Banks do not loan money they think they will lose.
Period.
It was ONLY after a lawsuit by Cuomo, and then the GUARANTEE by FANNIE and FREDDIE that they would cover these loans that they jumped into this.
THEN the back and forth sales and inflation of prices happened. If you were to look at a price graph and compare the dates to this info you will see a massive upturn after Cuomo and Barney Frank and Dodd and CLinot did this.
What are you here for? To help democraps?
You are the most uninformed financial idiot around here. That is exactly the point. The banks did not stand to loose on their loans for the simple reason that they thought they had sold the loans on where they were securitized and divided into tranches which were further securitized and insured by the likes of AIG - recall that name?
So the banks made their fees up front, originating the loans and selling them on for others to be at risk for the losses. By others, I mean the pension funds that ultimately hold these things, and oh yes, the taxpayer, who it turns out underwrote AIG even when we did not know we were going to do so.
And banks are like sharks, if they aren't loaning they'll drown. You have to remember that the bank is paying interest out on all the money they hold, so they can't hold it long. They need to get it loaned fast and make that spread, otherwise they sink to the bottom quick. It's just the way a central bank/fractional reserve system works. It's a structural issue and has no political party.