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For 20 years before the crisis, the American government promoted numerous policies to lower mortgage lending standards. The 2008 crisis is a natural price for s

by Ray20 3y ago

For 20 years before the crisis, the American government promoted numerous policies to lower mortgage lending standards. The 2008 crisis is a natural price for such policies. "Corporate/private greed" - is an explanation aimed at children, I don’t understand how a mentally capable person can seriously listen to this BS.

vouwfietsman 3y ago
> the American government promoted numerous policies to lower mortgage lending standards Again, where do you think these reforms come from, exactly? Grassroots movements? Where do you think the standards were before they were lowered and why were they initially higher? Do you think these ideas are voted into effect by individual citizens well informed on the facts of how it would affect the economy? Or based on advice by experts who did the same? If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards or lobbied against it. But they didn't, did they? Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? It's ridiculous. A cat and mouse game between legislation and reckless behavior is not a moral equilibrium where both sides are responsible for the outcome. Sometimes an explanation aimed at children is the right explanation, and all the adults are just shifting the blame and hiding behind the status quo.
- FeepingCreature 3y ago
  > If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards Wouldn't that have been illegal on multiple grounds?
  - vouwfietsman 3y ago
    No, quite the opposite. It's almost always possible to be safer than what is lawfully required, instead its hard to be riskier than what is lawfully required. Refusing to sell mortgage backed securities based on subprime mortgages is unlikely to cause you to be prosecuted. In fact, I do it every day. The strawman that supposedly justifies taking the risk anyway (everybody else is doing it and we would lose to the competition) is coherent but equivalent to "Billy was also doing it, and he's getting all the girls" when you got caught smoking cigarettes at school.
- Ray20 3y ago
  >Again, where do you think these reforms come from, exactly? From the federal government. That's the whole point. >they could've easily formed internal agreements to simply not lower their own standards No.These policies were literally designed to make it illegal. >Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? Yes. >Sometimes an explanation aimed at children is the right explanation But this is not the case
- ETH_start 3y ago
  The government was guaranteeing a significant fraction of subprime mortgages. This meant risk-free gains for corporations that bought the securities backed by them. That in turned guaranteed a rise in the market demand for MBSs backed by subprime mortgages, and with it, systemic risk. It was an inevitable consequence of the policy: https://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html https://www.nytimes.com/1999/09/30/business/fannie-mae-eases... Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

by Ray20 3y ago

vouwfietsman 3y ago

> the American government promoted numerous policies to lower mortgage lending standards Again, where do you think these reforms come from, exactly? Grassroots movements? Where do you think the standards were before they were lowered and why were they initially higher? Do you think these ideas are voted into effect by individual citizens well informed on the facts of how it would affect the economy? Or based on advice by experts who did the same? If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards or lobbied against it. But they didn't, did they? Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? It's ridiculous. A cat and mouse game between legislation and reckless behavior is not a moral equilibrium where both sides are responsible for the outcome. Sometimes an explanation aimed at children is the right explanation, and all the adults are just shifting the blame and hiding behind the status quo.

FeepingCreature 3y ago
> If corporations and private firms were so appalled by the government lowering the standards, they could've easily formed internal agreements to simply not lower their own standards Wouldn't that have been illegal on multiple grounds?
- vouwfietsman 3y ago
  No, quite the opposite. It's almost always possible to be safer than what is lawfully required, instead its hard to be riskier than what is lawfully required. Refusing to sell mortgage backed securities based on subprime mortgages is unlikely to cause you to be prosecuted. In fact, I do it every day. The strawman that supposedly justifies taking the risk anyway (everybody else is doing it and we would lose to the competition) is coherent but equivalent to "Billy was also doing it, and he's getting all the girls" when you got caught smoking cigarettes at school.
Ray20 3y ago
>Again, where do you think these reforms come from, exactly? From the federal government. That's the whole point. >they could've easily formed internal agreements to simply not lower their own standards No.These policies were literally designed to make it illegal. >Again and again, companies exert enormous effort to create and find loopholes and weaknesses in law, abandoning all ethics in the process and causing massive problems for society. And somehow this is blamed on government? Yes. >Sometimes an explanation aimed at children is the right explanation But this is not the case
ETH_start 3y ago
The government was guaranteeing a significant fraction of subprime mortgages. This meant risk-free gains for corporations that bought the securities backed by them. That in turned guaranteed a rise in the market demand for MBSs backed by subprime mortgages, and with it, systemic risk. It was an inevitable consequence of the policy: https://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html https://www.nytimes.com/1999/09/30/business/fannie-mae-eases... Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.