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A global financial system should absolutely not be able to be taken down by fraudulent behavior like writing shitty loans. You can point all the fingers you wan
by cirgue 8y ago
A global financial system should absolutely not be able to be taken down by fraudulent behavior like writing shitty loans. You can point all the fingers you want at them, but ultimately that's like saying that the intern who was able to push changes directly to production is the reason your site now shows nothing but cat pictures: they had a hand in it, but the fact that it happened points to much larger and more pernicious structural problems that, while everyone else might have been doing their job correctly, indicate that the system obviously didn't do the thing you need it to do.
- Retric 8y agoShould and did are different things. Banks where approving loans because they where offloading the risks from bad loans by reselling the mortgage while pocketing fees. That's a systematic change that obviously created huge conflicts of interest and thus had a huge negative impact on the financial sector. Really, it's not about bad actors it's about bad incentives creating bad actors and worse those incentives have not really gone away.
- lotsofpulp 8y agoWell, usually if a lender encourages its underwriters to commit fraud and lend money to people who are not as likely to pay it back, the lender would go out of business. Unless that lender happens to be a home mortgage issuer in the US, where you don't have to worry about that and the government bails you out. So the structural problem is the continuous system of bailing out lenders, which means lenders don't need to spend money to do due diligence, and hence you end up with a "broken" system. But that doesn't absolve the individual people who are committing fraud and enabling it.