Posted on 06/14/2008 10:29:21 PM PDT by TigerLikesRooster
You are forgetting that it was not sold as “bad paper”. It was sold as “AAA” rated paper. Think Treasury Bonds that pay more interest. That is what investors thought they were getting. They had not clue they were buying junk bonds. They were defrauded, pure and simple, by the rating agencies who rated them at “AAA”. That is who bought the bad paper — conservative investors looking for a modest rate of return on a bullet-proof investment about as safe as cash.
OK....who are the Rating Agencies??? NAME NAMES!
http://en.wikipedia.org/wiki/Bond_credit_rating#Credit_Rating_Agencies
Wikipedia is not the most accurate, but they are the most convenient.
No. The CRA had nothing to do with the no-doc loans or any government regulation.
What happened in the credit market is what happens when the shift of the risk moves to other people. Banks outsourced the job of approving homeowners for loans to the mortgage brokers. The brokers got paid regardless if the homeowner defaulted or not. The Banks pooled those loans and sold them off, so they would get paid regardless if the homeowner defaulted or not. Ibanks repackaged those loans and sold them off, so they would get paid regardless if the homeowner defaulted or not. Hedge Funds, Mutual Funds and Pensions would buy those loans with other people’s money and get paid regardless if the homeowner defaulted or not. So the risk is passed to the two parties with the least amount of information - the average/sub-prime homeowner and the investor.
There was too much cash in the marketplace after 2001 (Bush Tax Cuts, runaway GOP spending & Fed theory) and when the stock market became too expensive, the money moved to corporate bonds, when that got too expensive it went to prime mortgages, then Alt-A, finally to subprime.
The government didn’t force anybody to do anything.
According to some friends who were in the middle of that mortgage market they were told their rejection rates were too high for minorities and they were ‘encouraged’ to approve mortgages for them.
I don’t think the government forced a regulation on them but they certainly were encouraged to do it.
Your friends are lying to you.
I told everybody here more than a year ago that the subprime problem was an illegal alien problem, but all these experts insisted otherwise (http://www.freerepublic.com/focus/f-news/1805625/posts).
Told ya so!
Your friends may lie. Mine don't.
http://www.city-journal.org/html/10_1_the_trillion_dollar.html
You didn’t even read that article.
So my friends are liars and I don’t read articles I ping you to.
Boy oh boy am I glad I’m not married to you.
you and me both.
The real problem behind the sub-prime meltdown was the passing off of risk to the least knowledgeable participants - the borrowers and the investors.
Loans originating from Mortgage brokers and bought and repackaged by banks never counted in the CRA’s tally.
So your shyster friends who were processing no-doc loans they knew the customer could never pay back are the real criminals in this situation, they are just trying to pass the blame onto black people.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.