FHA cut backs will stall the housing market

The administration has clearly underestimated the magnitude of the problems in the mortgage industry. We have scene that Freddie Mac and FNMA are piling up huge losses and will require continued subsidies in order to survive. 

The administration seems to hope that the banks and insurance companies that are continuing to receive enormous subsidies from the government will help with lending . However lending is drying up for homeowners who need to extend or rework existing loans and for small business that need the same type of relief. The banks again are failing to aid the public by shutting doors to borrowers in need. The government has lent the banks a hand. Where is the hand to the people from the banks?

The administration needs to extend government Guarantees on loans to homeowners and small business if they want to revive the economy because the private sector will not help out in these situations.

The longer the situation persists the longer that the economy stays in the doldrums.
The Administration plan to tighten standards on FHA loans is exactly the kinds of policies we do not need to revive the economy. Housing needs any kind of help it can get from the Fed's. Tightening FHA standards hurts the middle class because this is the last outlet people with less than perfect credit have to purchase a home or maybe refinance their way out of some debt problems.
The administration has allowed the banks to continue to charge high fees and rates to people with less than perfect credit which perpetuates the problems these people have in getting their credit back to good health. Banks are more concerned with penalizing people who are late on payments so that they have no chance of repaying loans.

For the economy to turn Obama needs to revive housing and help people get of debt. To date all he has done is help the big financials stay in business and help people who already are in good financial shape refinance at lower rates. This has helped the rich get richer and the poor to get poorer.
So far there has been no relief on insurance, No help on other middle class issues like education costs, Energy costs or job growth.
We can only hope year two for Obama will bring better results. He should start by reevaluate who he is getting advice from. My suggestion would be to get rid of Ben " The Bankers Friend" Bernanke. Obama was elected to change things. I would start with Bernanke and maybe with Tim "Mr. Save AIG's Pals" Guitner next. These jokers are worried about to big to fail companies. They could careless about the little people that are failing everyday.