Was it greed? Was it capitalism? Was it super-greedy uber-capitalism?
Well, one thing’s for sure, we wouldn’t find ourselves having to bail out AIG, Freddie & Fannie, Bear Stearns, and the millions of flippers and defaulters if the real estate bubble hadn’t burst.
And, of course, the real estate bubble wouldn’t have burst if all the foreclosures and mortgage defaults hadn’t happened.
And all those people wouldn’t have defaulted and gotten foreclosed on if they hadn’t tried to buy too much house to begin with, via those vile subprime and other “predatory” (even “racist”) loans.
Which wouldn’t have happened if we hadn’t all thought real estate was a “good investment” and “always goes up”, and is “The American Dream” (which it’s not, “opportunity” is).
And, it’s important to note, Real Estate wouldn’t have “always gone up” (for 5 meager years) if the tech bubble hadn’t burst and Sir Alan Greenspan hadn’t depressed interest rates for way, way, way too long.
And those securitized rotten mortgages wouldn’t have been peddled so aggressively if Sir Alan Greenspan hadn’t depressed the interest rates for way, way, way too long, either.
Alan Greenspan wouldn’t have depressed interest rates for so damn long if the country wasn’t heading into recession after the demise of the tech bubble.
Of course the tech bubble burst because people finally realized that tech stocks don’t “always go up”.
All those bad, securitized mortgages wouldn’t have (couldn’t have) been securitized if the banks, along with Freddie & Fannie, hadn’t lobbied for Republican Senators Phil Graham and James Leach to repeal the Glass-Steagall Act (a post-Great Depression law that banned banks and brokerage houses from intermingling their finances) which was passed 90-8-1, and signed by Bill Clinton.
The banks, along with Freddie & Fannie, wouldn’t have lobbied for Glass-Steagall to be repealed if the banks, along Freddie & Fannie, hadn’t been suddenly handling an ever-increasing amount of really stupid, bad mortgages.
Freddie & Fannie wouldn’t have been able to “revamp” themselves and “back” all those idiotic loans if Clinton hadn’t installed his buddy Jim Johnson and former budget director Franklin Raines (both of whom are currently high-level Obama campaign principals).
Clinton wouldn’t have installed his cronies to head up F&F (and change their rules) if the banks hadn’t cried bloody murder (lobbied) about how dangerous, and risky all these mortgages, now sitting heavily on their books, were.
And, finally, the banks would never have partaken in these super-risky mortgages in the first place had the office of Housing and Urban Development, at Clinton’s direction, not drastically increased the home ownership quotas for “minorities” and other, “less fortunate” citizens.
And Clinton would have never demanded that “minorities” and other, “less fortunate” citizens, had it not sounded so darn good. In theory. Politically.
And, well, that’s it. That is exactly what happened.
All of this with the obvious and important fact that throughout all of this the Government willfully failed to enforce laws already on the books, like you can’t loan money to someone who can’t prove their income (bank fraud) and you can’t give junk-rate securities a AAA rating when you know full well they’re junk (securities fraud).
By the way, it’s not too late to enforce these laws, and even collect money from the monumental assholes that perpetuated this mess. Both in Government and in the private sector. From Congressmen, to Fed Chairmen and Presidents. From wannabe BoilerRoom Mortgage Brokers to Wall Street CEOs. These jerks owe us money, and jail time.
You know what they say about good intentions?
Whoever they are, they’re right.