SOME of the bad loans were made for this reason, sure. But the reason ALL of the bad loans could be made is because the corporation issuing the mortgage could then sell the mortgage to Wall St, eliminating their risk in the event the mortgage defaulted. The reason they were able to do this was because we removed government regulations and allowed Wall St to regulate itself with the CFMA.
It doesn't matter on the reason why except to mentioned government interference with the free market. The people insured them through Freddie and Fannie.
The loans should never have been made in the first place.
People were buying 2 or 3 and flipping them. That had absolutely nothing to do with the government programs helping low income people people move into a starter house. It had everything to do with lending institutions not having financial liability for the mortgages they were giving out.
Remove failure, remove the free market. Also someone must have told you only some of the bad loans and you didn't research the impact.
"Subprime and near-prime loans shot up from 9 percent of newly originated securitized mortgages in 2001 to 40 percent in 2006."
Flippers were a small part and they were making money during this process as housing prices were being increased through the artificial bubble. Flippers didn't get left holding the bag as well as get bailed out. Dunno why you even mentioned them.
Even those government programs to get people into starter homes were subject to this. Those housing programs were intended to put low income families into starter homes on 30 year and even 50 year fixed rate mortgages. At the time those laws were made that's how it was done. But a couple years after that, lending institutions figured out they could put literally anyone into a home on an adjustable rate subprime loan. And yes, fannie and freddy were just as guilty as every other bank in doing this. But in no way was it limited to government programs. EVERY lender in the country public or private was doing the same thing.
No, quite a few businesses were smart enough to stay out. And as a reward their weaker competition was bailed out in the end.
The common denominator in all of this, from private banks to government backed loans, was that the companies issuing the loans were not held financially responsible for the results of the loans because they were selling these mortgages to Wall St. Yes, the government programs were guilty of this. But it was not limited to them. It was just as bad with private banks. And none of this would have been possible without the banks ability to sell of these bad loans to Wall St. That was 100% caused by the CFMA and nothing else. 100%.
You're putting the cart in front of the horse. The loans would never have been made in the free market.
Even if you remove all the government programs out of the equation, the crisis would have still happened because ALL lenders were issuing these loans. The government programs were only part of the problem. But none of this would have been possible with the CFMA. That's why it's a root cause of the problem. Simply saying "no it wasn't!" does not counter that what I've said is indisputable fact. Not my opinion, fact.
It is not a fact that is related to the cause.
I never said no it wasn't. You lie to often.
It wasn't the reason, it came after the bad loans were made.
If you think that then you failed to comprehend the facts I put in front of you. I explained in detail how these bad loans were profitable and possible. If you didn't get that, well I can't force you to learn. I explained it 3 or 4 times.
You can keep explaining what happened after the fact all you want. It wont change things. I haven't argued too much with your on your facts since they are not related to the cause.
You're calling me names while I'm citing specific laws and explaining exactly what those laws did, so look in the mirror.
Because they are not related to the cause. My answers are not complicated. I'm not trying to impress anyone with bullshit. You must be missing some chromosomes.
You're not understanding any of this.
Yes I am. It's you that don't understand and lie about me. Maybe because you have suffered a defect in the region above the neck, your don't understand simplicity.
The government never did regulate the qualifications for mortgages. The rated the safety of them as investments when they were bought up by Wall St and sold on the exchange.
More specifically, they rated the safety of the swaps that were backing them. When this market got deregulation and the safety ratings were now done by Wall St instead of the SEC, Wall St just rated all the bundles as AAA rated investments. This made them extremely easy to sell on the market. At that point banks could make profits by selling whatever loan they could get someone to sign regardless of their ability to pay to Wall st. That's why banks were giving out bad loans. They could make a profit just by getting someone to sign them and then selling the loans to Wall St. They were not being held financially liable for defaults. Understand?
Doesn't matter. it's not important. Just more of your bullshit.
When government adds or removes segments from the free market that is regulation.
I can't make you less stupid or ignorant. I give up.
Give up? In the game of seeking the truth you didn't even enter the room.
parker -So what you're saying is the regulations allowed banks to make bad loans.
Yes. That is a proven fact.
Good that you get it.
I have indeed explained what made it all possible. You just aren't understanding for some reason.
More bullshit on your part. I've mentioned many times I fully understood what you are saying its just a related symptom not the cause.
What made that possible was the Commodities Futures Modernization Act of 2000 which took deregulated the swap ratings allowing Wall St to self rate the swaps.
LMAO Turtle shit for brains. You are unable to find the cause yet again.
You are a simpleton of the highest order. Seriously. I've been saying this whole time these were terrible loans that should have never been given out in the first place. If the only part of this you're understanding is that these loans were bad, then I probably shouldn't even bother trying to explain this too you anymore. It's clearly too complicated for you.
Not it's just you lying again. Same bullshit when you try to portray yourself as being informed by spouting off all this unrealted rhetoric.
It's not complicated. All that you said would naever have happened until government interference. You don't make those loans.
As I said, simpleton of the highest order. There was no fear of failure because the free market allowed them to just scam everyone. hen I probably shouldn't even bother trying to explain this too you anymore. It's clearly too complicated for you.
LMAO You don't know what the free market is you dumb twat. Great quote though. There was no fear of failure when you have your losses insured a head of time.
You just copied and pasted garbage.
The funny thing is you don't even know that reason. Ever heard of the Federal Reserve? You remember them? They set the interest rates so low it caused all that mal investment in the housing crisis. Same type of thing that caused the Great Depression. Mal investment. Same type of thing we saw in the dot com bubble. Anti free market strikes again.
Why are you discussing any of this when you don't know the cause and you don't know who funded it?