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Government Regulations Run Amuck

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  • Description

    FBN’s Gerri Willis on the unintended consequences of government regulations.

  • Duration 3:24
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It's part of the government's settlement this week Bank of America began sending out 200000 letters to people who have not been paying their mortgage.

Now these troubled homeowners -- get rid of some of their mortgage debt haven't forgiven.

As much as a 150 grand -- what they -- homes they can't afford.

War debt forgiveness for people who overspent and have no way of paying their debt without a rescue.

Now at the same time deadbeats are getting mortgage forgiveness people who have been faithfully paying their mortgage each and every month.

And are trying to lock in today's bargain basement low mortgage rates to save a little -- Many of them are being denied.

Loan approval times are stretching longer and longer for those who do qualify.

The average time it takes to refinance a home loan is now seventy days compared to 45 days just a year ago.

Wells Fargo and Citibank or warning potential borrowers to expect the wait as long.

-- -- -- -- -- This kind of policy rewarding deadbeats while those obeying the rules get hurt it's not fair and it's not right.

But these are the kinds of unintended consequences of government intervention.

In the housing market.

The Bank of America bailouts are the results of attorney generals across the country demanding payoffs.

And the robo signing scandal.

Negotiations took months during which time nothing got done in the market.

Meanwhile the legitimate part of the market the refi should be proceeding.

And is in at least in part because lenders are hung up by government red tape.

Listen to this Fannie Mae and Freddie Mac -- introduced new rules that are supposed to improve the quality of loans for instance.

Appraisal packages for the first time must include.

A picture of your bathroom toilet.

I kid you not to -- -- house does in fact have a bathroom but if you want to see government red tape run -- Take a look at Dodd-Frank.

The 848 page to walk past in the wake of the financial meltdown.

Calls for the creation of a tidal wave of red tape will be celebrating.

Its second anniversary of Dodd-Frank this July just a few weeks away.

As of the start of this month regulators have missed two thirds of their deadlines for writing rule -- 148 -- 221 that's not a good debt hit ratio.

Just over a quarter of the nearly 400 total required rules have been finalized.

At this rate the last Dodd-Frank rule won't be done until January of 27 -- And the new regs are in place have set off a cascade of unintended consequences.

Not that we really want it all these new roles.

As a consequence of Dodd-Frank chase is now being driven into the prepaid debit card business.

Trying to make up for the fifteen billion dollars in annual industry revenue outlawed.

By regulations on normal debit cards credit cards and overdraft fees you've heard me talk about prepaid debit cards before.

I don't like them why because it doesn't help consumers it's an overblown gift card with -- lots of -- doesn't help you build credit.

This isn't the kind of product that Washington should be encouraging banks to get into.

But the area have that as I said the unintended consequences of government intervention.

They're not good asking for more rules asking for a bail out.

It doesn't turn out well.

To quote former president Ronald Reagan the nine most terrifying words in the English language are I'm from the government and I'm here to help that's.

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