Fannie and Freddie not at fault

[Maggie]

If the primary lenders know that no one will buy their bad loans, they wouldn't make those loans in the first place. As it was, the private banks basically had a key to the dump.

It's another example of the principle that you can't just open the door a little.

But yes, my current and past mortgages has been transferred more than once. One thing I've noticed, however, is that SunTrust seems to not sell theirs, which makes me think they were one of the more responsible ones.

We were one of those homeowners that refinanced into two loans (we cashed in some equity). But we also bought less home than what we could reasonbly afford. At the time we refinanced our loan was with WaMu.

I think all the mortgage selling and buying has lead to some of this problem too. There is no stability. If banks just kept their own loans that they made, maybe none of this would have happened in the first place.

I think you are right….to an extent; however, what would have happened is all the local banks would have gone under – which they were not willing to do.

Fannie and Freddie are not bad institutions – they serve a purpose. Like I wrote they allow the local banks to shift risk – which is a good thing in that it permits these banks to extend more credit. The problem is Fannie and Freddie, et als., lowered their standards as well and passed the bad loans on to the larger market.

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

So ask yourself -- why were lending standards relaxed and for what purpose?

[RoyalShock]

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

Not to speak for rr, but I think that is what he really meant. At least, that is what I'm agreeing with.

rr, if that isn't what you meant, then I take it all back! :D

[Maggie]

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

Not to speak for rr, but I think that is what he really meant. At least, that is what I'm agreeing with.

rr, if that isn't what you meant, then I take it all back! :D

If that is what he meant – then he has discovered the genesis of the financial crisis.

But it is also worth it to explore what social policies gave rise to these conditions, who supported them and why.

[RoyalShock]

But it is also worth it to explore what social policies gave rise to these conditions, who supported them and why.

Completely agree.

And the next quesiton is, can we expect to hear about new legislation or new SEC rules to address those policies?

[Maggie]

But it is also worth it to explore what social policies gave rise to these conditions, who supported them and why.

Completely agree.

And the next quesiton is, can we expect to hear about new legislation or new SEC rules to address those policies?

What would you propose?

[RoyalShock]

I don't know.

If I knew more about what the consequences of certain actions are in the banking/financial sector, I could perhaps devise a plan.

I'm still learning about how things work. This "collapse" has been quite the educational adventure!

[Maggie]

I don't know.

If I knew more about what the consequences of certain actions are in the banking/financial sector, I could perhaps devise a plan.

I'm still learning about how things work. This "collapse" has been quite the educational adventure!

Indeed.

[rrshock]

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

Not to speak for rr, but I think that is what he really meant. At least, that is what I'm agreeing with.

rr, if that isn't what you meant, then I take it all back! :D

That was what I was getting at. Smaller banks, like "Hometown" banks would have never made alot of the loans that are going bad now. Yes, even the best loan on paper can end up a crappy deal, but they would have been alot more careful with who or how they leant money.

[Maggie]

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

Not to speak for rr, but I think that is what he really meant. At least, that is what I'm agreeing with.

rr, if that isn't what you meant, then I take it all back! :D

That was what I was getting at. Smaller banks, like "Hometown" banks would have never made alot of the loans that are going bad now. Yes, even the best loan on paper can end up a crappy deal, but they would have been alot more careful with who or how they leant money.

Then why did they make the loans?

[rrshock]

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

Not to speak for rr, but I think that is what he really meant. At least, that is what I'm agreeing with.

rr, if that isn't what you meant, then I take it all back! :D

That was what I was getting at. Smaller banks, like "Hometown" banks would have never made alot of the loans that are going bad now. Yes, even the best loan on paper can end up a crappy deal, but they would have been alot more careful with who or how they leant money.

Then why did they make the loans?

Because they fit into certain criteria that the larger banks that buy them had?

[Maggie]

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

Not to speak for rr, but I think that is what he really meant. At least, that is what I'm agreeing with.

rr, if that isn't what you meant, then I take it all back! :D

That was what I was getting at. Smaller banks, like "Hometown" banks would have never made alot of the loans that are going bad now. Yes, even the best loan on paper can end up a crappy deal, but they would have been alot more careful with who or how they leant money.

Then why did they make the loans?

Because they fit into certain criteria that the larger banks that buy them had?

Sure...what "criteria" and why?

[SHOCKvalue]

I think a more salient point is – if the lending standards were not relaxed in the first place this would not have happened.

Not to speak for rr, but I think that is what he really meant. At least, that is what I'm agreeing with.

rr, if that isn't what you meant, then I take it all back! :D

That was what I was getting at. Smaller banks, like "Hometown" banks would have never made alot of the loans that are going bad now. Yes, even the best loan on paper can end up a crappy deal, but they would have been alot more careful with who or how they leant money.

Then why did they make the loans?

Because they fit into certain criteria that the larger banks that buy them had?

Sure...what "criteria" and why?