The Little Guy / Small Businessman

Here's what no one seems to be talking about...(those who are, aren't speaking loud enough, or aren't being heard!)

As the federal government picks and chooses which financial institutions will be saved and people debate "moral hazard", the issue remains liquidity. In the housing market, that means loans for builders and mortgages for consumers. From my perspective and for my benefit, I am in no rush to see more homes built with the supply as it is, so my concern is with access to mortgages.

As we all know, or should know, mortgages were being given out too liberally. This debt was ultimately packaged and sold on the open market through complex vehicles that no one understood. When borrowers started to default on mortgages and the end investors figured out that what they had bought was backed by no-documentation/no-verification loans, the money supply dried up. (simplistic, but basically accurate)

Here's the problem now...

As is often the case, the pendulum has swung way too far in one direction. There is/was a valid need for the loans discussed above. The small businessperson who uses legitimate tax planning tools is unable to justify his/her ability to pay back a loan and right now it is almost impossible for him/her to qualify for a mortgage.

I sincerely hope that the mortgage industry is able to create a mechanism by which these people can qualify for mortgages. In the alternative, the government must restructure the tax code so as to make it practical for small businesses to make a profit on paper. After all, small businesses employ roughly 70% of the workforce. Owning a small business has many drawbacks. Do we really need to create another by blocking access to home ownership for the people taking most of the risk and who act as the engine for our economy?