A Quote by Thomas Sowell

Securities based on risky mortgages are what toppled financial institutions but it was the government that made the mortgages risky in the first place, by making home-ownership statistics the holy grail, for which everything else was to be sacrificed, including commonsense standards for making home loans.
No one pushed harder than Congressman Barney Frank to force banks and other financial institutions to reduce their mortgage lending standards, in order to meet government-set goals for more home ownership. Those lower mortgage lending standards are at the heart of the increased riskiness of the mortgage market and of the collapse of Wall Street securities based on those risky mortgages.
What began as a subprime lending problem has spread to other, less risky mortgages and contributed to excess home inventories that have pushed down home prices for responsible homeowners.
I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers - those with the weakest credit.
Fannie Mae and Freddie Mac buy mortgages from banks and other lenders, providing those financial institutions with capital to make new loans.
The Democrats, because they believe in socialism, redistribution, forced the banks and financial institutions to make the risky loans.
What the mortgage bubble was all about was big banks like Goldman Sachs taking big bundles of subprime mortgages that were lent out largely to low-income, highly risky borrowers, and applying this kind of magic-pixie-dust math to these bundles of securities and slapping AAA ratings on them.
One third of the $15 trillion of mortgages in existence in 2008 are owned, or securitized by Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing and the Veterans Administration. Wall Street buyers of repackaged loans didn't mind buying risky paper because they assumed that they would be guaranteed by the federal government: read bailout from the taxpayers. Today's housing mess can be laid directly at the feet of Congress and the White House.
If I'm a bank, and I'm making risky loans, I have an incentive, if I can, to make those loans using other people's money: in other words, to make highly leveraged loans.
In September 2008, the two largest housing mortgage companies called Fannie Mae and Freddie Mac, which were government-sponsored enterprises, which hold hundreds of billions of dollars of mortgages, because of the losses they took on the mortgages, they essentially became insolvent, and the government had to take them over.
Suning Appliance has no problem of financial risk. Do you think I'm risky? I'm definitely not risky.
Funny money has always been the reason housing prices have risen too fast. First, it was liar loans and negative-amortizing mortgages, where the total amount you owed increased rather than decreased every month. We all know how that ended, with the global financial crisis of 2008.
The Department of Energy made an investment that failed, and it got raked over the coals for that failed investment. This is ridiculous. The fact of the matter is, the government should be making a lot of risky investments, the majority of which are likely to fail.
Much of the blame for the Great Recession lies with abuses in the housing market - namely the creation of risky and unsustainable home loans that were packaged and sold as quality investments around the globe.
I think something that forces financial institutions to write down underwater mortgages, I think, would be a sensible thing to do.
After the risky mortgage-lending practices fostered by government intervention led to massive defaults and foreclosures that caused financial institutions to collapse or be bailed out, Congressman Frank changed his tune completely.
Subprime mortgages, typically defined as those issued to borrowers with low credit scores, make up roughly the riskiest one-third of all mortgages.
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