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'The banks had little to lose. They made the money for originating the loan and then dumped all the risk on the taxpayers. They packaged the risky loans into investment instruments, gave them a great rating, and everyone bought them.'

You just made the case for Banks playing a major role.

-I agree that Gov't played the major role, but that was because of cheap credit.
-Gov't didn't force banks to use leverage.
-Commericial real estate bubble and crash. Gov't policy?
-Worldwide real estate boom from easy credit.
-Private Debt. Companies run higher amounts of debt than before
-The Economy wasn't healthy to start with. We've been using debt and cheap credit for decades. It had to end eventually, and eventually it will.
-Trade policy- Jobs aren't coming back.
-Private sector rating agencies failed.
-The Banks failed to actually do their job of checking the financial history and credit potential of the consumer. Gov't did't force them to do a that.

Look up the article in my post to Volunteer. Your wrong! Barney Frank and Chris Dodd single handily forced the banks to lower requirements and with the power of their offices saw to it that that happened. Why do you think neither one of them are running for reelection. The facts were coming out on them. They probably could have been the target of congressional or criminal actions. If we knew the facts we would probably have tared and feathered them and then run them out of town.

The Banks failed to actually do their job of checking the financial history and credit potential of the consumer. Gov’t did’t force them to do a that.”””

Sorry-—but Janer Reno did exactly that.

I still remember her press conference where she stood up and told the banks that she would use the Justice Department to sue them if they didn’t “ give people a chance to own their own homes”. Carter created the CRA and demanded that even welfare and food stamps were to be considered as income. Loans were given to people who didn’t have the credit history & work history & ethics to even buy a T-shirt on payments.

I can remember real estate people that cringed with all such activity. One said “IF you could fog a mirror, you had to get a loan,” Some people coming into title companies could only sign an “X” !!!!!! They could not read nor write!!!

A loan was given on a $650,000 house in Fresno, Calif., to an illegal immigrant who was a strawberry picker!!!
He & his family got irate & yelled loudly when the place was foreclosed on!!!

Every single bit of this whole mess can be traced back to Jimmah Carter and the CRA. Banks & depositors were victims.

-The Banks failed to actually do their job of checking the financial history and credit potential of the consumer. Gov't did't force them to do a that.

As a matter of fact, government did.

If you read the article, you'll recognize that the banks were forced to take on poor credit risks and were threatened with regulatory consequences if they did not.

Indeed, banks were pushed to have a quota of what were referred to as NINA loans -- no income, no assets.

When the banks still resisted, Fannie Mae and Freddie Mac agreed to buy the loans -- transferring the banks' liability for bad loans to the taxpayer...en masse.

Then, in order to get more money -- to buy more bad loans -- it was Fannie Mae and Freddie Mac who packaged the loans and re-sold them, creating the mortgage derivative market.

It is because the banks were, in fact, doing their job -- trying to restrict loanss to buyers who were creditworthy that the government started distorting the market.