| theprof00 said: Flagship, banks knew that people were not going to be able to fulfill their debts, and they profited off of it. It has been proven, several companies that have gone under have said so, and others have been imprisoned for it. The fact is, one of the major impedences of the sub-prime loan sharks was a decrease on usury regulation. Usury, loan sharking. I don't even know how legislation like that can be passed. "Oh loan sharking isn't so bad...... the market is rich, lets let wall street make a buck." |
Those loans were made to meet federal regulations. They are required under ECOA to make loans on the same parameters to everyone, so if your a high risk individual you will get a high interest loan and in the past this helped to pay for this part of their business. The same entities though have to try to meet CRA requirements that they provide loans in underserved areas or face law suits. You combine those two and your getting high interest, high risk of failure loans that must be made. Until you provided a market for these it was just part of doing business, once you start making these marketable you bet they are going to sell them as it makes them profitable instead of just a loss. You make them a hot part of the market, by trying to make them a large part of Fannie Mae's portfolio and they went nuts. As for proven abuses, who was proven to be abusing what and by who? If your saying this is bad behaviour, you bet but it was supported by the federal government and the GSEs.
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