On Sat, 28 Mar 2009 16:17:56 -0500, Tim Daneliuk wrote:

The U.S. government - in the form of its political rectal warts
like Carter, Clinton, Frank, and Dodd - *distorted* market behavior
by insisting that banks lend to borrowers who absolutely could not
qualify under normal rules. They did this by promising the bankers
they could keep the upside of such lending, but that "the government"
would protect them from the downside when such borrowers defaulted.
This created a perverse incentive for the banks (and AIG as their
mortgage default insurance company) to take lots of risk knowing
they'd never have to eat the downside.

I know you won't believe this, Tim, but the majority of defaulted loans
were made by mortgage brokers thru non-bank finance companies. I don't
recall the exact numbers, but I posted them here once before.

The banks problems were that they bough up the securitized mortgages
believing the housing market would go up forever.

And then there's the speculators who simply walked away when the bubble
started leaking. Or haven't you read about all the renters that are
being evicted because their landlord bailed out?

Trying to blame the CRA just won't fly. It's been debunked too often.
Can you show me language in that or any other law that requires lending
to unqualified individuals.

And it wasn't the government that invented "liar loans" either.

--
Intelligence is an experiment that failed - G. B. Shaw