Quote:
Originally Posted by MMM
The deregulation of mortgage lenders like Freddie Mac and Fannie May happened under the Bush administration and the Republican Congress.
The failure of Freddie Mac and Fannie May happened months before Obama was even elected.
Bailout attempts were not what cursed these huge mortgage lenders but deregulation in billions in bad loans. Why lend $200,000 at an ARM low interest rate when you can make 50% more money lending $300,000? The only problem is when the interest changes so dramatically so suddenly, then suddenly you have hundreds of millions of dollars in loans that will quickly default.
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thank you MMM
during the bush era our banks developed a policy of giving out mortgages and loans to almost anyone who applied, regardless of ability to repay... what they essentially figured they could do was to put all these bad loans into a blender, scoop out a handful of them, sell them to international banks with the assurance they were a solid investment...(which is why we were not the only one effected) it was pure deregulation and greed on the part of upper level execs which caused the market collapse
