Posted: Mar 24, 2014 11:57 am
Actually, I don't think it's the legality of fractional practices that is the problem, or causes the problem. What is at the core of what this Minky guy apparently said, AND what I saw happen in the event, is that lenders went into a frenzy of IRRESPONSIBLE fractional lending. Note that the whole mess was referred to as SUB-prime lending. What that SUB -PRIME refers to, is that the loans themselves were known AT THE TIME THEY WERE MADE, to be crappy, and not correctly supported by real value, or by trustworthy and capable borrowers.
If anything needs to be attacked, it is the practice of handing out huge paychecks to people who MAKE huge loans, without connecting their rate of pay with the QUALITY of the loans they make. Since lenders were paid based only on the SIZE of the loans, they were incentivized to loan as much money as they possibly could, and not allow the ability (or obvious IN-ability) of the borrowers to repay them, to get in the way of writing them up and processing them.
Add to that, the ability of lenders to hide their crap inside of Derivatives, and to pretend that they were selling high quality loans, when they were actually selling bad debts at premium prices, and the disaster was set into concrete.
Republicans over here want to blame the Democrats for having SUGGESTED that more people with lower incomes to be allowed to buy housing, but they carefully avoid admitting that the details of HOW that was to be done, was left up to the lenders...and the lenders chose flat out, greed driven, Ponzi-like idiocy.
If anything needs to be attacked, it is the practice of handing out huge paychecks to people who MAKE huge loans, without connecting their rate of pay with the QUALITY of the loans they make. Since lenders were paid based only on the SIZE of the loans, they were incentivized to loan as much money as they possibly could, and not allow the ability (or obvious IN-ability) of the borrowers to repay them, to get in the way of writing them up and processing them.
Add to that, the ability of lenders to hide their crap inside of Derivatives, and to pretend that they were selling high quality loans, when they were actually selling bad debts at premium prices, and the disaster was set into concrete.
Republicans over here want to blame the Democrats for having SUGGESTED that more people with lower incomes to be allowed to buy housing, but they carefully avoid admitting that the details of HOW that was to be done, was left up to the lenders...and the lenders chose flat out, greed driven, Ponzi-like idiocy.