What was the one pivotal thing that triggered this Global financial meltdown? May 1, 2010
Posted by Banking in : Politics , trackback
Did it have something to do with mortgage lending to people who didn’t have a down payment at sub prime rates with a high credit risk? Who pushed these policies?
By: pigletscafe
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By: pigletscafe
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Republican rule in the USA.
Everything they touch turns to ****.
Juggernaut bankers.
All assets and no cash. A paper economy with zero tangible worth.
hmmmm….organization like oh i don’t know…ACORN?
Yes, it was failed liberal social engineering. There is no such thing as “affordable houses.” There is such a thing as lending money to people who can never pay it back.
Barney Frank and Chris Dodd were the “masterminds” of this mindless policy.
It had a lot to do with those home loans, those where Carter and Clinton’s babies, forcing it on the lending institutions. When people don’t have to work and save for a down payment most of the time they are also not prepared to take care of a home. In most cases repo house are trashed !
I think 9/11
The repeal of the Glass Seagel banking act of 1932 .
Banks buying unregulated and falsely insured CDOs filled with toxic mortgages, and assuming that home values would continue to rise forever to cover the risk-
Phil Gram helped push for the deregulation that made this possible-
It was the real estate bubble along with the mortgage lending practices. I have been astounded by what I have heard over the last 5 years of people taking incredible risks with their property. From buying too much house to interest-free loans thinking they were going to be able to turn around and sell the property and make a killing.
I saw this thing happen in the late 80s. I actually made the mistake of getting into the market in 89 because I thought we were at the bottom. 8 years later I sold that property at a loss.
The difference between now and the the late 80s is that the banks were only lending to people that could pay back the loan. There were very strict lending guidelines back then. Thankfully I stuck to those rules as I bought successive homes. So now I am not one of those facing foreclosure and I still have a good amount of equity in my home.
The downside is I don’t get a bailout.
I think Repackaging and bundling of bad mortages used to secure larger scale borrowing and lending.
yes , democrat stupid congress that wasn’t thinking straight, never thought of the consequence that it will bring in!
and i can’t wait to see how much more damage are they plotting against the people !
Bill Clintons fiscal policies, and the Democrats roadblocking the Bush administrations attempts to correct them in 2003.
Check out Para. 8 of this NYTimes article from 1999 and the statement by Peter Wallison where he discusses how a bailout is gong to be needed. YES THAT WAS IN 1999!!!!!
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By crashing the US economy it took all the international investors with it.
If you really want a good answer, read this. It was published last December, but nailed both the cause and the aftermath. Funny thing is, ACORN, Carter, Clinton, the CRA, Fannie Mae, Barney Frank, and Chris Dodd aren’t mentioned as causes. Neither is Bush, repeal of the Glass-Steagall act, or deregulation. Government in fact isn’t given as a cause at all. That certainly won’t be a popular view at either end of the political spectrum, just the right one.
Mortgage loans made to borrowers NOT qualified to pay them back. The loans were made for several reasons.
1st- Democrats in Congress refused to allow lenders to say NO to borrowers who did not have the ability to pay the loans back. They thought “Everybody-no matter income level–deserved to own a home”> So underwriting guidelines were all but done away with and everybody qualified for a loan.
2nd- Democrats in Congress said if the Mtg, Banker did not make a loan to Everyone–they would be closed down.
3rd- To make up for not inhousing non-qualified borrower loans (who wants to keep a worthless loan)–lenders packaged up the qualified and non-qualified loans into packages and sold them off to investors world wide as if there was no risk in the entire package.
4th- Once some of these packages started not performing (paying back as agreed) the investors wanted completely out of All of them. So the resale market for all loans dried up because no one knew which borrowers were qualified and who was not in these packages.
5th When this market dried up-all lending dried up because everyone started to hoard their cash, since they could sell loans to generate cash to then reloan to another borrower.
6th- With no cash coming in- investors could not pay their creditors (employees, electric bill, insurance bill, building payment/rent…) hence the crisis was born.
This is in no way a complete picture but it is as complete as I can made it without writing a book. Besides, even Treasury Sec. Paulson and FED Chair Berninkie do not know what happened, and these are the guys who are supposed to fix it. They and their buddies caused it, so there you go–welcome to the Financial Brain Trust who knows better than the working people of America–any wonder we are MAD.
I think The international banking conspiracy.