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Liar Loans That COLLAPSED U.S. Housing Bubble Exposed in Canada!

from The Money GPS:

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1 comment to Liar Loans That COLLAPSED U.S. Housing Bubble Exposed in Canada!

  • Ed_B

    I know that a lot of people blame the banks for all that crazy loan BS back in the mid-2000s but almost all of that was due to the US Gov forcing the banks to either make those loans to “people of color” OR be dragged into court under the anti-discrimination laws.

    So, the banks caved and gave the feds what they wanted… equal opportunity in home loans. Problem is, many of the borrowers did not have the financial resources necessary to repay those loans or maintain the property. The banks, of course, knew this going into this mess but caved in anyway because they also knew that the real fault was the US Gov and that if this came to light, it would make them look bad. To keep from looking bad, the US Gov was fully prepared to spend as much of We the People’s money as was necessary to prevent that from happening. So, they bailed out the banks to the tune of a few hundred billion of our dollars. So much for equality in making loans.

    Banks tend to be color-blind in terms of to whom they loan money. They only see one color and that is the green color of cash. But, like any other business, they want to KNOW that the
    business they do will be successful. This means that the people who borrow money from them and their depositors have the ability to repay those loans, in full and on time. Yeah, that’s asking a lot, isn’t it? On the other hand, as a depositor, I want the banks to be sure that the loans they make have a low default rate and that means that only about 3% or less of the loans fail.

    Having the US Gov getting involved in banking (or any other business) is just asking for trouble. This is because the US Gov knows a lot about politics but squat about just about everything else. Their balance sheet shows that they have no clue how to run a business but they never let that stop them from diving in head-first and screwing up everything they can get their hands on. This virtually always degenerates into a massive cluster-flop, which is exactly what happened in 2008. Gee, thanks Uncle Sam. Way to go. Idiots. 🙁

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