The Fox news channel covered this earlier in the evening, some professor-like man talking to the guy whose hour, or half-hour it was...covered all the bases you covered here, from FDR, LBJ, Carter, right up the line. The mystery is why would the financial institutions buy all these risky mortgages, apparently group them together, and sell? them again in increasingly larger groupings of mortgages...and sell them to who? And why? Why buy mortgages that were rated at something like 50% chance they’d fail? And who would buy ‘em? Shrug.
The bundle is a way of mixing different grade paper.
For example you can bundle low risk mortgages with high risk mortgages to create a blended value and risk.
The biggest issue is that people like Reins thought that property was such a good investment that the risk ratio for these instruments only needed to be 2%. Huge mistake.
They also didn’t account for speculators driving up new building and thus creating a surplus of homes in many markets this ultimately helped the bubble to pop and as soon as you have a home that is worth less than the mortgage and you have no down payment at stake you are now basically in the same position as a renter so you might as well leave and pay less for more somewhere else.
It amazes me that we continue to repeat history. Sheeple, sheeple, sheeple.