My Dad believes that the blame is fully, 100 percent with the people buying the loans; I told him that banks had been less than honest but he doesn't think it's their fault at all.
What are your opinions?Who is to blame for the mortgage crisis?
Legislators that forced banks to give loans to people with crappy credit are partially to blame, the banks and the people signing the bad loans are also to blame.Who is to blame for the mortgage crisis?
BANKS! It's their business to know - it's their specialty. They understand the legalese in those contracts. They led people to believe they could afford loans that they couldn't and assured them it would be ok. They made their money collecting fees and then sold the loans. Again, the common person was lied to and robbed. Same that happened with this bailout of enormously wealthy Wall Street corporations and banks.
EDIT: Legislation did not FORCE companies to grant mortgages to poor people. The law allowed them to grant loans to low-wage people to get them into ';affordable'; housing. However, greed took over they gave mortgages to anyone who asked so they could collect the initial fees and then sell the loans.
It's the fault of the government for certain laws and regulations passed that allowed both certain types of loans to be bought by freddie and fannie as well as making it easier for those who can't afford loans to get them.
It's also the fault of the banks who gave out these loans, knowing that however crooked the loan or borrowers were, freddie and fannie would buy them. Also their fault that, when buying or merging companies, they didn't pay attention to what types of loans that company held.
But your dad is right also, as it is also the fault of the borrower. I've seen a lot of these loans first hand. While I understand how someone might not understand the terms of the loan when they signed, and may not have realized what they were getting themselves into... If you're stupid enough to sign something worth that much money when you don't understand it, you should pay the consequences.
The people that signed the mortgage are to blame for their bad decision.
And the appraiser that signed the appraisal was wrong, the mortgage broker with the miss-leading rate was wrong, the banks that bough/issued them on ';liar'; loans were wrong, the brokers that sold them as being the same risk rate as a 20% down with verified income loan were wrong and the professional trained buyers that bought these products without asseses the risks were wrong and the brokers that bought the products without asseses the risks were wrong.
Plus each company along the way that had an officer with a fiduciary responsibility to their shareholders that took and reported these instruments in such a way as to hide the risk and take sales bonuses and short term stock market gains until it all collapsed for the investors were wrong.
So your dad is right from the standpoint that we need no Symphony for the fool that took one of those loans and lost their house. But as far as destroying the economy it took a long chain of liars, cheats and incompetence, well beyond a simple lendee. In fact histroy will record this as the biggest scam the world has ever seen.
The fault lies with the corporate bankers who overextended themselves in their greed to collect more money. This was facilitated however by the theory that everyone should have the American Dream and own a house. Not everyone is in a position or for that matter may ever be in the position to own a house and extending credit to someone that most likely will not be able to afford it is risky business. Personally I think the CEO's of these companies should be Giving up their anual salaries and using that for the bailout rather than the tax payers but who am I to say on that one. Their multimillion dollar salaries should be financing the financial crisis.
President George W. (butt-face) Bush is entirely responsible. That fool removed all of the regulations, because his reptilian kind believe that regs hamper captialism and hurt the economy. He believed that by removing regs, he'd be helping the economy. In particular the Glass-Steagall Act of 1933 which kept banks out of real estate investment passed by FDR who is forever hated by the Reptile republicans for hampering captalism. Some hampering, huh?
The people, not knowing any better because they have little acumen to figure out such frauds, paid down and were told that if it went bad the banks would give them insuirance policies (which they didn't call ';insurance'; to keep it out of the pervue to insurance regulators, so they called them ';swaps';) to repay them. The mortgage loans went south, and there was no money to make good on the insurance payouts.
The loan officers made their big-*** commission on the sales, the banks bundled the mortgages together (into ';derivatives';) sold them to Wall Street for them to sell to investors. The investors went belly up when the higher monthly mortgage prices hit the mortgagees and they had to default., That hit the investment firms badly, because the derivative investments for the investors dried up as a result. Other potential investors said ';to hell with it all,'; and the banks holding investments had runs when everyone yanked their money in case the banks folded.
It's something of a Rupe-Goldberg effect (or a snow ball growing while rolling downhill) which was first touched off by butt-face when he ended the regulations in the first place.
Lets look at the bight side of all of this --- we might yet get to see and applaud when some rich b@stards jump off of skyscrapers!
I hope that anyone who says the';idiots'; who took loans have purchased a home. If you think its easy like buying candy at the corner store you are very wrong.
Political pressure and deregulation created a situation where predatory lending was acceptable. Add to that that speculators were purchasing as much as 60% of the undocumented sub-prime loans.
These two factors created a ';bubble'; of speculation. Speculators could keep buying on undocumented credit and selling for a profit to the ';idiots'; your father's Fox news talks about.
Basically this is a market-run. The rich bought low and sold to the middle-class and poor high. Then the bubble bursts and guess who is buying low again? It is not the individual ';idiot'; who is now bankrupt and has terrible credit for years it is the speculators whose LLP went bankrupt but they just formed a new one and are back in business buying low.
This was structured as a run on middle-class and poor money from the very beginning. Check out a graph and see when the property prices made a major departure from inflation and you will see that it temporaly aligns with the passing of some deregualtory legislation.
I own 2 homes - purchased in the bubble and I am not an idiot.
The people buying the loans had no idea they were buying bad paper.
I blame the politicians, both parties, who used their legislative power to force the banks to lend to people who obviously couldn't pay it back.
When I bought my 2nd house, I had to write a letter to the mortgage company explaining why I was 30 days late on a $24 payment on my Sears credit card 4 months earlier.
Now I hear that they were lending money without income verification or credit history. They were allowing welfare checks as monthly income.
The average American citizen is a complete idiot. A stupid mindless imbecile with a lack of knowledge, wisdom and desire to learn anything. The banks are the ones who hold the key and power to the loans, they approve loans based on the individual. This being said, it is the bank's fault. They have people who understand (supposedly) the financial sector and they can already tell you the percent chance that a loan will be repaid by a prospective client. You don't give a box of big T-bones to a dog and after he eats too much and gets sick blame the dog for eating too much. This is exactly how the banks are in relation to those who were approved for the loans they couldn't pay.
In the early 90's, many lobbyists were crying foul at banks that refused mortgages for minorities and the poor. The banks were, after all, looking after their own self interests in refusing to write loans for people who were unable to afford them.
The lobbyists and minority groups went to congress and demanded that banks change their lending habits. Congress gladly obliged and Clinton signed into law a bill that required banks to lower their lending standards.
Banks did as they were told, and would soon learn that there was less risk by taking the newly signed mortgages and selling them to another bank.
Snowballs tend to grow larger while rolling, and here we are, 15 years on and we are now seeing the result of bad legislation. Millions of new homeowners started defaulting on those loans when the economy took a fall and interest rates went up. Some people saw their payments go up 1000 dollars a month.
This is by no means is a new catastrophe, we've been in this a long time, and for years politicians have been turning a blind eye to the problem, hoping to appeal to their constituents.
But there is a bright side. High home prices are falling at an alarming rate, and just as in the past, the free market will correct itself. But it's gonna hurt a lot of foolish people.
The media wants you to think it's the people buying houses. but the real criminals are the bankers who took the mortgages that were loaned out, then loaned money out on top of them numerous times and created a huge world-wide deficit in derivatives that is so huge, 1.5 quadrillion, that it sucks everything into it. When that finally crashes, then the world will go to hell. What we're going through now is just a primer.
the democraps that made it easy to get loans even when you couldn't afford them.
In 1999 (yup, it was Clinton, not Bush) they stressed the importance of home ownership with minorities. Congress eased the regulations.
I also think the twits getting the loans are 100% to blame. They knew darn well they couldn't afford the loans. How can a reasonable person think that they can keep making the payments when the payment will increase? This is just stupid.
Personally, I blame the people getting the loans for being stupid and Congress for allowing it to happen. The banks were greedy but without Congress, they couldn't have done it.
I pay my mortgage on time! The bail out isn't fair to people that are responsible. Are they going to help me make my mortgage payment?
a) Greenspan, for cutting the Fed interest rate when the Dot Com bubble burst
b) The banks, which then proceeded to qualify people for Adjustable Rate Mortgages at historic low rates, instead of the sensible interest rate the mortgage would have during most of its life.
Almost every ';lost the house'; sob story printed includes a phrase about ';the interest rate reset to a higher rate.'; This means that teaser rate ARMs were a bad idea. Congress hasn't acted to outlaw these teaser rate ARMs -- and they should, because if they don't, then the mortgage crisis will happen AGAIN.
There is a lot of blame to go around. The people that bought the homes, the banks, the government. The Community Reinvestment Act blew the doors wide open. Is it your right to own a home? NO not if you can't afford it! Crazy Democrats. Anyways, ultimately both parties failed us. Too much blame to go around
Oour government leaders mostly democrats have forced the lenders to lower there standards so more people could own there own home. Who in there right mind would lend a 105% of the property value with a non verifying income loan? Answer no one. You can in fact thank the democrats for that debacle.
Fannie Mae and Freddie Mac - both run by Wall Street crooks. Plus the fact that American financial systems are too uncontrolled. Note that the UK, Canada, Australia, New Zealand, and France, have not suffered to the extent that the US has - because we/they have financial controls - which are sadly an anathema to Americans. Americans have too much freedom
Your dad is right.
Its the :
corportae CEOs
careless loans
idiots who take these loans
and idiots who take loans and buy homes they cant afford.
McCain knew that Fannie and Freddie would be detrimental from the beginning
VOTE MCCAIN PALIN 2008!
The banks are the ones that bought the loans. The loans were brokered by unscrupulous agents then sold to the banks. The banks took on the risk when they bought the loans, now they have to be bailed out.
Why don't we blame Obama as usual. McCain and Republicans would love to do this. After all Obama was associated with a ';terrorist'; Professor William Ayers when Obama was only 8 years old.
McCain and the rest of the neoconservatives
KEATING ECONOMICS- McCain and the Making of a Financial Crisis
http://www.youtube.com/watch?v=IDofbll86鈥?/a>
Both the bank`s gave loan`s to people who they knew couldn`t pay it off and people signed mortgage`s they had no business signing knowing their income.
Does he mean the people who took out loans on things they couldn't afford, or the investors who bought sub prime mortgages from the banks hoping to make lots of money?
this is the real reason!
http://www.youtube.com/watch?v=KV9yDLhKb鈥?/a>
I'd put the blame squarely on the lenders, the buyers, the builders and Congress.
Congress!! I dont care who they are Rep. or Dem. they are all too blame!! We need a house cleaning in Congress and it may just happen in 2010..
that sounds very Republican of him.... you should encourage your Dad to read more and to listen to the radio less......
Idiots buying more than they can afford 90% Banks 10%
