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On Fri, 09 Jan 2009 21:49:11 -0500, Eisboch wrote:


That was the intent, but what it produced was Equal Opportunity Lending,
regardless of the ability to repay, race, religion or gender and it
encompasses everybody.

Nowhere in the CRA were banks ordered to disregard good business
practices. They did that on their own.

You say sub-prime loans didn't do the economy in, but acknowledge it was
the stupid actions of banks and investment houses in their dealings with
sub-prime loans. So, sub-prime loans really are at the heart of the
problem. What if the lending banks had not had the option to sell them
off to the investment houses? The answer, pure and simple, is that the
loans would never have been made to begin with.

Let's see, in normal business practices, if I make a loan, I accept the
risk. In this case, I make the loan, take my money, and pass the risk
off to someone else. What's to keep me honest? "Liar loans"? Come on,
these lenders abrogated their responsibilities. Buffet was right, these
derivatives were "weapons of mutual destruction".

And then to make matters worse, these nitwits leveraged themselves in
derivatives to astronomical proportions. It's my understanding that
money is tight now, because no one knows who owns the bad debts. F'n
geniuses don't even know what they own? No way you can convince me that
some poor slob in Cleveland, trying to buy his dream house, is the cause
of this problem.

It was greed. Financial markets are run on the balance of greed/risk.
There's nothing wrong with that, but greed took over, and here we are. A
few fat cat "financiers" just brought the world's economy to a
standstill.

Ah, but you left out *why* banks felt safe making the loans. In general,
banks are the
most conservative, no risk lenders in the world. In a normal economy you
basically have
to prove you don't need the money in order to qualify for it.

The problem was the government getting involved via Freddie and Fanny to
take the
risks away and that started in 1995.

Eisboch