| theprof00 said: It wasn't the central banks that fucked us, it was ARM companies. Now that those are regulated giving out loans is preferable to what banks are doing now which is not loaning and just investing. Housing drives the economy. Without homes, people don't buy things like fertilizer, enetertainment systems and big home theater systems, garage door openers, alarm and security, appliances. |
I... really don't even understand what your saying here... because you aren't using actual terminology.
Either way, the financial crisis largely happened because of "Liar loans" which largely happened because government pushed for loaning to poorer people with bad credit to get government incentives.
Which lead to compensation structures to emphasise number of loans as opposed to good loans. Instead of getting bonuses for signing a bunch of good loans, you got bonuses for signing any loans... and specifically good bonuses for signing good loans with people with that fall under bad credit situations. Since you've gotten the company good loans AND fufilled the government requirements.
Which lead to a bunch of brokers convincing poor people to lie, allowing them to immediatly cash in on bonuses for doing such a good job picking out the best loans.
Considering there was no real way to tell liar loans from "good poor" loans it was a matter of eiter A) Not compying with government directives and taking a penalty or B) Find a way to minimize risk.
They obviously went with B.
