Forum Post: Wall Street was complicit, but governement made the current crisis possible.
Posted 13 years ago on Oct. 20, 2011, 2 p.m. EST by mfx007
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Check wikipedia on the subprime mortgage crisis. It describes a lot of things that went wrong. However you will see that the main reason was that lenders were seeing less and less risk because Fannie Mae and Freddie Mac were writing bad mortgages and they kept assuming bad mortgages from the private sector - all risk was assumed by the government. No Fannie Mae and No Freddie Mac - no mortgage crisis since there would ne no incentive for banks to write bad mortgages. Now Wall Street saw that reduced risk by defacto government backing of mortgages and came up with mortgage backed securities and other things to make matters worse - but the government left the keys in the car, windows and doors open and a signed title on the seat and a sign "free car" in the window. Of course there is no free lunch (car).
Check out my thread title: http://occupywallst.org/forum/most-covered-up-story-of-wall-streets-success-at-r/ posted 1:49 pm today to get a "how was it done" clue.
Nonsense. The bulk of the loans were made by deregulated credit markets. Fannie and Freddy account for a very small percentage of the bad loans. What's more, Fannie and Freddy had moved from explicit guaranteeing to implicit guaranteeing (meaning there was LESS guarantee that government would back these loans up than before).
http://www.obamaftw.com/blog/mortgage-crisis/fannie-freddie-mac-community-cra-crisis
It's also time for strong leadership and a single, focused, concise message.
Yes, it's why we must take this fight to Washington, in numbers that would make all previous marches pale in comparison. We have the numbers, we have the will. It's time all the Occupy groups around the country unite and march on Washington!
Plus, as far as capitilism goes: The govt getting into the mortgage business is NOT capitalism. Capitalism has difficulty working with govt interference. The mortgage crisis (a large part of our current financial crisis - along with huge govt debt) was made possible bt the govt. Not that all govt interference is bad, some regulation is needed, but having the govt perform the function of a bank - that interferes with capilatism
Plus, as far as capitilism goes: The govt getting into the mortgage business is NOT capitalism. Capitalism has difficulty working with govt interference. The mortgage crisis (a large part of our current financial crisis - along with huge govt debt) was made possible bt the govt. Not that all govt interference is bad, some regulation is needed, but having the govt perform the function of a bank - that interferes with capilatism
Wasn't it the reinvestment act or something that made it necessary for them to back loans to all kinds of (bad) credits? It was a move to make everyone have a house.