Those in the media and many in Washington like to place the mortgage crisis blame on the "working class" who acquired loans through what any sane economist knows to be a Classism loan disguised as the somewhat less offensive name, "Sub-Prime". In simple explanatory terms, here is what the loan banks were not telling the borrower at the other side of their table:
Sub-Prime is a discriminatory name and practice for you the working class for being forced by the government to give you a loan; So here is what I'm going to do. Your loan will be thrown in a Russian Roulette POOL and I'm going to sell it so it can resell again and again raising the payments higher and higher until your mortgage payments are impossible to meet, and I don't care. I'm going to treat you like a hot potato even though you were able to afford the original mortgage. I don't care because I'm a Republican and my goal is to make as much money off the only resource we have left... the people. I don't care!
That's what sub-prime really means. And I'm sick and tired of hearing these brainless news pundits and less than honest economists try and play reversal blame.
Instead of being truthful, banks tried to make you feel guilty by labeling you risky. "Risky?" you ask yourself. "How can a mortgage of 675.00 be risky to me while I've been paying 800.00 in rent?" Your upset, but you take the loan because the system is set up to prevent you from acquiring a 5 or 6% loan. Too bad you didn't know your 9 percent loan was going to go up up up until your mortgage reached a whopping 1400.00 per month!
Thanks to McCain's deregulation no one stopped the bond companies that took loans off the bank hands from creating the mortgage crisis by practicing SECRUTINIZATION.
Remind everyone PEOPLE WERE FORCED to own a home via SUB-PRIME LENDING. Next time someone tells you offering loans to risky people is the reason for this whole mess, tell them risky was dealing with gangsters on Wall Street. Here's an interesting excerpt from Robert Kuttner who wrote an article in The American Prospect a little over a year ago.
http://www.prospect.org/...
The sub-prime lending crisis of the current decade closely repeats that pattern. In 1977, the investment-banking firm Salomon Brothers devised a highly lucrative financial device known as "securitization" of mortgage credit. Mortgages could be purchased from the originator of the loan, repackaged as bonds, sorted according to supposed risk, and certified by bond-rating agencies, thus allowing any number of investors to buy the bonds. Each player along the way took a cut, raising costs to borrowers. Securitization enabled sub-prime lenders to throw away the rulebook. As long as some investment bank could be found to buy the loan, convert it to a bond, and peddle it to someone else, the mortgage companies could still turn a profit.