A bank manages risk, if a person sees something they think is risky, they should act. The GOV should not be able to intervene in that business decision. It’s crazy. Couldn’t your boss have had several bad loans with local persians and seen a higher risk with that type of individual without being a “racist”?
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Uhhhh….No.
Doing that would be, by definition, racist and illegal.
Logic isn’t your strong suit is it?
[quote=markmax33]
The GOV 100% caused the housing bubble through ENABLING the bad loans to be resold from the banks balance sheets! Without the ENABLING element of the GSEs and the low interest rates of the FED the housing bubble COULD NOT HAVE HAPPENED! PLEASE explain how a bubble could have started without a 2ndary market to resell risk.
Actually your statement above that the GSE loan volume went up AFTER the bubble is flat out a lie. Here is a graph. The highest years are right before the bubble:
Well your unlabeled JPEG does not support your assertions. The higher graph marks (again its basically unlabeled) are pretty solidly within what is widely accepted as the bubble period. Also, that wasn’t my statement. Aim before firing (as Allan says).
Another thing is this: the GSE’s were not public or government entities prior to 2008. They were sponsored and set up by the government but operated independently (and sold stock on the NYSE and such).
The FED’s prime rate had some connection but was not as direct as you imply.
Prime rate affects credit cards and money market rates and HELOCS.
It does not generally affect mortgages.
Even ARMs are based on LIBOR, not prime (the L in LIBOR stands for LONDON, not Liberal).
If anything, the tech bust had more to do with it.
It chased money from stocks to bonds and debt-based securities in massive amounts.
Bear in mind the GSE’s don’t handle stated anything and were rather late to the subprime game.
This is not something you can clearly lay at the government’s door.
This was a largely a failure of private risk management.
This is typical of unregulated credit markets.
