4
73

[–] Lag-wagon 4 points 73 points (+77|-4) ago 

How I see it is the people who were giving out loans saw, on paper, these people would not be able to pay it back. Then gave the loan anyways. Then sold the loans to get rid of them.

14
32

[–] creflo 14 points 32 points (+46|-14) ago 

They were coerced into making ill advised loans to unqualified minorities by zealous government agencies which threatened discrimination charges.

Hard to blame them for trying to offload them.

4
22

[–] The_Only_Other 4 points 22 points (+26|-4) ago 

This is completely untrue. Banks lent to under-qualified people of their own accord without any regard to whether or not the debtor could repay because they could bundle bad debts, slice them up as derivatives, offer a small amount of security on them to get a high credit rating, and sell them to unsuspecting customers all over the world.

Most of those loans that went to the under-qualified minorities were issued directly from federal government agencies or programs (or they re-imbursed banks in some way or another for making the loan).

The biggest failure on the federal governments part in all this was creating overly complicated regulations that led to a handful of super-powerful financial institutions taking over the industry, wielding undue influence over the political process, and creating overly-complicated financial products with rules that no one can understand, while simultaneously knee-capping the federal government in its ability to police or even understand the industry that it had created.

[–] [deleted] 8 points 16 points (+24|-8) ago 

[Deleted]

[–] [deleted] ago 

[Deleted]

2
-1

[–] shakin_my_head 2 points -1 points (+1|-2) ago 

This is it exactly. Bill Clinton got rid of that stupid Glass/ Steagal act because those guys didn't know anything. This led the way for government backed loans anf the banks were then encouraged to give them out. Obviously citizens played a part as well but overall I place the blame on politicians.

0
21

[–] DrJungyBrogen 0 points 21 points (+21|-0) ago 

The mortgage crisis was a direct result of unregulated derivatives, collateralized debt obligations, credit default swaps, sneaky shit from the ratings agencies, investment banks and their people in the government.

If you are not familiar with these terms, I think one of the easiest to understand explanations is in the movie 'Inside Job'. Don't let the fact that Matt Damon narrates it sway you from seeing this documentary movie. It shows you just how deep the rabbit hole goes.

3
2

[–] Spear1000 3 points 2 points (+5|-3) ago  (edited ago)

The fundamental issue was that the government backed absurd loans to people so people were putting like 5% down on a house and just buying it in the hopes that it would rise in value and they could sell it. Yes there were financial products build on top, but this really came down to absurd loans and the people buying them. Then when housing bubble popped, these people were all under water and couldnt afford what they bought, the securities attached to them also defaulted.

3
4

[–] CheeseStain 3 points 4 points (+7|-3) ago 

I think that people are responsible for their own actions. Home buyers should have know that they couldn't payback the loans and gotten smaller loans.

The mortgage companies are also to blame as they were pushing loans on people that they knew couldn't pay them back. I bought my house during this period and our loan officer kept pushing us not to put 20% down because "nobody was doing that." They definitely shouldn't have been bailed out.

I got no sympathy for anyone involved.

0
6

[–] 4410147? 0 points 6 points (+6|-0) ago 

The ones I have sympathy for are the people in the broader economy who got shafted. They played no role in it.

0
2

[–] The_Only_Other 0 points 2 points (+2|-0) ago 

I think that people are responsible for their own actions. Home buyers should have know that they couldn't payback the loans and gotten smaller loans.

While I will generally agree with you on that point, lenders were intentionally being deceptive in the conditions of their loans. A buyer may have taken out a 30-year loan with payments of $1500/month (just an arbitrary number) after you in factor, say, 5% interest but been unaware there were provisions (intentionally hidden or obfuscated) that on the third night of a full moon the bank could arbitrarily jack up the interest rates to 20-30%.

Not to mention there were thousands of people who were making their payments as agree and still had their homes foreclosed on because the banks couldn't keep track of their own shit.

0
1

[–] rspix000 0 points 1 point (+1|-0) ago 

Except the only people who our best-money-can-buy politicians held responsible were the taxpayers. Banksters got a pass in our crony capitalist system.

1
48

[–] IWHBYD 1 point 48 points (+49|-1) ago 

From what I understand, banks gave loans to a lot of people who should have never gotten them, then bundled all those bad loans into financial packages and mislead investors about the risks of those packages. In a way the people who defaulted were blamed as most of them can't get credit any more. I think the issue is that the people at the banks who actually engineered much of the disaster didn't face any real consequences for what they did.

0
5

[–] omegletrollz 0 points 5 points (+5|-0) ago 

This is a big part of it but I would also like to point out that there were also a few entities responsible for making sure those investments were safe or at least labeled unsafe. They kept giving triple-A ratings (the best possible ones) to investments that proved to be among the worst in history. I believe to some extent the government was responsible for making sure these entities were doing their job properly (not because I believe it's the government's job to do it but because I think the US government assumed for itself that responsibility at some point).

Film about it (not a documentary) http://www.imdb.com/title/tt1596363/

[–] [deleted] 14 points -1 points (+13|-14) ago 

[Deleted]

1
18

[–] Gracchi 1 point 18 points (+19|-1) ago 

Show me a bank that was punished for being more strict on loans.

0
1

[–] 4410162? 0 points 1 point (+1|-0) ago  (edited ago)

I could see how the government was the one hyperventilating over 30% YoY gains.

0
0

[–] rspix000 ago 

3
-2

[–] CatNamedJava 3 points -2 points (+1|-3) ago 

They shouldn't get credit. They are un trust worthy borrowers

4
20

[–] Vladimir_Komarov 4 points 20 points (+24|-4) ago 

In their defense, a lot of those folks got suckered into bad deals with shady sales tactics.

7
4

[–] caelaorn 7 points 4 points (+11|-7) ago 

It doesn't take a rocket surgeon to figure out you probably shouldn't get a mortgage that's 10x your yearly household income even if you're approved for it.

I was pretty recently out of college at around the height of those shenanigans and looked into buying a house with my college roomate. We got pre-approved for something like 800k at less than 100k combined yearly income for people with basically no credit.

If you look at that and think it's reasonable - you deserve some responsibility for what happens.

1
5

[–] The_Only_Other 1 point 5 points (+6|-1) ago 

This is only half the story. Many banks used intentionally misleading sales tactics to sucker people into to loans they thought they could afford and then turned the tables on them, jacked up their interest rates because of some arbitrary, obfuscated provision in the loan contract, and threatened to foreclose.

Not to mention that there were thousands of cases of individuals who were making their payments on time and still got foreclosed on because the banks couldn't keep track of their own shit.

[–] [deleted] 4 points 1 point (+5|-4) ago 

[Deleted]

0
0

[–] 4411477? ago  (edited ago)

I'm in a jurisdiction in the middle of a housing bubble.

From where I'm standing it's the banks, 100%.

The problem is, idiots are of course going to buy way more house than they can afford. Their idiot friends and idiot families are telling them housing can only go up, and that you're going to get left out if you don't buy now.

You can always find more idiots. Look at all the payday loan places. They're everywhere, and they're stupid as hell, but if you offer idiots money, they'll take it because they're poor and stupid.

It's on the banks (the ones who stand to lose millions of dollars and destroy the world economy if they aren't responsible) to act as gatekeepers for the money they've been given license to conjure out of thin air.

0
14

[–] alalzia 0 points 14 points (+14|-0) ago 

WS sold AAA rated junk

1
12

[–] xeemee 1 point 12 points (+13|-1) ago 

and who approved those loans?

1
4

[–] alalzia 1 point 4 points (+5|-1) ago 

The bankers work for themselves not the institutions that pay them , they are receiving bonuses for giving out loans so every shitty deal got approved .

3
0

[–] CatNamedJava 3 points 0 points (+3|-3) ago  (edited ago)

Gullible bankers who were too trusting. We need to protect this people from preditory borrowers

0
3

[–] xeemee 0 points 3 points (+3|-0) ago 

where's the '/s'?

[–] [deleted] 2 points 11 points (+13|-2) ago 

[Deleted]

[–] [deleted] 1 point 11 points (+12|-1) ago  (edited ago)

[Deleted]

[–] [deleted] 1 point 9 points (+10|-1) ago 

[Deleted]

1
1

[–] CatNamedJava 1 point 1 point (+2|-1) ago 

"We need to cut government spending, but not two of the largest outlays social security and medicare"

1
2

[–] Zardoz 1 point 2 points (+3|-1) ago 

Agreed.

In my area the Baby Boomers sin is that they decided to sell their homes (and many homes inherited from their parents) but they decided to wide-open the market to any Hong Kong millionaires as they could get in.

Then sold the home. AKA sold the inheritance. At outrageous prices. Then told their kids to work their way up 'like they did' which apparently is by paying for college by teaching tennis lessons or waitressing on the weekends, simply joining a government union like all of their white baby boomer friends did together and so on.

But instead all their kids (all from divorced families and no family homes to inherit) just realized they will NEVER buy a home when a home that WAS 75,000 for the then-young baby boomers in 1977 (adjusting for inflation etc) is now 1.4 million and the East Indians who own it don't want to sell it because its for their children to inherit.

but anyways yes fuck Baby Boomers - they are what sold out the Western World and are still determined to kill it before they die off in the next 10 years. First to rich foreigners and now to flood with Muslims.

1
8

[–] LetsBeNakedOutside 1 point 8 points (+9|-1) ago  (edited ago)

Lemme tell you a story:

I was just out of highschool, working a drive-thru job. I was working inside, and this guy comes in and is really chatty with a lady. At first I'm just thinking these are really friendly people. It does happen once in a while after all.

I sell him this stuff and he hands me a card. He asks me what kind of house my dream house is. I tell him I make $8.50/hour(implying I can't afford a house). He says that he seeks houses to people like me, and his wife (the lady next to him) does the financing.

I repeat myself, and tell him I can't afford a house because I can barely afford anything. He says that it's cool, what kind of house is my dream house. I mention am area of town that is higher priced and has giant Victorian houses, easily $250-350k+.

He then tells me he can 'get me into it no problem.'

It was 2004-5. Not even the height of the market bubble 2006-7. I've only had that many red flags go off in my head outside of gas stations at night while drunk.

Needless to say, I didn't do it. But I wasn't surprised when I started hearing about the crash either though.

0
6

[–] Zardoz 0 points 6 points (+6|-0) ago 

Huge props for asking this question.

I was square in the headlights of the mortgage crisis and paid for it hardcore but now let me tell you about one of the most amazing conversations I had. It was an 8 hour conversation and it was on the very day Obama was elected and the 1st biggest story was MORTGAGE COLLAPSE.

By coincidence I was sitting for an 8 hour flight back to the USA with of all people a Mortgage Broker. Dont' worry guys, he wasn't escaping with your money. Actually he'd lost his job and at age 32 was flying back to his hometown to get his aging grandparents to pick him up and stay at their house till he found a new job.

"Flat screen TVs". When I asked him what was going on he simply said "Flat Screen TVs".

He was barely amused at all the talk about 'whos to blame' and 'freddy mack' and just endless talk about who did this to us! Yes yes the bankers.

To this day I wish I could have recorded this guy because he put this in such easy to understand ways, better than I can put it by memory but basically:

People who COULD afford the homes bought the homes. They were able to afford them. If they wanted to afford them. Absolutely and he knew it because it was literally his job.

Actually his job was more specifically to do with loans but point he made was his job was literally to take every account of all their income, expenses, assets, debts and so on and see if they could afford a flat screen TV and/or 2nd vacation.

So people, who ABSOLUTELY CAN AFFORD HOMES bought them and then decided that is was an absolute right and necessity to have furniture that matched the house.

And they decided that they absolutely needed to watch 'renovation porn' and then do their kitchen to raise the value of the home which it doesn't but anyways..

So they cranked up their credit cards.

Then the MINUTE they'd paid enough into their homes they started getting money OUT of their homes. And they did so immediately and to the maximum.

Flat Screen TVs. Not such a big deal now but in 2006-2008 it was an obsession! it was a right of passage, it was a civil duty it was mandatory, a hobby, a craze and if you did not have one bigger than your neighbour and 3 per household then what was the fucking point of living?

He uses 'flat screen TVs' as the 'posterboy'. It was this and new cars, 2nd cars, 2 vacations a year. all on credit and the house and then the car payments.

People did that. We did that. That was us and we fucking well knew we were doing it and so did the 1000s of clients he processed and again and again and again:

almost ALL of them could have kept affording those houses IF they accepted living relatively 'house-poor' and waiting 1 more year for a flat screen TV. Then buying 1 flatscreen TV not 3.

That excellent movie The Big Short mostly goes on bankers (though it does have a segment pointing at the example 'stripper who owns 5 houses') but The Big Short doesn't focus on people except in one little 'nod':

There is a great little scene where they find a totally abandoned house. I mean, the people just literally left their home, the furniture still inside, still food in the fridge, they didn't even clean up a thing... except they took ONE thing......... The Flat screen TV.

Flat screen TVs.

[–] [deleted] 0 points 1 point (+1|-0) ago 

[Deleted]

0
2

[–] Zardoz 0 points 2 points (+2|-0) ago  (edited ago)

ya sorry he put it way better than that. and in such a confident step-by-step explanation.

He was aware nobody was going to listen to him. I even remember someone on TV suggesting the people were to blame and the journalist just skewering the guy with "ARE YOU SAYING ITS THEIR FAULT!?" and the economist was basically terrified and shut up. It was not the time for anyone to tell any of us this truth. Holy hell people were killing themselves. So we just wanted to let them know it was 'banking schemes'.

And i really do understand it. It really wasn't the time for us to hear that ugly truth :(

that is was us. that we did it to ourselves.as much as anyone did anything 'to us'.

load more comments ▼ (30 remaining)