The Mortgage Meltdown and Who Is Responsible

mortgage meltdown The only time mortgage confusion was higher that it is right now is back when sub-prime mortgages were not known to be the cesspool that we now know them to be. The global economic system has been collapsed by people who were confused about mortgages and didn't know it. Whose fault was it? It was the fault of the sub-prime home buyer. It was the fault of the sub-prime mortgage broker. It was the fault of lazy financial advisors who put their client's money in asset backed paper that turned out to be worth whatever recycled paper goes for and no more. Of these, the most dangerous and most responsible party, the Federal Reserve Bank, is also the malefactor fingered the least.

The Federal Reserve increased the amount a bank could loan relative to the amount the bank holds in deposits. It is hard to argue that the increase to a 30-1 ratio was simple idiocy. Did you see Jon Stewart hammer Jim Cramer, the host of CNBC's Mad Money, on who did this? Well, the answer is, the Federal Reserve Bank did it. Congress must replace the FRB.

Mortgage brokers tried selling a subprime mortgage to any prospect that had a pulse. With interest rates at historic lows (until now, and God help us), mortgages were made to people that mortgage brokers knew could not afford the payments if interest rates were to return to their historic averages.

When the FRB raised the ratio it flooded the market with more money, which went out in loans to unqualified buyers which were then bundled as the infamous 'asset backed paper.'. An other word for a so called toxic asses is a liability. And that's what the government is buying. The government is effectively using your money to buy these liabilities named toxic assets.

Finally, the people who sit and tell CNN cameras that they didn't know that they had an adjustable rate mortgage are simply too stupid to own a home. If not, things that are bad now are going to get worse and they may not ever get better again. Does that sound pessimistic? Good, because if you are not pessimistic now, you are a fool.

Comments :

0 comments to “The Mortgage Meltdown and Who Is Responsible”

Post a Comment


Fashion Corner


Fabrice (55 Avenue Rd., 416-967-6590), the spot for all things French and fabulous, has brought in fantastic handmade bags by Parisian [ ... ]

sept08BuzzGarnier_250 I’ll be the first to admit, I’m a little beauty product obsessed. My bathroom shelves are stacked with loads of makeup and hair care products, and I’m always on the lookout for a new line [ ... ]

Sport Corner


James Toseland´s year of learning the ropes in MotoGP is just four races from its conclusion following the historic round fourteen visit to the Indianapolis Motor Speedway [ ... ]

Food Corner


Want to improve your cooking skills and discover the latest and greatest secrets and tips from our expert recipe testers? Become a member now to access this article and hundreds more. [ ... ]

food Like this Special Collection? Become a member for expert advice on every occasion and cuisine! Whether you stock up at the supermarket, have your own tree, or spend a Saturday afternoon at a U-pick orchard [ ... ]