Devoted to interest rates, loans, and lending institutions

In terms of home loan financing, Fannie Mae and Freddie Mac have just been given a lot more leeway. They will be able to finance larger mortgage loan amounts, as well as become involved in a wider variety of types of home loan financing. The New York Times reports on this mortgage loan news:

In a statement issued after the announcement, Treasury Secretary Henry M. Paulson Jr. said the decision would make more financing available for mortgages.

“Additional capital will enable the companies to help more homeowners and will strengthen the underlying fundamentals of the mortgage market,” Mr. Paulson said

Not everyone agrees with this standpoint, though.The New York Times presents an opposing view of the requirement for Fannie Mae and Freddie Mac to hold less capital:

“I think it’s very dangerous and it’s a sign that people are very frightened,” said Thomas H. Stanton, an expert on the two companies. “At a time in which finance companies are holding questionable assets and facing losses, regulators typically require more capital, not less.”

Even though the government repeatedly insists that it is not guaranteeing these loans, all of the evidence points in the direction of a government bailout if trouble ensues. Instead of changing the way we look at debt, and taking a hard look at the economy and adjusting our course, we are instead enabling the same faulty practices that got us into this mess in the first place.