Now here’s a surprise:
Seeking to buoy a strained rural economy in the midst of the recession, Congress ordered up a huge increase in federal mortgage guarantees for small-town home buyers as part of the 2009 economic stimulus package.
The response from lenders was immediate. The value of federally backed rural home loans soared to $16.2 billion in fiscal 2009, up from just $3.7 billion two years earlier. Last year, the guarantees reached nearly $16.8 billion.
Now, a newly released audit has found that the rural loan program, administered by the United States Department of Agriculture, was plagued by lax government oversight and many of the same sloppy banking practices that fed the broader mortgage debacle. . . .
Analysts said the problems echoed those exposed earlier in the mortgage crisis, with banks seemingly eager to collect fees for loans in which they retained little or no risk.
“In a couple years, when these loans are going bad, everybody’s going to say, ‘Oh me, oh my, how did this happen?’ ” said Christopher Whalen, managing director of Institutional Risk Analytics, a bank rating and consulting firm. “There’s no surprises here.” [Emph. added]
How disappointing. One would think that, in devising economic stimulus packages like the one passed in 2009, Congress would at least take the time to come up with new ways to screw up the economy. . . .