JoB
maplesyrup…
when banks had to assume the risk for their own mortgage failures.. they actually counseled their customers to write mortgages their assets and income could support.
When they were allowed to pass that risk on to others and realized the potential for short term profit in individual mortgages.. they counseled their customers to write the mortgage that would provide the greatest profit for the them… regardless of the foreclosure risk.
What they overlooked was that when their priority changed to making as much income as possible out of individual mortgage transactions as quickly as possible they exponentially increased the possibility that loans would default… increasing repossessions and devaluing assets.
I imagine in the beginning it was fine.. a few toxic loans packaged with predominantly sound loans.. but as the practice escalated.. the percentage of toxic loans to sound loans increased and yet the bond ratings on those packaged loans didn’t change.
When that was compounded by insurance policies against the failure of those packaged loans it set the stage for a complete financial meltdown.
So who was left holding the bag?
Taxpayers, Individual homeowners, pension funds, retirement funds, etc…
Not the banks or any of the financial centers that profited from the policy.
there is a direct cause and effect relationship here…
so explain to me again why we shouldn’t hold the banks that wrote the loans responsible ?