patrick.net

So, whose fault is it? cheater or cheated?

At some level, someone knew that this was a fraud. The rank and file may have no idea that they're issuing toxic loans, but their superiors somewhere in the chain knew to package together the toxic debt into MBS's, convinced the rating agencies that they're safe investments. Loan officers and brokers are just paper pushers with no power.

Criminals.

bubblesitter says

So, whose fault is it? cheater or cheated?

I would blame the usual suspects.......politicians.

You can't always blame the politicians, a d it's not the government's job to bail them out. Whatever happened to personal responsibility?

Strategist says

I would blame the usual suspects.......politicians.

Yeah right! You blame politicians for people taking on those toxic loans?

People need to take personal responsibility for the loans they sign for.

The problem was a "perfect storm" of greed, stupidity and lack of brains up the food chain. It was a house of cards built onto a false premise; house values never fall.
The shaky foundation was sub-prime mortgages. These should not have been originated but as we know banks were sued for not lending to people, it was considered "racist" or "redlining" etc.
The other was everyone was getting rich on fees originating mortgages. The people in the business were not regulated or licensed in any way. Used car salesmen started being mortgage brokers.
The math geniuses in Wall St. thought that you could package the bad mortgage tranches with good mortgages and this mixture could be sold to worldwide investors.
Worldwide there were many people seeking income and willing to buy SBS. The capital available for mortgages was huge.
An insurance type device called "Credit default swap" was then traded, which in other types of insurance would have been illegal because people trading had no "insurable interest" since they actually didn't own the mortgage security. It was as if you could trade the life insurance policy on your neighbor even though the beneficiary should be his wife.
The root of the disaster for banks was during Clinton; Rubin, Weill and others thought banks should be able to get back into trading, (gambling) rather than be stuck simply being banks. So, it took 9 years or so for the chickens to come home to roost, Glass-Steagal was replaced with Gramm-Leach-Bliley in 1999.
I blame banks the most, since we all know that the average slob would take free credit in most cases people are acquisitive.
Greenspan said after the disaster he was surprised that banks didn't take steps to protect themselves and went bankrupt.
What bothers me is also the banks have fucked up things in the U.S.A. on previous occasions.
I am incensed that the U.S. taxpayers bailed out bankrupt Citi and later they paid Rubin $120 million bucks. The clowns at Fannie and Freddie were also paid tens of millions in salaries.

It may be a corrupt system, but it's the best corrupt system in the world, so there's no need to worry about it ever falling apart.

It's a pretty big pie, so just dip your hand in it already, OK?

myob says

At some level, someone knew that this was a fraud.

Yes, that's definitely true. The way these companies operated with respect to MBSes and CDOs is consistent with that view. It was the same group of approximately 40 parties who were the greatest participators in these schemes, and they knew what they were doing. We shouldn't have bailed these fraudsters out.