“Experience keeps a dear school, yet Fools will learn in no other.” — Benjamin Franklin, Poor Richard’s Almanack, 1743
We all know why Hollywood makes crappy sequels: The first film in the series made money. Which is why Hollywood squeezed out the likes of Superbabies: Baby Genius 2, Highlander 2: The Quickening and The Concorde… Airport ’79 onto the innocent, unsuspecting heads of American movie-goers. But Hollywood, bless their blackened, cocaine-engorged, money-hungry hearts, knows enough not to make a sequel to a film that everyone hated the first time.
So why are America’s political and financial elites hard at work on creating Subprime Meltdown 2: Melt Harder?
Remember when the whole banking system almost crashed when Bill Clinton’s sub-prime mortgage disaster caught up to us in 2008?
It turned out that loaning hundreds of thousands to people with shoddy credit history wasn’t sustainable, and you’d think we would have learned that lesson.
Yahoo Finance reports that starting in 2026, our two lending giants are once more relaxing their lending standards below a credit score of 620.
Fannie Mae eliminated its minimum credit score requirement on Nov. 15, 2025, as noted in an update to its Selling Guide.
‘Previously we used a minimum credit score to determine whether a borrower was eligible for a credit risk assessment,’ the government-sponsored enterprise said in a statement. Fannie Mae added that the update would ensure risk analysis is ‘agnostic of third-party credit scores.’
That’s like saying you want to make your highway safety decisions apart from highway death statistics.
The GSE also said that risk decisions would be based on ‘a broad set of factors, such as borrower reserves, debt levels, property characteristics, and loan purpose.’
In other words, risk will now be assessed by the need for high level executives to hit loan bonus targets.
Since Freddie Mac and Fannie Mae provide capital to the mortgage industry for more than half the mortgages in the U.S., the credit bureaus are also moving away from a traditional credit requirement.
We’ve seen this movie before, and the first time it hit screens, in 2008, it almost destroyed the western banking system and brought on the worst recession since The Great Depression.
I didn’t like that movie the first time, and I certainly have no desire to sit through it a second time.
