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22. Re: Morning Legal Briefs Oct 29, 2012, 18:44 Wowbagger_TIP
 
Axis wrote on Oct 29, 2012, 16:59:
Only the die-hard libs won't admit a simple fact (of which you state you aren't):

When you force banks to offer loans to people who cannot pay them back, and the gov't say they'll back them ALL... KABOOM, welcome to America's bust.

Now this was caused by both both parties, but the vast majority of "what caused it" lies in the Gov't guaranteeing bust loans in first place. Read up on it, I did all that years ago.
Oh god... here we go with the "banks were forced to make lousy loans" crap. No, they weren't. Not only that, but the CRA only covered a fairly small percentage of the crappy loans that were made. Most of the stupid loans had nothing at all to do with it. Nor does it explain the fact that they were making as many loans as they possibly could, even foregoing underwriting to speed up the process.

Now you say it was caused by both parties, but you sure weren't saying that before. What lead to the ridiculous loans was the ability to package them into securitizations which they could then insure via credit default swaps, thereby giving the illusion of no downside. Thing like the CFMA of 2000 allowed AIG to essentially print money by selling insurance on these "AAA" securitized mortgages with no requirement for maintaining any sort of reserve that any real insurance company would have. So when the shit hit the fan, AIG couldn't cover even a fraction of the liability they took on, we see that the banks were lying about the "AAA" ratings, and the ratings agencies are worse than useless, and the whole thing comes crumbling down.
 
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"The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts." -- Bertrand Russell (I think...)
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