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This isn't all the banks fault. No one was verifying any of this.
Exactly. That's what happened with the GSEs' automated underwriting system. Nothing was verified. I already posted the link that said the GSE's' underwriting system approved 65% more loans than manual underwriting would have. All of that extra 65% was high risk.
They simply made stuff up. There were no standards where people with no verifiable income were acceptable. In those cases Countrywide (and others) simply made stuff up.
This isn't all the banks fault. No one was verifying any of this. To try and set the blame at what levels is a waste of time. This was a complete failure by the government and the banks.
It was everyone's fault. From first time homebuyers to the middle class to mortgage industry to the overall financial sector to the government.
None of the checks and balances of the private sector (ratings groups and plain old fiduciary responsibility) or the public sector (deregulation).
The GSEs (Fannie and Freddie) underwrote the loans. It was their "automated underwriting" system that was used. I already posted the link.
You don't get it. This didn't get toxic until all the subprime loans started getting bundled up (CDOs) and rubber stamped AAA or AA by PRIVATE rating agencies.
The government NEVER made the financial industry package the subprime loans into CDOs, THAT was the private sector's doing.
I never said that. I've said the opposite. To try and defend the government here is equally as stupid. Who was supposedly regulating the ratings agencies? Who allowed them all to walk away with their millions of dollars holding no one really accountable for any of it?
Why did the government do this? They were all in on the scam.
Deregulation of the late 90's and early 2000s and the revolving door between government employment and private sector. Kinda strange how them SEC folks that were let go or quit ended up working for the banks in the early 2000s.
You don't get it. This didn't get toxic until all the subprime loans started getting bundled up (CDOs) and rubber stamped AAA or AA by PRIVATE rating agencies.
Private rating agencies saw GSE endorsements and thought all was good. But we know post-mortem that the GSE automated underwriting system approved 65% too many loans, all of that 65% being too high risk.
I have no clue as to why you would ask me this as they are all guilty.
If you bought a MBS that was riddled with fraud were you guilty too? If you bought something made in China that the trade deficit was financed buy buying the Mortgage backed securities are you guilty? How far up the food chain does the guilt spread?
Quote:
Originally Posted by pknopp
I never said that. I've said the opposite. To try and defend the government here is equally as stupid. Who was supposedly regulating the ratings agencies? Who allowed them all to walk away with their millions of dollars holding no one really accountable for any of it?
Crony capitalism. I'm not saying the government wasn't dirty.
Quote:
Originally Posted by pknopp
Why did the government do this? They were all in on the scam.
Group dynamics. A Real Estate bubble is a living thing. It will change the laws to meet its needs, it will overcome everything in its path, and the only thing that will stop it is massive defaults.
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