Did FDIC Insurance cause the 2008 Housing Collapse?

[CrusaderFrank]

If banks stockholders were solely responsible for any losses incurred by the bank and were allowed to set their own underwriting standards (it's known as "Free Markets") for the mortgages and loans and securities they bought and sold, would the 2008 Collapse have ever occurred?

(Let's assume for a moment that Fannie and Freddie don't exist and that the US Government was not giving a de facto AAA rating to No Income No Asset loans)

 

[The Rabbi]

Prior to the Great Depression bank board members were personally on the hook for any losses the banks sustained. Made for much more sanity in lending.
People respond to risk. If you can play roulette with depositors' money knowing Uncle will bail you out, why not?

 

[JakeStarkey]

Yep, and all that prevented the banking collapse of 1929 to 1933.

You guys are simply stupid: the inane ability to keep think you can do the same thing over and over, and somehow the result will change.

 

[occupied]

If banks stockholders were solely responsible for any losses incurred by the bank and were allowed to set their own underwriting standards (it's known as "Free Markets") for the mortgages and loans and securities they bought and sold, would the 2008 Collapse have ever occurred?

(Let's assume for a moment that Fannie and Freddie don't exist and that the US Government was not giving a de facto AAA rating to No Income No Asset loans)

Your question demands that any who answer it must assume like you that the government is entirely responsible for the meltdown.

 

[occupied]

If "buyer beware" was the only regulation then banks would not exist, we would all be hoarding precious metals in holes in the ground. Any faith we have in banks is only there because there are rules keep them at least minimally honest and FDIC insurance to cover us against their institutional stupidity and short shortsightedness.