tired and discredited claim that affordable housing caused the housing crisis

Crunch · 11-20-09, 03:46 PM

Quote:

Originally Posted by Objective Voice

But I'll say again, it wasn't cheap loans that caused the problem. It was "creative financing" within our financial institutions that allowed leveraging of derivities at such high rates as a byproduct of their cash cow - home loans, property insurance and securities - that caused the problem. The housing market was the catalysist, the financial vehicle that gave the financial markets their "foot in the door" as it were to create riskier investment opportunities. But the cause was deregulation of the housing industry and the lack of regulatory oversight.

Don't get them confused.

Of course you gloss right over the fact that if the mortgages had been given only to those that:

#1. Had a financial stake in their homes. (does 0% down ring a bell?)

#2. Where actually able to pay their mortgage.(a job, not welfare for instance)

#3. Had the cash reserves that used to be required before a mortgage was OK'ed. (It used to be that you needed a reserve equal to 6 months mortgage payments)

The derivatives would have been a sound financial tool.

And why you ask were these requirements waved? (hint: 3 letters... starts with C)