Easy loans

The President began this week to push for more home ownership. He has told the banks to loosen their standards and start taking on more risky loans. He has said that the loans will be backed by the FHA, which by the way has no money, meaning that the taxpayers will back the loans. He did not give the banks direct guidelines but told them to use subjective judgment. If you are a banker and you make money on each loan and the government has assumed the risk for bad loans and you can use your subjective judgment to determine who qualifies, what will you do? Stay tuned for the logical ending to this scenario.