“However, if the Govt becomes the primary source for lending as many seem to think is going happen since it may become too risky for private lenders to continue to thrive as they have been, then all bets are off….at that point we are in really deep shit.”
Let’s look at a smaller program that parallels the mortgage industry the Student Loan Industry. Right now 3 companies in San Diego have shut their doors. Ted Kennedy promised that the increase in Pell grant money would not cost the american public a dollar. They would take 20 billion from Private lenders and there would be no response. Right now they are using tax payer money to fund guaranteeing agencies as FFELP Lenders exit the origination side of student lending. Previous discounts for auto pay and on time payments have been eliminated. There fore the cost ofthese loansis not less but more.
The student loan industry is about 90 billion so it is really chump change compared to the mortgage industry but there appears to be movement in the same direction.
I would expect to see many lenders exit the originatin side and I would expect incompetency and laziness to funnel its way into government burocracy.
This has all been fairly well orchestrated by the Democratic Party in an effort to consolidate student lending into the Direct Loan Program. It is suppose to cost us less but in realiy is going to cost student and taxpayers far more.