Lunch, With A Side of Hurt

James Casford says :

Thank God the Clinton administration relaxed the lending laws so all of this could happen. Banks were forced to approve loans that should never have been granted and people "bought" homes with no down payments whatsoever. What ever happened to saving most of your life to come up with a sizable down payment and a realistic monthly? These people are reaping exactly what they should have expected. Unfortunately it is affecting us all.

Dave says :

only the tip of the iceberg what is coming no man no woman will ever forget not even the grand kids of the kids alive today will ever forget.
nothing can stop what is coming

Banker says :

James, in his post above, says "Thank God the Clinton administration relaxed the lending laws..." Clinton continued the policy of deregulating the banking industry. Deregulation also decriminalizes certain practices. When the regulation was removed, the oversight and any enforcement measures went with it.

James says "Banks were forced to approve loans..." Banks, like all corporations, are in business to make a profit. James is suggesting that banks were forced to make loans against their own best interest. Or the banks were forced to become a failure. The question now is how do you force a deregulated bank to compromise its own survival? To force, suggests that someone or something was regulating or directing the bank's behavior in conflict with its profit driven instincts.

The only way to override the bank's need to make a profit is to assure the bank upfront that it will be more than compensated and covered for any losses as a result of taking on such huge risks. The banks would not have stepped out there without some reassurance from someone that there would be some safety net in place to minimize the risks. The need to stay profitable is just too strong to overcome any other way.

Andrew says :

And you blame Wall Street why, Pat?

Last I checked anyone from small local banks and Credit Unions to your large Wachovia banks could make loans. This includes banks that were and are publicly owned, therefore the need to show consistent profits TO Wall Street, but in no way entirely motivated to shirk lending standards.

No, the blame does like appropriately with The Democrats and Clinton administration. The Community Reinvestment act combined with the repeal of the Glass-Steagall act (enacted post-Great Depression to prevent THIS specific scenario) was creating a loaded powder keg to blow the world wide open.

Wall Street created the unbrided derivatives that is causing collapse after collapse, but no one but the government pushed interest rates to historic lows. No one but Fannie Mae, Freddie Mac, banks, and the government actually changed lending protocols to "give everyone a home."

People who can afford homes under traditional methods are generally OK under more creative methods because they have the experience and cash to handle Adjustable rate mortgages. It's those who people who could not must a sufficient down payment for the risk OR get under the debt to income ratios, which is a very large % of those who received preferential treatment when receiving lending.

Stop trying to label people so you can "write them off" or "dismiss" them. I'm labeled an independent, have done much research, work in the financial industry, and know the history and future of this. Blaming PARTIES does nothing to put this in the proper perspetive in realizing that greed coupled with much of what conspired during the depression was repeated.

Sasha says :

The housing crisis is the inevitable result of the bubble. The bubble is the result of the monetary policy of the Federal Reserve.

In reality, all three parties share the blame - the low income lending laws, sheisty wall street types, and the Fed. But I would argue that the nexus of the whole thing was the Fed causing people to make bad decision because they thought the market was only going to go up.