Obama Administration - Banks Forced to Take Risk on Short Sale to The Fed’s Hoenig Warnings of Impending Disaster – The Rocky Road to Inflation

The Obama administration’s plan to reduce the increasing number of foreclosures is a program to launch this April entitledMaking Home Affordable. Apparently the premise of the program is to offer "incentives" to both banks and consumers to significantly reduce their mortgage in order for the mortgagee to stay in their home. That said banks have not exactly jumped at the prospect. From the financial Times:

“The moves come as the Obama administration prepares to launch a programme in April that encourages homeowners, lenders and investors to complete short sales by providing up to $3,500 in incentives.
Banks had been hesitant to embrace short sales, which require agreement by all lien holders and are subject to higher rates of fraud.
Real-estate brokers said this was changing. “It used to take a year to get approval on a short sale,” said Leslie Carver, a real- estate agent in Las Vegas. “Now these deals are getting the green light from banks in a month and approval rates are way up.”
Mark Zandi, chief economist of Moody’s Economy.com, forecasts short sales and deed-in-lieu transactions will total 20 per cent of all distressed home sales this year, up from 15 per cent last year.”

Just what the struggling economy needs, a program which is funded by taxpayer dollars in continued bailouts that are prone to fraud. How is that fraud committed? Possible scenarios are given at Fraudproblem.com/short-sale-scam/

Meanwhile the Kansas City Fed’s Thomas Hoenig has been virtually shouting from the rooftops that the spending must stop or the U.S. will surely be facing high inflation. Sadly, most members of the Federal Reserve are politically correct, and prop up the insanity of the Administration and its monetary policies (or lack thereof). Hoenig, in breaking with “tradition” has balked against printing money that is clearly not there, in order to prop up an ever increasing government with falling revenues and no way to repay its debt. Suggested read: Howstreet.com’s article by Mike Shedlock entitled “Three Paths Forward" - Kansas City Fed on Current U.S. Fiscal Imbalance, Hyperinflation, Printing”. It is an eye-opener, to say the least.

While the taxpayer base decreases due to sustained high levels of unemployment, the administration finds new methods of enlarging the behemoth that is the Federal Government through a variety of programs, some of which are subject to fraud. This is adding to the deficit in amounts no one could have imagined. Add a politically correct Federal Reserve, winking and nodding the fiscal shenanigans of the current administration, and the end result will be hyperinflation. There are solutions, most of them painful, as outlined by Hoenig however, and these should be seriously reviewed by his peers who should stand up to the excesses of this administration. In the past comparisons to the Carter administration have been made in reference to policies of the Obama administration, however, this current administration has dared to go where Carter would not.