But the problem wasn't that people couldn't afford housing, it was that they became victims of predatory lending. ARM companies would give out loans boasting all the best intentions, at a 2-4% rate and then after a couple years, inflate to 6% then 8% etc etc. Of course people wouldn't be able to afford payments at rates like that, but it was a loophole for ARMCs to exploit.

ARMCs didn't care about getting long term incomes, they fronted money, took a loan, then boosted the terms, then sold all their loans to big banks for a lump sum. The big banks then were buying loans at rates people couldn't afford, so when they estimated making 800k over 20 years on a home they then realized that they had to drop rates down, meaning that 800k loan they paid for turned into a 500k loan, meaning they were drastically overpaying ARMCs and losing tons of money in the process. This was due to a lack of regulation on ARMs and a fundamental failure of banks to be vigilant. To banks, this was just business as usual until they realized the extremely destructive consequences.

From Wiki:

The crisis can be attributed to a number of factors pervasive in both housing and credit markets, factors which emerged over a number of years. Causes proposed include the inability of homeowners to make their mortgage payments (due primarily to adjustable-rate mortgages resetting, borrowers overextending, predatory lending, and speculation), overbuilding during the boom period, risky mortgage products, increased power of mortgage originators, high personal and corporate debt levels, financial products that distributed and perhaps concealed the risk of mortgage default, bad monetary and housing policies, international trade imbalances, and inappropriate government regulation.^{[2][42][43][44][45]}

Three important catalysts of the subprime crisis were the influx of money from the private sector, the banks entering into the mortgage bond market and the predatory lending practices of the mortgage lenders, specifically the adjustable-rate mortgage, 2–28 loan, that mortgage lenders sold directly or indirectly via mortgage brokers.^[46] On Wall Street and in the financial industry, moral hazard lay at the core of many of the causes.^[47]

An estimated one-third of ARMs originated between 2004 and 2006 had "teaser" rates below 4%, which then increased significantly after some initial period, as much as doubling the monthly payment.^[87]

The proportion of subprime ARM loans made to people with credit scores high enough to qualify for conventional mortgages with better terms increased from 41% in 2000 to 61% by 2006. However, there are many factors other than credit score that affect lending. In addition, mortgage brokers in some cases received incentives from lenders to offer subprime ARM's even to those with credit ratings that merited a conforming (i.e., non-subprime) loan.^[94]

There's also a section on government policies which continue to show that these companies were able to function because of banking and lending deregulation, which was bipartisan.

In office now, we have a regulations guy who has provided a wealth of shadow bank regulation and regulation on the banking system to both encourage lending and attempt to regulate the predatory lending that led to the crash.

Yes, there were government policies previously at fault. Yes, consumers were taking loans they couldn't afford. Yes to everything. Everything is just a piece of the pie that contributed to the crash. However, that doesn't change the fact that subprimes and their option-ARM offsrping accounted for 60% of all variable resets from 2006-2010. Banks and ARMCs were in it for big profits and raped everyone.

I often wonder who is to blame. Reading vgc, one would think "the administration", but they didn't really pull the trigger, did they? Sure it was the deregulation that gave banks and ARMCs the ability, but noone told those institutions to rape everyone's faces. The policies were designed to increase home buying, not increase bank profits.

Letting businesses deregulate is like letting a dog off the leash: there's no guarantee that the dog is well behaved, and you're responsible for whatever it shits on, pisses on, bites, mutilates, or destroys.

Letting governments regulate trade and then complaining about how terrible corporatism is is like... something else equally stupid and self-defeating. Smashing your dick with a hammer, perhaps.

That's assuming that the regulations are inevitably going to be corrupted by corporate donations, etc. Aggressive reforms could fix it

That's assuming that the regulations are inevitably going to be corrupted by corporate donations, etc. Aggressive reforms could fix it

Because power itself doesn't corrupt, right?

Because the people with the power are seriously going to legislate away other people's ability to bribe them, right?

Because even in the hilariously unlikely scenario that they did, no illegal deals are ever made, right?

Money corrupts more than power

Um... wat. What would money be if it didn't represent power? If the possession of wealth didn't confer a measure of power, then there would be no reason for money to be a corrupting influence.