Mebbe - but here’s a slightly different take on bankers. Bankers operate on a spread, and the spread is usually related to risk. I don’t think bankers like to lose money, and, like most people, they will jump at the opportunity to make easy money, provided the risk is minimal.
I still believe that the sub-prime market was created by the CRA and dramatically increased when Fannie Mae and Freddie Mac lowered their loan purchasing standard. I seem to recall they used to require 20% minimum down on a mortgage before they would buy it; after 1999, that number went down, at least to 3%, and they started buying no-documentation loans, also.
“Privatize the gain, socialize the loss” - bankers had every incentive to write larger and larger loans, knowing that Uncle Sam would buy the loan and take the default risk off the banks’ books.
I do think the bankers and the real estate industry made the problem exponentially worse by collateralizing the loans as they broke the tie that existed between the mortgage and the mortgagee into numerous parts and sold them off, making it nearly impossible to establish clear title when it comes time to sell the house...
YMMV
““Privatize the gain, socialize the loss” - bankers had every incentive to write larger and larger loans, knowing that Uncle Sam would buy the loan and take the default risk off the banks’ books.
I do think the bankers and the real estate industry made the problem exponentially worse by collateralizing the loans as they broke the tie that existed between the mortgage and the mortgagee into numerous parts and sold them off, making it nearly impossible to establish clear title when it comes time to sell the house...”
Yea, we’re pretty much in synch. The bankers still have their bonuses and mansions (and are not in jail, where they belong) - they didn’t have any skin in the game thanks to government insurance, and then a bunch of TOTAL IDIOTS that were willing to take over their worthless loans.