Two — the widespread growth of mortgage backed securities, allowing financial institutions to play hot-potato with mortgages.
Three — the repeal of Glass-Steagall, allowing unimaginable levels of chicanery by financial institutions.
That’s the trifecta. And FNMA and FMAC are part of #2 since they offered the first MBS investment products.
The real question is what happens next? Are we headed back to the good old days of local banks writing mortgages for their neighbors and carrying them for the full 30 years? Or are we in for even more market manipulation, government intervation, and financial hooliganism?
I know where I’d put my betting money (if I had any left).
