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> It caused a $5 trillion in transfer from wealthy away from the working classes to the investor class in that 2008 Mortgage crisis. This sounds like a made up

> It caused a $5 trillion in transfer from wealthy away from the working classes to the investor class in that 2008 Mortgage crisis. This sounds like a made up number. What is your source? > The 2008 Mortgage crisis robbed the working classes How? I.e. what did working class people own that was subsequently taken away by some other entity? > Wall Street over leveragged had huge wealth handed to them in money printing that was giving directly to their balance sheets. A common misconception. The government did recapitalize various Wall St. entities on favorable terms, and did, via quantitative easing, give owners of some securities more than they might have gotten in the market without intervention. But there were certainly not any "no strings attached" givings of cash to the big financial entities. The other stuff about how working Americans were the ones most hurt by the financial crisis also sounds incorrect to me. If I had to categorize winners and losers, owners of mortgage debt and homeowners would be the biggest losers of the crisis. Working Americans suffered knock on effects, or direct effects to the extent they were in the other categories, but they were not the primary victims.

yourbandsucks 8y ago
A lot of Americans have/had home equity as their biggest asset.
- oihoaihsfoiahsf 8y ago
  That's true, but also a non-sequitur, since nobody "stole" home equity from anyone. The value of homes went down across the board because of oversupply, and that is a phenomenon that required potential homeowners, financiers, builders, and other entities to tango. It's not something the banks caused to happen on their own, nor something they bear sole and unmitigated responsibility for.
  - yourbandsucks 8y ago
    I'd argue you're into red herring land a little yourself with the systemic goings-on. From Joe Sixpack's perspective, he paid his mortgage every month for 20 years, was all set to retire on his home equity, and then poof, the rug got pulled out from under him. It's a bit of a tall ask to say he should've seen that his home was overvalued and planned accordingly when all of Wall St couldn't see it either.
    - oihoaihsfoiahsf 8y ago
      If Joe Sixpack owned for twenty years, he was not underwater after the crisis. He might not be in as good of a shape as he was at the top, and I can understand how that would be disappointing, but he's still doing fine. If he got greedy and did a big cash out ARM refinance, well, that sucks, but people are told from a very young age that when something seems too good to be true, it probably is. Caveat emptor! And there are warnings ALL OVER the documents you have to sign to actually participate in such a transaction. I reject the notion that American adults should not or cannot be custodians of their own financial lives. I'm certainly not saying that I expect the average American to understand what actually happened. The average American believes all kinds of things that aren't true, even in much simpler domains of knowledge. I am just saying what actually happened.
    - isoskeles 8y ago
      What about the Joe Sixpacks who bought homes because housing always goes up and I can just flip this in three years?
    - stale2002 8y ago
      But he can retire. He owns a house. Nothing poofed away. He owns it, and is not getting evicted. He can continue to live in that same house that he has lived in for 20 years.
  - chadbaud 8y ago
    The banks did cause it to happen. They had an insatiable appetite for mortgage backed securities and would shop credit rating agencies (who were newly public companies) to get a AAA rating on total garbage they knew would explode. Municipalities and pension funds would buy AAA securities even though the originators and packagers of the mortgagers knew they were garbage. It was a big fraud caused by the bankers greed.
    - oihoaihsfoiahsf 8y ago
      Yes, the banks were part of the cause. That is not in dispute, as you can see by reading my previous comments. But they would not have been able to commit their fraud without the aid of credulous buyers willing to purchase far more house than they could afford. That's all I'm saying.
      - wiz21c 8y ago
        >>> without the aid of credulous buyers or with the aid of people with that necessary skill needed to convince regular people to do something only credulous people would do. What was the name of that skill,... hmm... isn't it "manipulation" or "marketing" ? You see, if someone's is going to make a mistake, I tend to help him by preventing him to do so. I don't give him the pen to sign its destiny.
        oihoaihsfoiahsf 8y ago
        Y'all keep trying to explain the morality of what the banks and lenders did to me like I don't already know. I know. It's not good. That's irrelevant to the question of whether they were solely responsible.
        deleted 8y ago
        [deleted]
      - chadbaud 8y ago
        In a functioning market, a buyer would not have received a loan, no matter how much they wanted to over extend themselves. But, because fraud was being committed from the rating agencies, investment banks and mortgage originators, they got the loan. I understand what you saying, but I think you underestimate the lack of accountability that allowed people to get loans they were not in the best interest of anyone.
- kolbe 8y ago
  > A lot of Americans have/had home equity as their biggest asset. In all fairness, the only reason their home equity had any value was thanks to an inflated housing market. It seems that what people 'stole' from them was the delusion that their homes had actually increased in value for the long term.
  - chadbaud 8y ago
    They had every right to believe their homes were going up in value and make decisions accordingly, especially from 2003-2006. Subprime lenders were selling loans to people who were not qualified to have loans that greatly inflated the housing prices. It doesn't matter if they person signed off on a mortgage, by law, they shouldn't have received it. People were making decisions in a market they thought was fair. But, that market was fraudulent created by originators and bankers trying to make a quick buck.
HashThis 8y ago
>> $5 trillion > This sounds like a made up number. What is your source? $1.3 trillion from two levels of TARP, plus AIG, plus Fannie/Fredy. The rest has been documented from lost of people who had sustainable mortgages but lost their home due to 9% unemployment that lasted years. There are many sources that cover this. I've read several books on the mortgage crisis and they are all in this category. That is a subset of the $13 trillion referenced in wikipedia sub-prime article. >> Wall Street over leveragged had huge wealth handed to them in money printing that was giving directly to their balance sheets. > But there were certainly not any "no strings attached" givings of cash to the big financial entities. You are missing the big robbery. Investment banking firms that purchased the CDOs/MBSs only had 3% of assets backing massive leverage. The reason the financial industry was going to CEASE UP was because they all didn't have the assets to backup the extreme leverage. The robbery came because extreme money printing (QE) was used to "give assets" to banks so they would have far more than 3% assets to backup their massive leverage. The US tax payer was robbed with the money handed to them to sit on their balance sheets. That is the way their assets backing leverage raised above 3%. Banks getting more than 3% assets didn't happen any other way. Massive inflation will happen when this massive assets flood the market once a bank gets in trouble and transfers these QE "assets" into the market. That is when citizens will get robbed by the huge inflation impact of that QE.

yourbandsucks 8y ago

A lot of Americans have/had home equity as their biggest asset.

oihoaihsfoiahsf 8y ago
That's true, but also a non-sequitur, since nobody "stole" home equity from anyone. The value of homes went down across the board because of oversupply, and that is a phenomenon that required potential homeowners, financiers, builders, and other entities to tango. It's not something the banks caused to happen on their own, nor something they bear sole and unmitigated responsibility for.
- yourbandsucks 8y ago
  I'd argue you're into red herring land a little yourself with the systemic goings-on. From Joe Sixpack's perspective, he paid his mortgage every month for 20 years, was all set to retire on his home equity, and then poof, the rug got pulled out from under him. It's a bit of a tall ask to say he should've seen that his home was overvalued and planned accordingly when all of Wall St couldn't see it either.
  - oihoaihsfoiahsf 8y ago
    If Joe Sixpack owned for twenty years, he was not underwater after the crisis. He might not be in as good of a shape as he was at the top, and I can understand how that would be disappointing, but he's still doing fine. If he got greedy and did a big cash out ARM refinance, well, that sucks, but people are told from a very young age that when something seems too good to be true, it probably is. Caveat emptor! And there are warnings ALL OVER the documents you have to sign to actually participate in such a transaction. I reject the notion that American adults should not or cannot be custodians of their own financial lives. I'm certainly not saying that I expect the average American to understand what actually happened. The average American believes all kinds of things that aren't true, even in much simpler domains of knowledge. I am just saying what actually happened.
  - isoskeles 8y ago
    What about the Joe Sixpacks who bought homes because housing always goes up and I can just flip this in three years?
  - stale2002 8y ago
    But he can retire. He owns a house. Nothing poofed away. He owns it, and is not getting evicted. He can continue to live in that same house that he has lived in for 20 years.
- chadbaud 8y ago
  The banks did cause it to happen. They had an insatiable appetite for mortgage backed securities and would shop credit rating agencies (who were newly public companies) to get a AAA rating on total garbage they knew would explode. Municipalities and pension funds would buy AAA securities even though the originators and packagers of the mortgagers knew they were garbage. It was a big fraud caused by the bankers greed.
  - oihoaihsfoiahsf 8y ago
    Yes, the banks were part of the cause. That is not in dispute, as you can see by reading my previous comments. But they would not have been able to commit their fraud without the aid of credulous buyers willing to purchase far more house than they could afford. That's all I'm saying.
    - wiz21c 8y ago
      >>> without the aid of credulous buyers or with the aid of people with that necessary skill needed to convince regular people to do something only credulous people would do. What was the name of that skill,... hmm... isn't it "manipulation" or "marketing" ? You see, if someone's is going to make a mistake, I tend to help him by preventing him to do so. I don't give him the pen to sign its destiny.
      - oihoaihsfoiahsf 8y ago
        Y'all keep trying to explain the morality of what the banks and lenders did to me like I don't already know. I know. It's not good. That's irrelevant to the question of whether they were solely responsible.
      - deleted 8y ago
        [deleted]
    - chadbaud 8y ago
      In a functioning market, a buyer would not have received a loan, no matter how much they wanted to over extend themselves. But, because fraud was being committed from the rating agencies, investment banks and mortgage originators, they got the loan. I understand what you saying, but I think you underestimate the lack of accountability that allowed people to get loans they were not in the best interest of anyone.
kolbe 8y ago
> A lot of Americans have/had home equity as their biggest asset. In all fairness, the only reason their home equity had any value was thanks to an inflated housing market. It seems that what people 'stole' from them was the delusion that their homes had actually increased in value for the long term.
- chadbaud 8y ago
  They had every right to believe their homes were going up in value and make decisions accordingly, especially from 2003-2006. Subprime lenders were selling loans to people who were not qualified to have loans that greatly inflated the housing prices. It doesn't matter if they person signed off on a mortgage, by law, they shouldn't have received it. People were making decisions in a market they thought was fair. But, that market was fraudulent created by originators and bankers trying to make a quick buck.

HashThis 8y ago

>> $5 trillion > This sounds like a made up number. What is your source? $1.3 trillion from two levels of TARP, plus AIG, plus Fannie/Fredy. The rest has been documented from lost of people who had sustainable mortgages but lost their home due to 9% unemployment that lasted years. There are many sources that cover this. I've read several books on the mortgage crisis and they are all in this category. That is a subset of the $13 trillion referenced in wikipedia sub-prime article. >> Wall Street over leveragged had huge wealth handed to them in money printing that was giving directly to their balance sheets. > But there were certainly not any "no strings attached" givings of cash to the big financial entities. You are missing the big robbery. Investment banking firms that purchased the CDOs/MBSs only had 3% of assets backing massive leverage. The reason the financial industry was going to CEASE UP was because they all didn't have the assets to backup the extreme leverage. The robbery came because extreme money printing (QE) was used to "give assets" to banks so they would have far more than 3% assets to backup their massive leverage. The US tax payer was robbed with the money handed to them to sit on their balance sheets. That is the way their assets backing leverage raised above 3%. Banks getting more than 3% assets didn't happen any other way. Massive inflation will happen when this massive assets flood the market once a bank gets in trouble and transfers these QE "assets" into the market. That is when citizens will get robbed by the huge inflation impact of that QE.