Quote Originally Posted by xring View Post
I believe this to be a incorrect statement. In times past the lender on the property remained holder of the loan begining to end. The lender had a interest in the property being fairly valued. What changed is that the lender quickly sold the loan to investment banks. They had no responsibility or loss if the value was not correct or the loan defaulted. The investment banks in their turn quickly combined these mortgages into debt derivitives that they sold to pension funds who liked them because the ratings agencys had bestowed them with a AAA rating. No responsibility or loss for the investment banks eithor. The investment banks were in fact clamoring for subprime loans, they made more money off those. The fact that they would buy every shitty fraudalent subprime mortgage out there was the primary driver of the ongoing subprime event
It isn't an inaccurate statement, it's what started it, and will start it again. The part in your statement is simply the automatic reaction of the investment bankers and mortgage writers to the first statement. If in the position, would you not buy up federally guaranteed loans? It's automatic profit, that's federally backed. Millions of loans all guaranteed to pay out. It's a big banker's wet dream. The 2 events are not mutually exclusive and the second couldn't have happened without the first.

Do I like it? No, but I blame the government for creating that environment far more than I blame a private capitalist for leveraging their abilities to profit from it.