Notice how people are pointing fingers at others to explain how "they" caused this mess? The mortgage mess was a team effort.
It started with Builders eager to sell homes, and their (often captive) lenders who wanted to write and sell the loans to make those homes sales happen.
They hired appraisers who would agree to just about any sale price without too much scrutiny, as long as they got paid.
They convinced real estate agents to bring their Buyers and not argue too much about pricing. Never mind that the agents had a fiduciary duty to try their best to get their client the best price possible. That was frequently overlooked in search of bigger bonuses and commissions.
The bankers discovered that, if they could package those loans and sell them to "investors", they could repeat the process over and over. They convinced the ratings agencies that they were all solid loans (in spite of the very lax credit standards and documentation, if any). The ratings agencies simply didn't do their job of investigating the packages - after all there was a ton of money to be made. The investors took the word of the ratings agencies and bought them up without any independent verification.
The regulators, who had gotten very cozy with the bankers and builders, relaxed their few standards to allow the boom to proceed uninhibited. Congress worked overtime to get rid of any remaining obstacles, in the name of "Free Markets".
So, who got stuck with the result? Pensioners who saw their retirement funds decimated; families who lost their homes due to undisclosed additional fees that were tacked on to their house payments long after closing, homeowners who saw their neighborhood values decline; taxpayers who bailed out the bankers and paid them bonuses for their great performance; cities and states who saw their tax base erode; foreign bankers who believed in our system and bought into it; and mostly, our children who get stuck with the tab.
So, that's why we NEED good regulation; we NEED regulators who aren't just angling for a good job when they leave the agency; we need ACCOUNTABILITY from the ratings agencies who act like nothing happened; and we need legislators who aren't so beholden to the others that they forget whose interests they are there to protect.
It started with Builders eager to sell homes, and their (often captive) lenders who wanted to write and sell the loans to make those homes sales happen.
They hired appraisers who would agree to just about any sale price without too much scrutiny, as long as they got paid.
They convinced real estate agents to bring their Buyers and not argue too much about pricing. Never mind that the agents had a fiduciary duty to try their best to get their client the best price possible. That was frequently overlooked in search of bigger bonuses and commissions.
The bankers discovered that, if they could package those loans and sell them to "investors", they could repeat the process over and over. They convinced the ratings agencies that they were all solid loans (in spite of the very lax credit standards and documentation, if any). The ratings agencies simply didn't do their job of investigating the packages - after all there was a ton of money to be made. The investors took the word of the ratings agencies and bought them up without any independent verification.
The regulators, who had gotten very cozy with the bankers and builders, relaxed their few standards to allow the boom to proceed uninhibited. Congress worked overtime to get rid of any remaining obstacles, in the name of "Free Markets".
So, who got stuck with the result? Pensioners who saw their retirement funds decimated; families who lost their homes due to undisclosed additional fees that were tacked on to their house payments long after closing, homeowners who saw their neighborhood values decline; taxpayers who bailed out the bankers and paid them bonuses for their great performance; cities and states who saw their tax base erode; foreign bankers who believed in our system and bought into it; and mostly, our children who get stuck with the tab.
So, that's why we NEED good regulation; we NEED regulators who aren't just angling for a good job when they leave the agency; we need ACCOUNTABILITY from the ratings agencies who act like nothing happened; and we need legislators who aren't so beholden to the others that they forget whose interests they are there to protect.
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