Question by Change Now: Why do people continue to think the banks were forced to create bad mortgages?
This is the most ignorant statement I hear people make on this post.
The banks were not forced to make bad loans. They did it on their own free will because of the creative financing technique called securitization.
If they are talking about CRA, that was a very minor part of the overall picture.
Best answer:
Answer by DAR
THe CRA was a key part of the picture, actually. And as for the rest, it is the federal reserve fixing interest rates so low the resulting free money to wall street had to find a bubble to build. The CRA and Fannie Freddie guarantees just guaranteed that that bubble would be in housing.
What do you think? Answer below!
