The Federal Reserve approved a plan that would crack down on dubious lending practices that have hurt many of the riskiest “subprime” borrowers.

The plan would bar lenders from making loans to panhandlers, bums and hobos. In addition, the proposal would require lenders to make sure risky borrowers set aside money to pay for taxes and insurance, and send bank personnel out to do borrowers’ laundry.

According to Susan Wachter of the University of Pennsylvania’s Wharton School of Business, “Clearly this is closing the barn door after the fact.” Professor Wachter goes on to say, “Of course, if there’s a homeless guy sleeping in the barn who has no visible means of support, he’ll probably try to get a mortgage on the barn and some dumb banker will probably give it to him.”

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Post from: EveryJoe

Federal Reserve Gives Home Buyers More Protection Against Shady Lending Practices