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The incentives were screwy. Originators shouldn’t be able to offload all the risk of mortgages they underwrite. Incidentally that’s something that is still tru
by bradleyjg 8y ago
The incentives were screwy. Originators shouldn’t be able to offload all the risk of mortgages they underwrite.
Incidentally that’s something that is still true today. Originators are still unloading 100% of the risk of mortgages they issue. Except these days it’s almost to the federal government instead of private securities holders.
Dodd-Frank had a skin-in-the-game rule but it was effectively nullified in the rule making process even before this current administration.
- lovich 8y agoThat doesn't make it the "right thing". That makes it a "best for me" thing.
- rinze 8y agoIsn't that what the current system is all about?
- qaq 8y agoMany countries tried to build systems around doing "the right thing" did not work out too well.
- bradleyjg 8y agoExactly. As an individual one should strive to do that right thing. As a member of society one should support systems that are resilient in the face of people that do not strive to do the right thing.
- bobwaycott 8y agoIt doesn’t appear the parent was explaining it as the “right thing”.