Re: Obama in TX speech carefully confuses legal immigration with illegal border-crash
I realize FOX told you all about the leftwing meddling in the housing market.
HA HA HA! You can always tell when a lib is panicking - he throws the "Fox" card.
Let me be more specific. The mortgage lenders sold their loans not just to make a profit, but to rid themselves of the toxic debt they had intentionally incurred, thus freeing up liquid capital to fund even more toxic debt and continue doing so until they felt the time was right to stop, but their greed did not allow for them to stop, so they got busted.
For someone who pretends to know so much about the subject, you appear clueless. All primary lenders
>>>EVER<<< do is resell mortgages to secondary markets. If such secondary markets didn't exist, probably not a single 30 year mortgage would ever have been given even to qualified borrowers in normal times.
The financial institutions that bought the debt were doing the same thing but with a twist, they would bundle the loans, divide the interest and sell them as securities which we know as "derivatives", again always planning to sell off the toxic debt before the bill came in, and again, greed prevented this.
How did they do that? By holding a gun to the heads of the people who bought the securities? Noooooooooo..........
The people who bought the securities saw how Fanny Mae, the organization which
>>>CREATED<<< the market for subprimes, was making trainloads of money, and they wanted part of the action - the investment banks responded to the demand. While you're charging everyone and his second cousin with being greedy, you mysteriously leave those investors off the greed bandwagon.
To fund the buying and selling of all these mortgages requires a percentage of liquid capital held in reserve to cover the purceived amount of loan default normally associated with that type of loan and derivative, this is where we get such terms as "AAA" rated. Unfortunately, the loans were vastly overrateddue to fraudulent estimates.
You leave out who made a "fraudulent", as opposed to "wrong", estimate. Anyone who was a victim of fraud has the right to bring legal actions against the defrauders.
To make matters worse, insurance companies, most notably AIG gave out huge policies to cover these loans, over reaching itself, AIG purchased re-insurance. Unfortunately, AIG owned their own re-insurance company, so in effect, they were insuring themselves with their own money.
So AIG was mismanaged - your point there would be what?
With the fall of Leymann Bros. the books of all banks came under suspicion, and, as it turned out, for good reason. The real value of the loans became increasingly obvious, the money trail became much clearer when the derivatives came under scrutiny and the feces hit the blades when it was discovered that AIG did not have the assets to cover the policies on the loans that went worldwide and it was discoverewd that 4 of the top 5 banks in the world were unsolvent. Fannie may and Freddie Mac were only end users, they had nothing to do with the daily selling of mortgages, the impetus was not on serving some government mandate but only the personal greed of an industry whose system of renumeration not only causes but encourages fraud, legal fraud more often than not.
I didn't say Fanny Mae had anything with the daily selling of mortgages, but they were the enablers of those who did, in promising to be a secondary market for those who DID - without that promise, no primary lender would have ever given a single subprime mortgage. The investment banks, as I said, got in in response to investor demand after FM had created the market. And FM created the market on orders from Clinton, whose democrat congress vastly expanded the scope of the CRA in 1992.
In trying to ascribe the 2008 meltdown as something that was due to only the events you describe, you're trying to pretend the whole play was just the final act.
It's about like saying lots of people drowned when the Titanic sunk because the crew loaded the lifeboats slowly. In fact, the Titanic US economy was heading for collapse the moment it steered a course for an iceberg labeled CRA.
