did the government ask the mortgage companies to finance houses that they knew people couldn’t pay for?
by Mortgage Rates on Saturday, September 18th, 2010 | 4 Comments
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NOPE, it was the mortgage brokers and the big banks like Goldman Sachs.
Contrary to what some people believe, neither the Clinton Administration nor the Bush Administration FORCED mortgage companies to do loans that they did not want to do.
The mortgage companies were driven by one thing: Greed.
A mortgage person a few years ago told me that he didn’t like dealing with people with good (or great) credit. He said that they were too picky and liked to shop for the best rate. He wanted the bad and fair credit people because they didn’t have a choice on whether or not to accept his offer.
I don’t think the mortgage companies needed any encouragement to authorize those terrible loans.
The Clinton Admin & Democrats in Congress put tremendous pressure on banks and mortgage companies to increase lending to “minorities” and “lower income” people. (Read Billy-Boy’s speeches, for pete’s sake — this was little more than a decade ago.) Congress passed the enabling legislation putting Fannie & Freddie on the front lines of easing mortgage requirements. Congress eliminated the Glass-Steagall Act in 1998. Congress enabled bundling and reselling of mortgage-backed paper. None of these things were allowed prior to Clinton Admin!
Banks start making money. Dems get more votes from blacks & other minorities & push for more lending to the bottom of the pile — including eliminating requirements for SSN to obtain mortgage so that illegal aliens can get mortgages! Of course, they cannot legally work, and can always skip town. But the banks are making money off mortgages so they give in to the Dem Congress.
Before you start laying blame around, do your homework. The blame needs to be laid squarely on the Clinton Admin and the Dems in Congress. But for their insane actions, this could never have happened. And it was all done over the objections of experienced bankers and economists.
Of course, once it proved profitable, the unthinking and the unprincipled jumped all over it. Idiots and crooks can always find the best chance to prove they are idiots and/or crooks.