You are unemployed and want a new job, under a Democratic president you have a better chance of getting one!

[TruthNotBS]

Ok, let's discuss how bad loans came to fruition.

Never said that at all. Now you're melding the crisis into the root cause.

name the initial factor

what was reckless?

name the lending practice that lead to bad loans for people who couldn't pay them back?

Had nothing to do with bad loans, or what happened afterward.

How was giving bad loans to people who couldn't repay them profitable, yet highly profitable? Explain that program for the class.

nope obammy and acorn did that.

nope, untrue and disinformation.

banks who knew they weren't getting their money back worked the system available, to sell loans. All legal.

it was the first domino.

what greed? You keep slinging around the word.

the bad loans were government forced, we know how and why. for votes.

Global? explain?

First, you keep asking for the "initial factor" as if there was one single cause for the bad loans, but that’s not how complex systems work. The push for homeownership, supported by both government policies and private sector ambitions, was one factor. However, the deregulation of the financial industry, particularly the repeal of the Glass-Steagall Act, played a critical role. This deregulation allowed banks to mix commercial and investment banking activities, leading to a culture where risky lending practices were not only allowed but encouraged. The reckless behavior here was banks pushing loans they knew were risky, bundling them into mortgage-backed securities, and selling them off as safe investments, all while knowing they were anything but. That’s where the greed comes in—banks and financial institutions were chasing profits at the expense of long-term stability.

Your claim that the crisis had "nothing to do with Glass-Steagall" is just plain wrong. Without the repeal of Glass-Steagall, commercial banks wouldn’t have had the same opportunities to engage in the risky investment practices that amplified the crisis. The idea that giving bad loans to people who couldn’t repay them was somehow profitable isn’t hard to understand when you consider the short-term gains these banks made from selling those loans off as securities, making profits up front while offloading the risk onto others.

As for your dismissal of predatory practices like adjustable-rate mortgages, it shows a lack of understanding of how these financial products were designed to exploit borrowers. These loans were structured to seem affordable at first, only to become unmanageable when interest rates inevitably spiked, leading to massive defaults. The fact that banks legally worked the system doesn’t absolve them of blame—if anything, it highlights the failure of a deregulated system that allowed such reckless behavior.

Finally, your claim that the bad loans were "government-forced" for votes is nothing but conspiracy theory-level nonsense. The private sector aggressively pursued subprime lending because it was profitable in the short term, and they exploited every loophole and deregulation to maximize those profits. The global nature of the crisis is undeniable—it wasn’t just the U.S. economy that suffered, but economies around the world, as those toxic financial products were sold internationally. The crisis spread because of the interconnectedness of the global financial system, something that wouldn’t have happened if those bad loans had been contained within a regulated, responsible banking sector.

So, to sum it up: the 2008 crisis wasn’t just about bad loans—it was about a deregulated financial system that allowed greed and short-term profit motives to create a global catastrophe. That’s the full story, and it’s far more complex than just pointing fingers at government policies.

 

[TruthNotBS]

Let's break this down: you keep saying that the problem was simply bad loans, as if the crisis would have happened regardless of how those loans were handled. But that’s a fundamental misunderstanding of how financial systems work. Yes, bad loans were part of the problem,

What part of the problem was bad loans? 50%? 75%? 90%? 95%?

It's not about saying bad loans were "X% of the problem." It’s about understanding that without the predatory lending practices, the lack of regulatory oversight, the repeal of Glass-Steagall, and the financial engineering that turned bad loans into ticking time bombs, the crisis wouldn’t have escalated the way it did. It was the toxic combination of all these factors that created the perfect storm, not just the existence of bad loans themselves.

 

[jc456]

It's not about saying bad loans were "X% of the problem." It’s about understanding that without the predatory lending practices, the lack of regulatory oversight, the repeal of Glass-Steagall, and the financial engineering that turned bad loans into ticking time bombs, the crisis wouldn’t have escalated the way it did. It was the toxic combination of all these factors that created the perfect storm, not just the existence of bad loans themselves.

Now you’re just confused about your confusion

 

[Toddsterpatriot]

It's not about saying bad loans were "X% of the problem." It’s about understanding that without the predatory lending practices, the lack of regulatory oversight, the repeal of Glass-Steagall, and the financial engineering that turned bad loans into ticking time bombs, the crisis wouldn’t have escalated the way it did. It was the toxic combination of all these factors that created the perfect storm, not just the existence of bad loans themselves.

It's not about saying bad loans were "X% of the problem."

LOL!

It’s about understanding that without the predatory lending practices,


What predatory lending practices?


the lack of regulatory oversight


You're kidding, right?
Home mortgages are one of the most regulated products out there.


the repeal of Glass-Steagall,


That had nothing to do with bad mortgages.


and the financial engineering that turned bad loans into ticking time bombs


The bad loans were ticking timebombs, no financial engineering needed.


It was the toxic combination of all these factors


I can't help but notice that you ignored, again, the regulations that forced banks to write bad mortgages and the regulations that forced Fannie and Freddie to buy ever increasing numbers of bad mortgages.

You never said how much, dollar-wise, Fannie and Freddie bought in subprime paper.

 

[jc456]

First, you keep asking for the "initial factor"

I never asked for anything. I provided facts.

as if there was one single cause for the bad loans,

There was only one. Government forced loans to people who couldn’t repay them. Bad loan.

but that’s not how complex systems work.

Mortgages aren’t complex at all .

The push for homeownership, supported by both government policies

No policies, just forced participation

and private sector ambitions,

Government interference

However, the deregulation of the financial industry, particularly the repeal of the Glass-Steagall Act, played a critical role.

Has no bearing on creating mortgages

This deregulation allowed banks to mix commercial and investment banking activities, leading to a culture where risky lending practices were not only allowed but encouraged.

No bearing on loans

The reckless behavior here was banks pushing loans they knew were risky

Forced by government interference

, bundling them into mortgage-backed securities,

That’s not how one gets a loan

and selling them off as safe investments, all while knowing they were anything but. That’s where the greed comes in—banks and financial institutions were chasing profits at the expense of long-term stability.

Banks got out of bad loans

Your claim that the crisis had "nothing to do with Glass-Steagall" is just plain wrong.

I’m sorry you don’t understand mortgages

Without the repeal of Glass-Steagall, commercial banks

Give loans all the time and have no issues

wouldn’t have had the same opportunities to engage in the risky investment practices that amplified the crisis. The idea that giving bad loans to people who couldn’t repay them was somehow profitable isn’t hard to understand when you consider the short-term gains these banks made from selling those loans off as securities, making profits up front while offloading the risk onto others.

Loans are personal in this program acorn put through

As for your dismissal of predatory practices like adjustable-rate mortgages,

You should look up HSA loans

it shows a lack of understanding of how these financial products were designed to exploit borrowers. These loans were structured to seem affordable at first, only to become unmanageable when interest rates inevitably spiked, leading to massive defaults.

Again you obviously don’t know anything about HSA loans

The fact that banks legally worked the system doesn’t absolve them of blame—if anything, it highlights the failure of a deregulated system that allowed such reckless behavior.

Legal

Finally, your claim that the bad loans were "government-forced" for votes is nothing but conspiracy theory-level nonsense.

Prove me wrong.

The private sector aggressively pursued subprime lending because it was profitable in the short term, and they exploited every loophole and deregulation to maximize those profits. The global nature of the crisis is undeniable—it wasn’t just the U.S. economy that suffered, but economies around the world, as those toxic financial products were sold internationally. The crisis spread because of the interconnectedness of the global financial system, something that wouldn’t have happened if those bad loans had been contained within a regulated, responsible banking sector.

So, to sum it up: the 2008 crisis wasn’t just about bad loans—it was about a deregulated financial system that allowed greed and short-term profit motives to create a global catastrophe. That’s the full story, and it’s far more complex than just pointing fingers at government policies.

Why do you feel lithe need to write a book every post?

 

[TruthNotBS]

I never asked for anything. I provided facts.

There was only one. Government forced loans to people who couldn’t repay them. Bad loan.

Mortgages aren’t complex at all .

No policies, just forced participation

Government interference

Has no bearing on creating mortgages

No bearing on loans

Forced by government interference

That’s not how one gets a loan

Banks got out of bad loans

I’m sorry you don’t understand mortgages

Give loans all the time and have no issues

Loans are personal in this program acorn put through

You should look up HSA loans

Again you obviously don’t know anything about HSA loans

Legal

Prove me wrong.

Why do you feel lithe need to write a book every post?

1. Government Policies and Deregulation: Yes, there were government policies aimed at increasing homeownership, but these policies did not force banks to engage in predatory lending practices. The private sector took advantage of these policies, fueled by the deregulation of the financial industry, which removed critical safeguards like Glass-Steagall. This deregulation allowed commercial banks to dive into investment banking, leading to risky practices that amplified the crisis.
2. Predatory Lending and Subprime Mortgages: Banks and financial institutions aggressively pushed subprime loans onto people who clearly couldn’t afford them because these loans were highly profitable in the short term. They didn’t just issue these loans and sit on them—they bundled them into mortgage-backed securities (MBS) and sold them off as safe investments, spreading the risk across the global financial system. This wasn’t about the government forcing banks’ hands; it was about banks exploiting the system to maximize profits.
3. Adjustable-Rate Mortgages and Other Financial Products: These products were designed to lure in borrowers with low initial rates that would later spike, making the loans unmanageable for many. Dismissing this as a non-issue ignores how these predatory products contributed to the wave of foreclosures that followed.

The crisis was about much more than just bad loans. It was about how those loans were packaged, sold, and leveraged in a deregulated environment that prioritized short-term gains over long-term stability. Blaming it all on government policies is not only inaccurate but also a convenient way to ignore the greed and recklessness that were at the heart of the financial meltdown.

As for your comment on the length of my posts, discussing complex issues requires more than just a few one-liners. If you’re not interested in understanding the full scope of what happened, then perhaps you should reconsider engaging in debates on such serious topics.

 

[TruthNotBS]

It's not about saying bad loans were "X% of the problem."

LOL!

It’s about understanding that without the predatory lending practices,


What predatory lending practices?


the lack of regulatory oversight


You're kidding, right?
Home mortgages are one of the most regulated products out there.


the repeal of Glass-Steagall,


That had nothing to do with bad mortgages.


and the financial engineering that turned bad loans into ticking time bombs


The bad loans were ticking timebombs, no financial engineering needed.


It was the toxic combination of all these factors


I can't help but notice that you ignored, again, the regulations that forced banks to write bad mortgages and the regulations that forced Fannie and Freddie to buy ever increasing numbers of bad mortgages.

You never said how much, dollar-wise, Fannie and Freddie bought in subprime paper.

Todd, it’s clear that you’re doubling down on your misunderstanding of what led to the 2008 financial crisis. Let’s address your points one by one.

First, the predatory lending practices were very real. Banks and mortgage companies aggressively pushed subprime loans onto people who were not in a position to afford them. These loans often included adjustable-rate mortgages with low initial rates that would later spike, trapping borrowers in debt they couldn’t manage. This wasn’t just a case of offering mortgages—it was a deliberate strategy to exploit vulnerable borrowers for short-term profit. That’s what makes it predatory.

Second, you claim that home mortgages are highly regulated, but the issue wasn’t the regulation of the mortgages themselves—it was the lack of regulation around how those mortgages were bundled, rated, and sold as securities. The repeal of Glass-Steagall allowed commercial banks to engage in risky investment practices, which included the creation and sale of mortgage-backed securities (MBS) packed with subprime loans. This is where the lack of oversight became a critical issue. Glass-Steagall’s repeal didn’t cause the bad loans, but it allowed those bad loans to be bundled into financial products that spread risk throughout the global economy.

Your argument that "bad loans were ticking time bombs, no financial engineering needed" completely ignores how those loans were weaponized through financial engineering. The problem wasn’t just the loans themselves—it was how they were packaged and sold off as low-risk investments, even though they were anything but. This practice turned what could have been a contained issue into a global financial disaster.

Finally, let’s talk about Fannie Mae and Freddie Mac. Yes, they bought subprime mortgages, but they weren’t the only players in the game, nor were they the primary drivers of the crisis. Private financial institutions were deeply involved in the creation and sale of toxic mortgage-backed securities. The total dollar amount of subprime paper bought by Fannie and Freddie is part of the story, but it’s not the whole story. The crisis was the result of a systemic failure that included private sector greed, inadequate regulation, and the reckless behavior of financial institutions that prioritized short-term profits over long-term stability. Ignoring these factors doesn’t change the reality of what happened.

 

[Toddsterpatriot]

Todd, it’s clear that you’re doubling down on your misunderstanding of what led to the 2008 financial crisis. Let’s address your points one by one.

First, the predatory lending practices were very real. Banks and mortgage companies aggressively pushed subprime loans onto people who were not in a position to afford them. These loans often included adjustable-rate mortgages with low initial rates that would later spike, trapping borrowers in debt they couldn’t manage. This wasn’t just a case of offering mortgages—it was a deliberate strategy to exploit vulnerable borrowers for short-term profit. That’s what makes it predatory.

Second, you claim that home mortgages are highly regulated, but the issue wasn’t the regulation of the mortgages themselves—it was the lack of regulation around how those mortgages were bundled, rated, and sold as securities. The repeal of Glass-Steagall allowed commercial banks to engage in risky investment practices, which included the creation and sale of mortgage-backed securities (MBS) packed with subprime loans. This is where the lack of oversight became a critical issue. Glass-Steagall’s repeal didn’t cause the bad loans, but it allowed those bad loans to be bundled into financial products that spread risk throughout the global economy.

Your argument that "bad loans were ticking time bombs, no financial engineering needed" completely ignores how those loans were weaponized through financial engineering. The problem wasn’t just the loans themselves—it was how they were packaged and sold off as low-risk investments, even though they were anything but. This practice turned what could have been a contained issue into a global financial disaster.

Finally, let’s talk about Fannie Mae and Freddie Mac. Yes, they bought subprime mortgages, but they weren’t the only players in the game, nor were they the primary drivers of the crisis. Private financial institutions were deeply involved in the creation and sale of toxic mortgage-backed securities. The total dollar amount of subprime paper bought by Fannie and Freddie is part of the story, but it’s not the whole story. The crisis was the result of a systemic failure that included private sector greed, inadequate regulation, and the reckless behavior of financial institutions that prioritized short-term profits over long-term stability. Ignoring these factors doesn’t change the reality of what happened.

These loans often included adjustable-rate mortgages with low initial rates that would later spike, trapping borrowers in debt they couldn’t manage.


Are adjustable-rate mortgages predatory?


Second, you claim that home mortgages are highly regulated


Only because they are.


but the issue wasn’t the regulation of the mortgages themselves—it was the lack of regulation around how those mortgages were bundled, rated, and sold as securities.


Issuing securities isn't highly regulated? Are you kidding me?


The repeal of Glass-Steagall allowed commercial banks to engage in risky investment practices


Stop lying. Glass-Steagall wouldn't have prevented these mortgages from being written, sold or securitized.


Glass-Steagall’s repeal didn’t cause the bad loans, but it allowed those bad loans to be bundled into financial products that spread risk throughout the global economy.


Glass-Steagall wouldn't have prevented Fannie, Freddie, Countrywide or Goldman Sachs from buying a single one of these mortgages and securitizing the hell out of it.


The problem wasn’t just the loans themselves—it was how they were packaged and sold off as low-risk investments,


You're so clueless. If the mortgages were all AAA with 20% down, they wouldn't have failed, there would have been no crisis. But they were shitty loans.


This practice turned what could have been a contained issue into a global financial disaster.


A trillion dollars of losses on the banks' balance sheets is better than a trillion in losses spread around the world? Why?


Finally, let’s talk about Fannie Mae and Freddie Mac. Yes, they bought subprime mortgages, but they weren’t the only players in the game


They weren't the only players. How much did they buy?


The total dollar amount of subprime paper bought by Fannie and Freddie is part of the story,


Let's hear that part. How much?


The crisis was the result of a systemic failure that included private sector greed, inadequate regulation,


Don't forget damaging regulation that helped start and inflate the bubble. A lot.

 

[beagle9]

The government did have a role in the 2008 financial crisis, but it’s important to understand that it was a combination of government actions and private sector greed that led to the meltdown. The government, through policies like the Community Reinvestment Act (CRA) and other initiatives, did encourage homeownership, which led to an increase in subprime lending. However, it’s a gross oversimplification to blame the government alone.

A key aspect was the deregulation that occurred in the years leading up to the crisis. The repeal of the Glass-Steagall Act in 1999 allowed commercial banks to engage in risky investment banking activities. This deregulation enabled the creation of complex financial products like mortgage-backed securities (MBS) and collateralized debt obligations (CDOs), which were instrumental in spreading risk across the financial system.

Additionally, government-sponsored enterprises like Fannie Mae and Freddie Mac did play a role by purchasing subprime mortgages, but they were not the only entities involved. Private lenders and Wall Street firms aggressively pushed subprime loans and created the financial instruments that ultimately destabilized the economy. The ratings agencies, which were supposed to provide objective assessments of risk, also failed by giving high ratings to toxic assets, further exacerbating the problem.

So, while the government’s actions were certainly a factor, the crisis was largely driven by a combination of deregulation, private sector greed, and a lack of proper oversight. It wasn’t a simple case of government manipulation; it was a systemic failure involving multiple actors across both the public and private sectors.

The government was the root cause, and Democrat government at that. JMO.

Hell Democrat government and leftist are actually at it again.

1st it was to tear down that wall or not finish it. Then it was to allow millions of illegals in here for an political agenda that is now backfiring bigly on the leberallies.

Sadly it's not a melt down (yet), but rather it is responsible for the innocent American lives that have fallen due to the illegals that came here under the guise of asylum seeker. Yes, these so called asylum but deadly seekers by their predatory actions have since killed our innocent, and we as a nation under Democrat philosophy have sat back on our hands watching the carnage unfold in many vulnerable cities and/or state's.

 

[jc456]

1. Government Policies and Deregulation: Yes, there were government policies aimed at increasing homeownership, but these policies did not force banks to engage in predatory lending practices. The private sector took advantage of these policies, fueled by the deregulation of the financial industry, which removed critical safeguards like Glass-Steagall. This deregulation allowed commercial banks to dive into investment banking, leading to risky practices that amplified the crisis.
2. Predatory Lending and Subprime Mortgages: Banks and financial institutions aggressively pushed subprime loans onto people who clearly couldn’t afford them because these loans were highly profitable in the short term. They didn’t just issue these loans and sit on them—they bundled them into mortgage-backed securities (MBS) and sold them off as safe investments, spreading the risk across the global financial system. This wasn’t about the government forcing banks’ hands; it was about banks exploiting the system to maximize profits.
3. Adjustable-Rate Mortgages and Other Financial Products: These products were designed to lure in borrowers with low initial rates that would later spike, making the loans unmanageable for many. Dismissing this as a non-issue ignores how these predatory products contributed to the wave of foreclosures that followed.

The crisis was about much more than just bad loans. It was about how those loans were packaged, sold, and leveraged in a deregulated environment that prioritized short-term gains over long-term stability. Blaming it all on government policies is not only inaccurate but also a convenient way to ignore the greed and recklessness that were at the heart of the financial meltdown.

As for your comment on the length of my posts, discussing complex issues requires more than just a few one-liners. If you’re not interested in understanding the full scope of what happened, then perhaps you should reconsider engaging in debates on such serious topics.

Subprime Meltdown: What Was It, What Happened, Consequences

The subprime meltdown was an event that followed a sharp increase in high-risk mortgages defaulting resulting from the housing boom and bust of 2007–2009.

www.investopedia.com

 

[TruthNotBS]

Subprime Meltdown: What Was It, What Happened, Consequences

The subprime meltdown was an event that followed a sharp increase in high-risk mortgages defaulting resulting from the housing boom and bust of 2007–2009.

www.investopedia.com

The article you shared from Investopedia doesn’t tell the full story and its conclusions are, frankly, misleading.

First off, the article focuses heavily on subprime mortgages as if they were the sole trigger of the 2008 financial crisis. Sure, subprime loans were a significant part of the problem, but the real issue wasn’t just these risky loans themselves, it was how they were manipulated, bundled, and sold off as safe investments to unsuspecting investors worldwide. This wasn’t just about a few bad loans; it was about a financial system that was allowed to run wild due to the deregulation that started in the late 1990s, particularly with the repeal of the Glass-Steagall Act in 1999. When Glass-Steagall was repealed, it removed the critical barriers that had previously kept commercial banking separate from risky investment banking. Without these safeguards, banks were free to gamble with depositors' money, creating toxic financial products that spread the risk across the entire global economy.

The article mentions low-interest rates and a housing boom as contributors to the crisis, but it glosses over how these factors were exploited by a deregulated financial industry. The financial institutions didn’t just passively watch this boom, they actively fueled it by pushing subprime loans onto people who couldn’t afford them, knowing full well they could bundle these loans into mortgage-backed securities (MBS) and sell them off. The profit motive was clear: banks were making money hand over fist by creating and selling these MBS, and without the regulatory oversight that Glass-Steagall once provided, there was nothing to stop them.

When the article talks about Adjustable-Rate Mortgages (ARMs), it fails to address why these risky financial products became so widespread. The answer is simple: deregulation. In a system where banks could mix commercial banking with high-risk investment banking, ARMs were a way to lure in borrowers with low initial rates, knowing those rates would spike and create a cascade of defaults. But again, this was only possible because the financial industry had been freed from the regulatory constraints that would have otherwise prevented such reckless behavior.

Finally, when the article tries to assign blame, it spreads it across mortgage brokers, credit agencies, and firms like Fannie Mae and Freddie Mac, while conveniently downplaying the role of deregulation. This is where the article’s narrative falls apart. The root cause of the crisis wasn’t just a few bad actors or bad loans, it was a systemic failure caused by a lack of regulatory oversight. The repeal of Glass-Steagall didn’t just open the door to risky practices; it tore down the entire framework that kept those practices in check. Without this deregulation, the crisis would have been far less severe, if it happened at all.

So let’s be clear: the 2008 financial crisis was the result of a deregulated financial system that allowed greed and short-term profit motives to run rampant, creating a global catastrophe. Blaming it all on subprime mortgages without addressing the broader systemic issues is not only misleading, it’s dangerous because it ignores the real lessons we should have learned from the crisis. If we don’t recognize the critical role that deregulation played, we’re setting ourselves up for another financial disaster down the line.

 

[TruthNotBS]

The government was the root cause, and Democrat government at that. JMO.

Hell Democrat government and leftist are actually at it again.

1st it was to tear down that wall or not finish it. Then it was to allow millions of illegals in here for an political agenda that is now backfiring bigly on the leberallies.

Sadly it's not a melt down (yet), but rather it is responsible for the innocent American lives that have fallen due to the illegals that came here under the guise of asylum seeker. Yes, these so called asylum but deadly seekers by their predatory actions have since killed our innocent, and we as a nation under Democrat philosophy have sat back on our hands watching the carnage unfold in many vulnerable cities and/or state's.

Beagle9, your attempt to pin the entire blame for the 2008 financial crisis on the government, specifically on Democrats, is not only inaccurate but also a gross oversimplification of a complex issue. Let's break this down.

First, the notion that the government was the "root cause" of the crisis ignores the significant role that the private financial sector played in creating and exacerbating the meltdown. The crisis was driven by the reckless behavior of financial institutions that were motivated by greed and enabled by deregulation, which allowed them to engage in risky practices without sufficient oversight. The repeal of the Glass-Steagall Act in 1999, a bipartisan move supported by both Republicans and Democrats, dismantled key regulations that had kept commercial banking separate from high-risk investment activities. This deregulation allowed banks to engage in the very practices that led to the crisis, such as bundling subprime mortgages into mortgage-backed securities and selling them as safe investments. To ignore this context and instead place all the blame on Democrats is to ignore the facts.

Secondly, your shift from discussing the financial crisis to talking about immigration and asylum seekers is a classic example of deflecting from the issue at hand. The 2008 financial crisis had nothing to do with immigration policies and everything to do with a financial system that was allowed to spiral out of control due to deregulation and greed. Trying to link the financial crisis with current immigration issues is a red herring and doesn’t contribute to an honest discussion about what really caused the economic meltdown.

Lastly, your claim that Democrats and "leftists" are responsible for the supposed current "carnage" due to immigration policies is not only unsupported by evidence but also dangerously misleading. The reality is that the challenges we face as a nation are complex and require thoughtful solutions, not scapegoating and fearmongering. Blaming immigrants for social and economic problems is an old tactic that distracts from the real issues, such as income inequality, corporate power, and the erosion of workers' rights—issues that are far more relevant to the everyday struggles of Americans than your claims about a supposed immigration-driven "carnage."

In short, the 2008 financial crisis was not the result of Democratic policies or government interference, but rather a failure of a deregulated financial system driven by profit and greed. Shifting the blame to immigration or trying to paint Democrats as the sole villains in this narrative doesn’t hold up to scrutiny and only serves to divert attention from the real causes of the crisis.

 

[TruthNotBS]

These loans often included adjustable-rate mortgages with low initial rates that would later spike, trapping borrowers in debt they couldn’t manage.


Are adjustable-rate mortgages predatory?


Second, you claim that home mortgages are highly regulated


Only because they are.


but the issue wasn’t the regulation of the mortgages themselves—it was the lack of regulation around how those mortgages were bundled, rated, and sold as securities.


Issuing securities isn't highly regulated? Are you kidding me?


The repeal of Glass-Steagall allowed commercial banks to engage in risky investment practices


Stop lying. Glass-Steagall wouldn't have prevented these mortgages from being written, sold or securitized.


Glass-Steagall’s repeal didn’t cause the bad loans, but it allowed those bad loans to be bundled into financial products that spread risk throughout the global economy.


Glass-Steagall wouldn't have prevented Fannie, Freddie, Countrywide or Goldman Sachs from buying a single one of these mortgages and securitizing the hell out of it.


The problem wasn’t just the loans themselves—it was how they were packaged and sold off as low-risk investments,


You're so clueless. If the mortgages were all AAA with 20% down, they wouldn't have failed, there would have been no crisis. But they were shitty loans.


This practice turned what could have been a contained issue into a global financial disaster.


A trillion dollars of losses on the banks' balance sheets is better than a trillion in losses spread around the world? Why?


Finally, let’s talk about Fannie Mae and Freddie Mac. Yes, they bought subprime mortgages, but they weren’t the only players in the game


They weren't the only players. How much did they buy?


The total dollar amount of subprime paper bought by Fannie and Freddie is part of the story,


Let's hear that part. How much?


The crisis was the result of a systemic failure that included private sector greed, inadequate regulation,


Don't forget damaging regulation that helped start and inflate the bubble. A lot.

Todd, yes, Adjustable-Rate Mortgages (ARMs) can indeed be predatory, especially when they are marketed to borrowers who do not fully understand the risks involved. These loans often start with a "teaser" rate that is attractively low but then adjust to much higher rates, sometimes even doubling the monthly payments. Many borrowers were not properly informed of how quickly or how much their payments could increase. Financial institutions took advantage of these borrowers, knowing they were unlikely to be able to handle the sudden spike in payments, which led to widespread defaults. The predatory nature comes from the exploitation of borrowers' lack of understanding and the strategic placement of them into loans that would eventually become unaffordable.

Issuing securities is regulated, but the key issue here is not just about regulation in theory, it's about how effectively those regulations were enforced and what was actually allowed under the deregulated framework. During the lead-up to the crisis, the financial products created from these subprime loans, like Mortgage-Backed Securities (MBS), were often given misleadingly high ratings by credit rating agencies. The lack of stringent oversight allowed these risky products to be sold as safe investments, spreading the toxic risk across the entire financial system. The regulations in place were either insufficient or not properly enforced, allowing the financial industry to manipulate these products with disastrous consequences.

Todd, it's not about whether Glass-Steagall would have prevented the creation of bad mortgages, it's about how it would have limited the scope of their impact. Glass-Steagall enforced a separation between commercial banking (where deposits and loans are handled) and investment banking (which involves riskier activities like securities trading). Without this separation, commercial banks were able to use depositor funds to engage in risky investments, including the securitization of subprime loans. This blending of banking activities under the same roof meant that when those bad mortgages were securitized and spread throughout the global economy, the risk was magnified exponentially. Glass-Steagall’s repeal didn't cause the loans to be made, but it allowed the fallout from those loans to wreak havoc on the financial system.

While it's true that Glass-Steagall wouldn't have stopped these entities from buying and securitizing mortgages, the broader point is that the repeal of Glass-Steagall facilitated a systemic failure. It allowed commercial banks, which handle depositor money and provide loans, to get deeply involved in investment banking activities like securitization. This mingling of activities amplified the risks and connected the commercial banking sector directly to the fallout from these high-risk investments. In other words, Glass-Steagall's repeal created an environment where the damage from risky practices could, and did spread far beyond isolated institutions, affecting the global economy.

Todd, you're missing the point here. The crisis wasn't just about the quality of the loans, although that was certainly a factor. The real issue was how these "shitty loans," as you put it, were packaged into supposedly low-risk securities and sold to investors around the world. These MBS were given AAA ratings by credit agencies, even though they were filled with toxic, high-risk subprime loans. This misrepresentation spread the risk globally, as institutions and investors believed they were purchasing safe assets. The systemic risk was not just in the bad loans themselves but in the way they were fraudulently marketed and sold as secure investments.

The issue isn't about where the losses occur but how they occur. If the risks had been contained within the institutions that created them, the fallout might have been severe but localized. By spreading the risk globally through securitization, the financial system ensured that when things went wrong, the impact would be felt everywhere, exacerbating the crisis. This global spread of risk made the situation far more difficult to manage and more damaging to the world economy, which is why it led to such a profound and prolonged economic downturn.

Fannie Mae and Freddie Mac certainly played a role in the crisis by purchasing subprime mortgages, but they were far from the only culprits. Private institutions were equally, if not more, involved in the aggressive pursuit of subprime lending and securitization. According to the Financial Crisis Inquiry Commission, Fannie and Freddie were involved in about 20% of subprime purchases, but private firms were responsible for the vast majority of these toxic assets. The crisis was a systemic failure involving many players, and focusing solely on Fannie and Freddie is an attempt to oversimplify and misdirect blame.

While there were certainly policies that encouraged homeownership, the primary issue wasn't too much regulation, it was the wrong kind of regulation combined with a lack of enforcement. Deregulation, particularly the repeal of Glass-Steagall, allowed financial institutions to take risks that they never would have been able to take under a properly regulated system. The greed of the private sector was a driving force, fueled by a deregulated environment that prioritized short-term profits over long-term stability. This is the real story behind the 2008 financial crisis, and ignoring these factors is a dangerous oversimplification.

 

[Toddsterpatriot]

Many borrowers were not properly informed of how quickly or how much their payments could increase.

Have the seen the sheafs of paper home buyers get when they're signing their mortgage
documents? If you're too stupid to understand paperwork that says, "Your payment will be $1500 for the first 6 months and could go up to $3000 in the 7th month" you shouldn't borrow money to buy a house.

 

[Toddsterpatriot]

Glass-Steagall enforced a separation between commercial banking (where deposits and loans are handled) and investment banking (which involves riskier activities like securities trading).

You keep saying this, but you have yet to show that a commercial bank failed because depositor funds were used for risky investment banking activities, like securities trading, but I can show you many commercial banks that failed because they held subprime mortgages.

 

[TruthNotBS]

Have the seen the sheafs of paper home buyers get when they're signing their mortgage
documents? If you're too stupid to understand paperwork that says, "Your payment will be $1500 for the first 6 months and could go up to $3000 in the 7th month" you shouldn't borrow money to buy a house.

Todd, the issue isn’t just about understanding the paperwork—it’s about how the banks deliberately crafted these loans to be confusing and predatory. Financial institutions stood to benefit enormously from these adjustable-rate mortgages because they could initially offer low, enticing payments to draw in borrowers. Then, once the rates inevitably spiked, banks could either collect higher payments or, more likely, push homeowners into default, which allowed the banks to foreclose on the property and resell it. This cycle of luring borrowers with deceptively low initial rates and then escalating payments wasn’t just reckless it was a calculated move to maximize profit at the expense of ordinary people who trusted these institutions.

Moreover, these banks didn’t just profit from the borrowers directly they turned these risky loans into financial products by bundling them into mortgage-backed securities (MBS) and selling them off as safe investments. This practice spread the risk throughout the financial system, making it everyone’s problem when the inevitable defaults began to roll in. The banks were reckless because they knew they could offload the risk and still make a profit, regardless of the damage done to homeowners and the broader economy. This isn’t a matter of borrowers being "too stupid"it’s about banks exploiting their customers for financial gain through deliberately opaque and predatory practices.

 

[TruthNotBS]

You keep saying this, but you have yet to show that a commercial bank failed because depositor funds were used for risky investment banking activities, like securities trading, but I can show you many commercial banks that failed because they held subprime mortgages.

Todd, you're missing the bigger picture here. The issue isn’t just about a specific commercial bank failing directly because of risky securities trading, it's about how the repeal of Glass-Steagall allowed commercial banks to dive into investment banking, intertwining these activities and amplifying systemic risk. The fact that commercial banks held subprime mortgages and then turned them into toxic securities that spread across the global financial system is precisely the problem. When these risky practices blew up, it wasn’t just the banks holding subprime mortgages that suffered; the entire economy took a hit because these toxic assets were everywhere.

Your focus on individual bank failures due to subprime mortgages ignores how deregulation created an environment where commercial banks could engage in reckless behavior with depositor funds indirectly. By blending commercial banking with investment banking, they exposed themselves and the broader economy to massive risks. So, while you might not find a single bank that failed solely due to securities trading, the interconnectedness of these activities under deregulation was the real-time bomb that brought down the entire financial system.

 

[Rumpole]

Total ridiculous NONSENSE, but typical of the jibberish that Democrats toss around,

Since Biden took office, businesses have been closing like crazy, due to the astronomical rents, and nobody has any money left to buy anything.

Sam Ash Music just went out business, after 100 years. AMERICANS are losing jobs by the millions. Millions more are losing jobs to Biden's illegal aliens.

The last word a Democrat should ever want to say is "jobs"

Rents are due to supply and demand, a thing called capitalism.

Illegals do not steal jobs, that's a myth.

The job market is not a zero sum game.

AS population increases, jobs increase.

Why? Humans buying stuff.

Humans, not Americans, Latinos, Mexicans, Illegals, just humans.

 

[jc456]

First off, the article focuses heavily on subprime mortgages as if they were the sole trigger of the 2008 financial crisis.

yep, exactly how Todd and I have explained it to you so many times my mortgage is paid off. LOL

I'm not responding to the rest of your nonsense, since all you're doing is regurgitating over and over the same fifteen page nonsense now to everyone. You believe what you want. But stop posting disinformation you haven't a clue to talk about.

 

[jc456]

How did they create 51 million jobs? What was it they brought?

Luckyone , yo, where's the information as to how they created said jobs? You vanished like a you were erased from the thread? Don't have any balls to commit to your posts? you're a drop a go poster with absolutely nothing to offer but disinformation from demofk talking papers. NO walk