Feds shy away from crackdown on ‘nothing down’

The San Diego Union Tribune reports:

It looks like regulators are chickening out on a major tightening of lending standards for mortgage loans. Low down payments are here to stay, and may be poised for a big comeback. Although this certainly helps homebuyers, owners and Realtors, it won’t do much to protect the banking system or smooth out the ups and downs of the real estate market, which have become particularly volatile in San Diego. On Tuesday the Federal Reserve outlined new regulations that may eventually reduce systemic risk by increasing the amount of equity a “too big to fail” bank must hold. The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are scheduled with the Fed this week to unveil detailed proposals on leverage. But the Fed went easy on small and regional banks, and it backed away from a proposal that would have discouraged lenders from making loans without at least a 20 percent down payment from the borrower.

The next housing bubble before your eyes!