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[–] 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.

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[–] 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.

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[–] 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.

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[–] 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.

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[–] 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.

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[–] 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.

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[–] 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.

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[–] 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.

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[–] 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.

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[–] 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.