Quote:
Originally Posted by xort
GWB made all those people buy way too much house and go into too much debt.
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The answer to your unasked question, has already been posted in this thread. But I forget that republicans prefer not to read. If they did, we wouldn't be in this mess.
Once again. My bank did in fact close mortgages through mortgage brokers which are today called subprime loans. Why did we use these programs? Because we could sell the paper on the secondary market. Who made the programs available and then bought these loans? Fannie Mae? Nope... Freddie Mac? Nope.... but Wall Street did.
Every large Wall Street brokerage house was specifying these loan programs and then buying the mortgages like crazy. Why? Because they were able to securitize the loans and offer Mortgage backed Securities to their investors. In short, they created the subprime MBS market and then bought and sold them. They made the fortunes, not us in the small banks.
Why were they able to do this? Where was the banking oversight? Good question, as there wasn't any. Courtesy of the Bush administration. Where was the SEC? Another good question that's being asked right now. They in fact had no oversite at all. Again, Courtesy of the Bush administation.
I would suggest that before you blame the banking system, you find out what really happened. In point of fact, if no one offered subprime loans, no one would be stuck with a subprime mortgage today. Once again, No bank in the country offered these on their own. This was always a Wall Street invention. They created them, they marketed them to the banks (retail), they bought them (wholesale) and today, they are stuck with the forclosures.
The country's two largest mortgage banking lenders are both in deep Kimchi only because their monthly volume was so large. In August of last year Wall Street woke up and realized the underlying loans were bad. They immediately pulled the programs. Stopped them cold. Unfortunately for Washington Mutual and Countrywide, they each had 2 billion dollars or more of loans closed and ready to be delivered to Wall Street. Needless to say, they were never bought. These banks were stuck with the loans, with little reserves to cover them. We also were stuck. All of us were forced to grab financing where ever we could to cover the value of the outstanding paper.
People don't realize that banks don't have that cash laying around. Just like the consumer, we borrow.
Has the law figured out what happened and who was responsible? You bet they have. Google the New York Attorney General's office and the charges they are now leveling. Wall Street is in their jurisdiction.