The problem with finding middle ground on a major issue typically means you have found the wrong answer. Listening to the critics over the past couple of days on President Bush’s agreement with the mortgage industry to freeze subprime loans has recieved tepid praise from few and condemnation from many.

Economic issues rarely can be fixed by public policy and those watching the subprime market know this. The truth is greedy bankers made bad loans to people who should never have applied for them.

Now we are experiencing the economic correction and instead of letting it run it’s course the politicians are stepping in and creating a minefield. Corrections mean pain, that is why the teacher used a red pen. But a good correction means that things can recover quickly.

And if you think that the political meddling will stop with President Bush’s agreement, do not be a fool. There is a Democratic Congress who now will want to impliment their solution and a gaggle of Democratic and Republican candidates who will interject themselves into the issue if it helps their chances in the election.

Here are a few reactions caught by Mary Umberger in the Chicago Tribune.

“This letter should give policymakers pause in their rush to pass bailout schemes for the real estate market,” said former Sen. Dick Armey, who now chairs FreedomWorks, a Washington grass-roots organization that put together the letter and pushes for less government involvement in private life.

On the flipside, Richard Bira, a Chicago mortgage broker, said he was troubled that the plan didn’t go far enough, skipping borrowers who are already in trouble. He added that freezing rates only postpones trouble.

“There is a reason why people are in subprime mortgages,” he said. “Their credit is banged up and their track record hasn’t been good. Putting a freeze isn’t getting to the root of the problem, which is that these people need to work on their credit.” via  chicagotribune.com

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1. FHA Creating Next Housing Bust? 1 in 8 FHA Loans is Delinquent
2. Why We Might See Another Housing Slowdown if FHA Loans Blow Up
3. 7% of Homeowners and 40% of Subprime Homeowners 30 Days Behind on Mortgage
4. Alert The Media – Banks Are Making Commercial Real Estate Loans
5. 908 Billion in Interest-Only Mortgages Still Out There