Senator Dodd singles out brokers as major cause of current housing market meltdown

Here is an interesting video of Senator Chris Dodd (D – Connecticut) outlining his proposed legislative changes to improve the plight of homeowners who are currently falling victim to the declining housing market. (h/t Housing Doom)

Two thoughts here:

Dodd doesn’t address homeowner responsibility in the current fiasco. Apparently consumer responsibility is not a part of the market mess; and people who made bad decisions shouldn’t have to face the music. Standard.
Dodd says it’s the brokers who are the ones who caused the disaster that is now the housing market. He claims that brokers, who position themselves as financial advisers, duped homeowners in to bad loans by jacking up the interest rates. No comment on lenders, apparently lenders didn’t have anything to do with this mess either.

First of all his rambling thoughts and conjectures show a lack of understanding of the mortgage market; but we can forgive him for that, because most politicians are speaking out of their *ss on this issue too. But the main problem is that he blames mortgage brokers for things that, while mortgage brokers are certainly guilty of, so are the banks and lenders!

Banks and lender originators were busy jacking up rates along with the rest of the brokers. Yield spread premium isn’t just a broker thing; its a loan thing. I hope Senator Dodd “hears” that the problems are systemic. It’s not just brokers, or banks or Wall Street – it’s everyone.

One might wonder if it’s a lack of understanding that makes him pick on brokers instead of lenders until you look at his campaign financing. Then it is clear why he picks solely on brokers; the banks and lenders are busy giving bucket-loads of cash to this guy.

Trust me, I’m all for industry reform; but I am not for picking on the little guy just because they aren’t filling campaign coffers. Brokers, lenders et al have the same amount of blood on their hands as the next guy in this fiasco. Let’s take an objective look at the problem, instead of looking for scapegoats – there are plenty of those wherever you choose to look.