The subprime mortgage crisis emerged in 2007, driving down the stock market late in the year. 2008 began with the economy in freefall, the stock market finally hitting rock bottom in early 2009. By then, the world economy was in turmoil from the shock waves. How did the troubles in one sector of the US economy touch off such a global financial meltdown?
The prelude
President Niceguy standing for the Cuban national anthem by his pal Fidel
In 1977, President Carter signed the Community Reinvestment Act, intended to help low-income borrowers and end discriminatory practices. This has been modified several times over the years, notably during the Clinton years. These changes gave it some real teeth. The first warnings were unheeded. For example, as the New York Times put it even as early as 1999, while the economy was roaring:
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. […]
These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates—anywhere from three to four percentage points higher than conventional loans. […]
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
“From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. “If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
So the government pressured the financial industry to accept loans from people whose credit ratings made them bad risks—what’s the worst thing that possibly could happen…? Carter and Clinton might have had the best intentions in mind, to help more people achieve the “American dream” of home ownership. However, this turned out to be a mistake; feel-good politics isn’t always good business.
Also during this time, the Gramm-Leach-Bliley Act gutted the Glass-Steagall Act of 1933. During the aftermath of the Great Depression, it mandated separation between commercial banking and investment banking, a protective firewall to help prevent another similar financial disaster. Again, what’s the worst thing that possibly could happen…?
Thwarted efforts at reform
They were warned, but…
By 2003, the White House proposed measures to fix this unstable situation in the works. Again per the New York Times:
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. […]
Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Further warnings went unheeded. In 2005, Federal Reserve chief Alan Greenspan warned:
“[If Fannie and Freddie] continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”
Meanwhile, Democratic Senator Chuck Schumer was saying:
I think Fannie and Freddie over the years have done an incredibly good job and are an intrinsic part of making America the best-housed people in the world… if you look over the last 20 or whatever years, they’ve done a very, very good job.
Problem? What problem?
Because of this political resistance, the regulatory reforms over Fannie Mae and Freddie Mac never came to pass. In 2006, Senator John McCain co-sponsored a reform bill, the Federal Housing Enterprise Regulatory Reform Act of 2005, which got blocked in committee by all its Democratic members.
How it all went down
The “new normal”, coming right up
Also, the banks were also under pressure from lawsuits. This included Buycks-Roberson v. Citibank Federal Savings Bank in 1994, a racial discrimination suit. As it happens, Obama (then an attorney) represented ACORN. Following all this, acceptance standards and fact-checking became quite lax, leading to the term “liar loans.”
So the banks, under pressure from both the government and civil rights lawsuits to issue loans to anyone with a pulse, came up with creative ways to offset the losses. Predatory lending practices began, such as zero principal loans, which never get paid off (might as well just rent). Also, they turned bundles of mortgages into investment securities, which they had the power to do with the Glass-Steagall firewall gone. These became the hot, new investment in the USA and abroad.
These securities got re-packaged into others, sometimes well over a dozen times; thus it was pretty hard for an investor to make an informed decision. There were credit rating agencies, but their criteria were pretty lax too; they weren’t getting paid to call investments crappy. The subject of derivatives is a bit complex, but credit default swaps are basically investment insurance policies. In good times, it’s gravy for the issuers, but when the investment loses money, the issuer covers the loss.
A prime rate interest hike touched off the powderkeg. Many borrowers were on adjustable rate mortgages, which was (and still is) another sucker deal. So the borrowers—many of whom could barely afford their house notes—got their mortgage payments jacked way up, and they defaulted in droves. The glut of houses now for sale drove the prices way down. That put many borrowers underwater, unable to get out without incurring a loss. As for the bundled investments, their value plummeted. AIG (which issued most of the credit default swaps) got clobbered into insolvency.
Then the stock market tanked. Panicked investors sold at a loss, driving the market further down. The banksters turned to the government like hungry piglets wanting some milk from mama sow. “Too big to fail” was the watchword. The government responded with the Troubled Asset Relief Program. The TARP beneficiaries included AIG and fifteen other financial institutions, along with GM and Chrysler (the only companies among them that actually produce anything). One could argue that it was necessary; on the other hand, rewarding people for making bad decisions sets a lousy precedent.
I haven’t followed all of them, but as I’ve mentioned previously, one of the megalo-banks used the bailout money to buy out a failing competitor and invest in the stock market when it hit bottom, massively profiting from the move. The financial industry has a cute abbreviation—OPM—which means “Other People’s Money”. In that case, the leverage came from the taxpayers. Awesome gravy! Some years later, they got their fingers burnt to the tune of a few billion on credit default swaps, proving that they hadn’t learnt a thing from that escapade of casino capitalism.
The political aftermath
Turning lemons into lemonade
The public largely held the Republicans responsible for the mess—Bush the Younger in particular—though the previous administration’s overenthusiastic policies set the groundwork. I wouldn’t lay the blame solely on Slick Willie either; the President is important, but isn’t the only figure shaping policy. Congress passes bills, and the President either signs or vetoes them.
Administration figures play a role too. Those encouraging the removal of the Glass-Steagall firewall included Robert Rubin and John Podesta. For those not familiar with them, Podesta is quite a colorful figure, filling a number of duties in the Clinton administration, a counselor under the Obama administration, and most lately as Hillary Clinton’s campaign chairman. Washington is a pretty tightly-knit family.
Rubin worked for Goldman-Sachs from 1966 until 1992. He joined the Clinton administration in 1993, serving as Secretary of the Treasury from 1995 through 1999. While in office, Rubin also opposed regulation of derivatives such as credit default swaps and collateralized debt obligations. In 1997, he became a co-chairman of the Council on Foreign Relations and still holds the position. After leaving the Clinton administration, he joined the Board of Directors of Citigroup. Wall Street seems to be the kissing cousin of Washington.
During the Presidential campaign under way, the Democrats benefited greatly from the public’s perception that the Republicans were at fault, carrying The Lightworker across the finish line. I recall Obama accusing McCain during one of the debates of wrecking the economy. How’s that for audacity?
The financial aftermath
Where did all that wealth go that had been built up for years?
Quantitative easing was another measure the government used to prop up the economy. In the first round, the government ended up buying over two trillion in treasury bills, bank debt, and those toxic mortgage securities. Round two included buying up $600 billion more T-bills. During 2012, round three began, in which the government started buying $40 billion in mortgage-backed securities every month. That finally tapered down and ended in 2014.
It did artificially prop up the economy, but was an inflationary pressure. Due to fuzzy math, official inflation figures don’t reflect the full impact of rising prices on the public. (One of the tricks is that some categories don’t count, like food, fuel, insurance, construction materials, etc.; it’s not like anybody actually needs those, right?) All the bailouts and buying up of assets drove the national debt sky-high, as if it wasn’t bad enough previously. That may yet be the next catastrophe in the works; something that famously came to pass for Greece.
Years later, Wall Street did recover, and the stock market is reaching new highs. However, Main Street still hasn’t recovered. Jobs did come back, but mostly in other countries, thanks to globalism and “offshoring.”
As has happened so many times, the government instituted feel-good policies and the general public had to suffer the consequences of the social engineering. As for the banksters, once again they made some bad decisions, yet came out ahead after they crashed the economy, while effectively strip-mining the middle class. (I have to wonder how the Founding Fathers of the American Revolution would’ve responded.) Part of draining the swamp must include breaking up the Washington-Wall Street puppy pile fueled by connections and campaign contributions.
Read More: How The Deep State Operates
No need for any depth of discussion.
Why did it happen? you let Jews control the banks and financial institutions.
Oy Vey Goy
Audit the Fed, End the Fed
I wonder (((who))) benefited the most from the crisis?
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Probably the biggest heist of all time. (((Bernanke))), (((Greenspan))) the (((world bank))), (((Goldman Sachs))) and other (((financial institutions))) found innocent by (((investigative boards))) the (((media))), political lapdogs and (((Judges))).
America heading towards twenty trillion dollars of debt, who’s your daddy? Democratically elected leaders? The people? Fuck no!
Bankers only have the control until the government decides to kill them. Remember when the Templars were the creditors to the King of France? On October 13 (Friday), 1307 Sealed orders were opened all over France and most of Europe ordering that they all be killed.
As a banker I am not suggesting this as a course of action today, but do remember that power comes from the barrel of a gun and not from a debt collection agency.
Its interesting that when the Templars were excommunicated/eradicated Jews obtained a complete monopoly on usury practices.
Except it isn’t that simple any longer.
They’ve gotten way better at keeping politicians in line and the public ignorant. The political office holder is more likely to find the gun pointed at him than he get it pointed at the bankers.
Bankers, Kikes, Globalists, Elites and puppet politicians. Need to elaborate more?
reptilian jesuit illuminatis.
“There’s a divinity that shapes our ends,
Rough-hew them how we will.”
William Shakespeare
But, in this world of sad bankers and their backers we are their mere bitches.
I knew the family of the former president and one of the founders of Countrywide, the number one mortgage broker in America.
In 2006, this man had run the numbers, seen the writing on the wall, and tried to convince the Countrywide CEO, Angelo Mozilo, that the subprime sector was going to take down the entire company. Mozilo was a true believer and completely ignored his warnings. So this man left the company in 2006 — the company he helped start — and watched from afar as his warnings all came true two years later.
Lesson: This crisis couldn’t have been avoided. Even those with great power in the industry, people like him, couldn’t stop it on their own. The beast was just too strong.
It was way too late by 06.
The current world order is a circle-jerk.
Democrats definitely were wrong, but interest in the subprime space was caused by the prime rate being kept artificially low, leading to thirst for yield. The real issue is the Fed, which does not answer to market forces the same way as a normal financial institution. Rates should have risen well before subprime became an issue, but didn’t because people were high on easy money and bringing them down was political suicide.
This is what happens when you fuck with the Market. Gravity always wins.
“government ended up buying over two trillion in treasury bills”
government ended up eating its own shit.
There fixed it. It’s exactly what they did.
(((“Federal” Reserve Bank)))
Federal my ass! lol
They also have no ‘Reserves’
Good one. I’ll have to add more quotes next time.
This is a very good example of government being deliberately short-sighted with policies that will get votes in the short-term, knowing that any problems will hit much later, likely after those responsible are no longer in office so others get the blame. All of it was predictable, and as usual, the globalists got richer and got more control, while the poor got screwed.
I’m not sure exactly what the answer is, but it certainly involves getting rid of ALL government guarantees and prohibiting bailouts of ANY form. It also involves ending the revolving door between bankers and the government, or more precisely, between any industry that has that much market share or financial stake in government policies. (I wouldn’t let executives from Google, Apple, Facebook, Microsoft, or any bank anywhere NEAR government.)
https://www.youtube.com/watch?v=IyFLm3pzhuk
Dylan started all this. horrible rendition
ok that’s better than Dylan.
I’d say the crisis was caused by greed from all sides.
Creditors gave loans to people who had no business getting them because they clearly could not pay them back. However, certain people within those institutions benefited from giving out more and more loans.
People in America also went looking for loans they clearly could not pay back. They wanted to “live the American dream” by “owning” a McMansion.
There really is no single group or individual who can be blamed for the crisis. It was a combination of factors from all sides.
I like your comment, but I differ slightly. There is a single group to blame for the crisis: Dumb asses on both sides of the fence.
Well if you want to look at it that way, then I suppose you are right.
“These securities got re-packaged into others, sometimes well over a dozen times; thus it was pretty hard for an investor to make an informed decision. There were credit rating agencies, but their criteria were pretty lax too; they weren’t getting paid to call investments crappy.”
Lax criteria for credit ratings. Hard for investors to make informed decisions. Some securities repackaged over a dozen times, etc.
I’m still new to learning business and investing. Still, I know better than to invest money in shit like this.
Back in the early years of the previous decade, although my credit score was good, my supply of cash wasn’t. A couple of friends worked at mortgage companies. I was told by them and others, flat out, several times, and I quote; ” Do what everybody else does. Lie. After you get the house, then figure out how you’re going to pay for it.”
One need only read my comments scattered and strewn across ROK and Rooshv to realize I am not very smart. But if I can avoid being sucked into that kind of disaster, how can everybody else be so dumb?
Great, pertinent article. Thank you Beau Albrecht.
Credit ratings are largely nonsense as most of them do not include things like bond swaps and potential hikes in the prices of bonds.
I created my own credit rating system composed of three elements: likelihood of default, potential of price increase and return of investment.
Still in the works, but could eventually come true.
Read about the “Worgl Miracle” of 1932.
This small Austrian town printed their local 1% monthly demurrage currency. The lack of inflation/deflation allowed this outpost to build a train station, a massive reservoir, housing, ski jumps, and near full employment at the height of the Great Depression before the central bank shut it down.
I think the true political genius will be the one who can print a local, debt-free currency without being shut down or assassinated.
Qaddafi was the last one that talked about it and started taking steps towards one. We all know what happened to him.
“We came, We saw, He died!” {Cackles}
-Literally Hitlery Rotten Clinton
If your idea of a debt-free currency means the state issuing it has no or little public debt, there already are many of them.
JFK attempted it.
Saddam Hussein too I think.
Nah, he wanted to sell oil in Euro instead of dollars.
O that’s right.
You goddamn right that that’s right.
You’re thinking of Gadafi.
He actually wanted to use a new gold backed African/Muslim currency.
mixing up my boogeymen…
That was Qaddafi!
Saddam tried to move away from the petro dollar which has a similar effect. Financial institutes only hold power if you use their currency, it is in demand and holds complete supremacy.
I believe its why Putin/Russia are now ‘literally Hitler’. Massively reduced their debt and looked to move away from (((globalised))) currency with huge, in demand resource wealth.
That sounds about right.
elaborate on this
Google “JFK Executive Order 11110”
He tried to do an end run around the Federal Reserve and their Fiat, debt-based currency.
Essentially he was about to roll out a new currency controlled by American congress and not by a private organisation (((The federal reserve)))
It was immediately repealed after his assassination.
That’s the one where the clone troopers are told to turn on their Jedi generals right?
Sorry, yeah I’ll check it out
Bitcoin?
Also, they didn’t care. They knew whatever stooge was in the White House would be forced to bail them out if it went belly up. Privatize the profit ($$$$$$$ for banks/corporations), socialize the debt (force the people to pay through taxes). The same happened in Europe. In fact, Australia was the only country to avoid a recession and actually INCREASE their credit rating to triple A during the GFC, and because the left leaning Labor government at the time decided to give every citizen a thousand bucks to spend! Yeah us!
But the Liberals told me it was something about war on credit cards an sheit. Let’s not let the Republicans off, though. Their greed in the late 90s made it all possible. They passed the legislation in an epic failure of a gambit to win minority votes.
Ahhhhh, what a glorious time… When a Shift Manager at Taco Bell earning $10hr
could acquire a $500k home with No Income documentation and No Money down!
I spent a little over a decade in the mortgage business, and what I experienced from the late 1990’s until the time I left in 2004 was nothing short of Complete Insanity. I had the good fortune to work with solid, low-risk Institutions, but companies like Countrywide, Indymac, New Century, The Money Store, etc. were all churning out this swill like it was going out of style. Everybody involved could see the writing on the wall – from the receptionists, to the processors, to the loan officers to the underwriters… EVERYBODY, and I mean everybody knew what the eventual outcome would be, but there was just too damn much money to be made – it’s just that simple!
If only there were no consumer loans in the first place, there could be affordable housing (as well as the problems with housing laws-homes can be made for under 10k) and the crash showed, for a moment, the true monetary value of a home. But the next crash will be much worse; the gov used up all their magic bullets (maybe not NIRP)
As long as the US has mass immigration I think the housing prices will be inflated no matter what.
I was reading this by one of my more sane Linked In contacts the other day.
https://www.linkedin.com/pulse/i-predicted-global-financial-crisis-4-years-before-happened-scovell
If everybody saw it coming why didn’t more people make money from it. Maybe there was some realization of it being a bad practice, that I could buy.
Lots of people did make money from it; some from shorting the market (watch The Big Short), and others by scooping in the cash and then packaging the bad loans into bags of shit and selling those bags of shit on the securitization market. A few big boys failed to see the handwriting on the wall, but most of them cashed up quite well from it.
When people can’t keep up with their incredibly insane housing costs or ballooning mortgage payments, it forces properties back onto the market due to the influx of borrowers defaulting, but because of the inflated prices, there were no buyers for these homes anymore. Thus, the bubble burst, which people tend to forget that bubbles have a tendency to do that.
I was there then too. It was obvious.
I sold a very large house, with an ARM, in March of 2006. I then moved into a small apartment. Late in 2008 I bought back into the housing market with a fixed rate mortgage. I could have waited, and got the absolute bottom about 2.5% lower than when I bought in, but there was no reason to be a hog.
I did statistical forecasting for the bank I was at then, and I told them in 2006 what was coming. They tried to reduce their exposure, and were successful to a limited degree. People have told me (mostly those not in banking) that no one could have predicted the crash. I tell them everyone could see it coming, but there was money to be made by ignoring it.
I realize that all the detail required would result in a book so I won’t fault that, but adjustable rate mortgages are not a sucker’s deal if you understand math and borrow below your means. Of course that wasn’t a lot of people who signed up for them. The people who signed up could barely afford the payment before it started adjusting. Adjustable rate mortgages work very well for people who can refinance, pay off the loan, or will sell before it adjusts.
The problem is that either the adjustable rate mortgages were not properly explained to these low IQ borrowers or the borrowers were mislead. I would not recommend an ARM to most borrowers since too many people do not think in terms of years but rather live week by week paycheck to paycheck.
The scenario was great for people who did a lot of under the table work. I was pulling down a lot of cash while self employed but because I didn’t declare a lot of income, I couldn’t qualify for a loan. I managed to buy a house and wasn’t doing bad. When the housing industry started hitting the crack pipe they told me my POS tract home was worth a half a million dollars and were willing to re-fi me to that amount. Hell, I cashed in, went and paid cash for a commercial building and I thought when it all went to hell (I knew it would) the worst that could happen was I’d wind up with a house I couldn’t move out of (I didn’t want to leave anyway) and a commercial building that was free and clear. I have a lot tied up in rolling stock now and I haven’t lost a dime during the last decade of financial hell.
It sure was good when times were rolling. Even the idiots in construction were making money. I was turning down work. I got to the point I wouldn’t even submit a bid. I’d just tell people I’d do the work but they were just going to pay me for my time. They’d usually write me a check to make sure I’d take the job.
On the flying side everyone was going to fly-ins, airshows, they were having planes rebuilt. An engine shop in LA that rebuilt 40’s era engines was booming. They had truckloads of engines going out the door on one side and trucks bringing engines in to be rebuilt on the other.
Man, when the end hit, it was brutal. All that stuff stopped, my phone stopped ringing and the cash flow dried up. I watched so many people who were slow to adapt. I knew guys that racked up 100K in credit card debt in less than a year. Then the credit card companies started calling their debt. I had a company card with a 50K limit and they stopped giving money out. They said they would continue to take payments but the card was no good. The next thing I knew was getting a card that was a quarter of the limit. There was a lot of cool toys that hit the auction block. I had a developer buddy that owned a couple WWII fighters, a couple huge houses and traveled around in corporate jets. Next thing you know he’d lost one fighter, was hiding the other, he lost the houses–oh, at that point his wife decided they’d grown apart and it was time for a divorce…LOL
I too would love to know who profited from the crisis. I remember Ford didn’t take any money and SWA gave all of theirs back.
“I knew guys that racked up 100K in credit card debt in less than a year.Then the credit card companies started calling their debt. ”
You don’t have to pay credit card debt back ….. they are unsecured loans.
You do have to keep paying the house loan.
It can still effect your credit score if you don’t….
I know someone who ran out on a $20k unsecured loan.
Blacklisted for 10 years, just got 1 letter every year asking for the money. One month after the 10 years was up they applied for a $50k home loan, granted immediately. Credit blacklisting has just been reduced to a maximum of 5 years in that country.
They get a commission on new loans, and are really keen to lend.
If you ever get in serious debt, pay your home loan, tell everyone else to fuck off. Do not negotiate unsecured debt into secured debt.
You don’t mention at all that the banks paid back their money with interest. The ones that haven’t is the government ones like Fannie Mae and Freddie Mac, and AIG ofc.
When the last of govt. held GM stock was sold, the taxpayers were out $9 billion.
Never buy a GM car or support a labor union.
Why the abolishment of the Fed. Fractional reserve banking and a return to sound money in the Gold Standard is needed to put an end to this.
And derivatives must be banned.
This and allowing those the too big to fail firms to fail.
Well, this will make watching the Big Short and Margin Call easier to understand now.
Up until the mid/late nineties, banks couldnt speculate in the commodities futures markets- had to be germane to your business (e.g., American Airlines could dip into the futures market for oil, Kellogg’s for corn, and so on).
It amazing how distorted the commodities sector is- you ever see a bank take delivery of oil?
Let’s not forget all the idiots who lied on their loan applications. And the idiots who applied for a $400,000 home loan while making $30,000/yr.
The banks take their share of the blame, but who is more foolish: the fool who offers a bad deal, or the fool who accepts it?
This is what pisses me off about the whole thing exactly. Everybody was in it, and while things were rolling they all kept shush. Then when things blew up the plebs started blaming Wall Street. The banks gave them what they wanted and made money in the process, of course.
I don’t know if you saw the movie Margin Call, or The Big Short. “Fuck the common people.” They liked the good life, the homes they couldn’t afford, etc. Of course they were left holding the bags. That’s what they are for and will be till the end of time.
Once again just in case you missed it 🙂 , Fuck the common people.
I did not feel sorry for the banks or the reckless home buyers who lied to get a loan. The majority of American voters who contacted their representatives and Senators and told them not to bail out the banks by a ratio of 20:1. Still the bailout happened. How could anyone think we live in a Republic when our elected leaders ignore their constituents and still get reelected.
Don’t forget that the banks were being forced to make offer the bad deal. They knew it was bad and bailed out of it by dumping the loans as soon as they could.
This is a good documentary about the subject:
And guess the race of most of the people there…..
submit to the chosen people.
I took away that the mentality of the 80’s (the bad of that decade) is still alive and well.
What’s Trump take on all this?
“do as I say not as I do”
Don’t forget that the nearly $900 billion TARP combined with baseline budgeting and no actual budget was spent 9 years and counting.
Its a kike! I wish @Loknee was here…
Ching chang chong (A.K.A Chinese like myself are taking over now…)! The Mandarin might be up to something.
the REAL fraud perpetrated by the rating agencies.
Labeling junk bonds with AAA ratings – for a fee.
Then the bonds MBS sold around the world based on those ratings.
however, they were full of junk.
When an agency receives fees from those selling the junk — the incentive for fraud, corruption, etc…is built in..
The Big Short — tells it all — and awesome movie
Succintly stated Beau. Well done.
When they started combing toxic debt with AAA rated investments it was a lit fuse.
The American middle class was erradicated, but that was probably by design.
The intentions of the CRA were not good. As with the majority of any public program, or law aimed at such, the intention is for ensuring political power, and creating another dependent group.
Class warfare is what the left has, it is how they’ve been able to win elections over the last 30 years.
But you forgot the essential
https://uploads.disquscdn.com/images/7b5cc653c82bcda685810a16f6f5ed5488e1de5a2412ef3f3c37cdf582a36981.png
Who would have thought ?
well written & clear. thank you
I must disagree as to the origins if the crisis. The subprime and nontraditional mortgages that triggered the housing boom-bust were primarily financed on Wall Street through private securities and CDOs that were peddled to banks and investors around the world. (More than $1 trillion per year at peak). These mortgages were designed to blow up or require refinancing once their intro rates expired. That became impossible, of course, once home prices stopped rising. So despite the conspiracy stories you hear, the crazy loans had much less to do with CRA and the GSEs, and much more to do with mortgage fraud at origination and when risky private mortgage paper was sold throughout the system.
This has the leftist Democrats hands all over it. In another time period in American history, Obama, Bawney Fwank, Chuckles Schumer, and Peanuts Carter would be lined up against a wall and shot for their treasonous actions.
In 2017 stock markets are hitting record highs.What is the state of real estate now, did property market bounce back to pre 2007 prices or above?
Blame the bankers and Wall Street and the Fed and anybody else you want, but it’s the voters who are mainly to blame. They’re the ones who demand that the government spend itself into debt to pay for their Social Security, Medicare, Medicaid, Obamacare, welfare, food stamps, etc.
The federal government hasn’t balanced its budget since the Clinton Administration and the deficit is expected to grow by another $10 trillion dollars in the next ten years to $30 trillion, and that assumes the economy continues to grow. If we have another bad recession, things will get a whole lot worse.
Heaven help us.
and the globalists wonder why the American people hired Trump as the President…..
put simply… government handouts,and people taking out loans they couldnt afford to pay back. a lot of this shit started with FDR and his “new deal”.
Excellent and well-researched article. It’s unbelievable that all of this occurs while the leftist elite sunbathe in their multi-million dollar estate located in a gated community in Whiteyville while everyone else has to put up with forced, unbalanced multiculturalism enacted illegally and against the will of the host population.
“Predatory lending practices began…”
Bullshit – predatory borrowers who knew damned well they would never be able to repay those loans gladly accepted them, then later on wanted a bail out. Zero sympathy.