Ferrari Mailing List: Re: Opinion - Rick's Failed Economy Comment

[Jim Conforti (lndshrk]

At 09:31 AM 5/20/2009, Mauricio Mesa wrote:

> Re: While partly true in that people lied on their applications to 
> get these loans, on the other side the banks knew that they wern't 
> good for the money but because they wanted their comission they took it in.

 (Note: I really love the demonization of "Oil Companies" and "Banks" - are
  you shooting for a job w/ B.H.O. or Hugo Chavez?)

  Really.. it was THE BANKS that knew?

  No, actually it wasn't.

  Most of these loans that have gone south were sold by MORTGAGE BROKERS
  who wanted the commissions.  Not BANKS.  Around 70% are sold by BROKERS
  not BANKS.

  It is true that banks were emboldened by the concept of CDO and risk-swap
  to lower their credit standards.  Mortgage BROKERS performed all sorts
  of shady 'math' to qualify people for the now lowered standards.

  In many cases - downright FRAUD.

  Loan standards, BTW, that were initially lowered BY THE GOVERNMENT on the
  basis of "Community Reinvestment"

  (See: Fannie Mae and Freddie Mac - and Jimmy "stag-flation" Carter)

  The Mortgage BROKERS (not BANKS) - these are SMALL businesses usually,
  not "BIG Corporations" - were the ones who laid the final straw upon
  the camels back in chasing commissions.

  Oh, and it's already been proven that "the government" had the right,
  had the authority, to "regulate" the entire nonsense of swapping risk
  and CDO's.  They simply failed to do so.

  They failed to exercise the regulation authority they had.

  As is the typical liberal solution - the solution is "More regulation".