There has never been more confusion about mortgages than at this particular time in history. The collapse of the world economy can, in broad strokes, be laid at the feet of three parties; the Federal Reserve, mortgage lenders, and American home buyers. But the Federal Reserve Bank should carry most of the blame. Lenen met negatieve bkr has indepth information.
It was the Federal Reserve Bank, and only the Federal Reserve, that was responsible for increasing the ratio between how much money a bank had on deposit and how much it could lend to 30-1. Did you see Jon Stewart hammer Jim Cramer, the host of CNBC’s Mad Money, on who did this? Well, the answer is, the Federal Reserve Bank did it. Congress must replace the FRB.
Mortgage contracts were made with such low standards that mortgage brokers tried selling a subprime mortgage to every living, breathing person they spotted.. Millions who trusted their financial advisors had no idea there money was getting tied up in mortgages to unqualified people.
When the FRB raised the ratio it flooded the market with more money, which went out in loans to unqualified buyers which were then bundled as the infamous ‘asset backed paper.’. An other word for a so called toxic asses is a liability. And that’s what the governement is buying. The American government is using taxpayer money to buy liabilities.
Finally, the people who sit and tell TV cameras that they didn’t know that they had an adjustable rate mortgage are simply too stupid to own a home. I know that’s harsh, but it is the truth. These people should never have been allowed to purchase a home, and they certainly shouldn’t be rescued from foreclosure.
