What isn’t explained here is how the government, through Fannie Mae, encouraged banks and mortgage companies to make loans they knew the customers would not be able to pay back. Mortgage executives said, “After all, how can we lose? Fannie Mae is backing us up.”
The liberal policies of people like Barney Fwank made home ownership into a “human rights” issue. Banks made sub-prime loansto minority buyers in order to fulfill quotas imposed on them by government regulators. They knew the borrowers would not be able to pay back the loans.After making all these bad loans, the banks packaged up the loans mixing the bad loans with the good and selling them to other companies. They hid the facts about the bad loans.
Yes, greed was involved here, but the government made it all possible. There were a lot of greedy politicians, like Barney Fwank, who had their hand in the cookie jar too.