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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: Brumar89 who wrote (150824)	1/2/2009 2:20:07 PM
From: geode00	Read Replies (1) \| Respond to of 173976

You have zero grasp of the problem. The problem is not the lending of money, it is the disconnect between risk and reward created by the securitization of debt and the utter failure of right wingers to regulate and protect capitalism from outright fraud. I know you do not have a very good understanding of finance but you should be able to comprehend that lending money rationally is the issue not the wealth or lack thereof of the individuals getting the loan.

To: Brumar89 who wrote (150824)	1/2/2009 2:40:35 PM
From: Steve Dietrich	1 Recommendation Read Replies (2) \| Respond to of 173976

Too much loaned to poor risks creates a problem for lenders. This has virtually nothing to do with the problem we're in. Banks wanted to loan to anybody and everybody. Why? Because the underlying asset, the collateral, real estate was going up, up, up. Loaning to a poor risk was great for the banks. If the borrower defaulted, the bank got the property and resold it for a higher price than the original loan. As long as property values were going up, the banks couldn't lose. They wanted to loan to as many people as possible. The banks successfully lobbied against regulations that would've limited their ability to make real estate loans. Everybody begged, borrowed, and stole to get in on the real estate boom. Home owners borrowed against the equity in their homes to buy more property. As those went up in value, they borrowed more and bought more. Speculation was rampant. Leverage was out of control. Once property values started coming down, the house of cards collapsed, like any bubble. Trying to blame low income borrowers for the rise and collapse of the real estate bubble is beyond ridiculous... SD