Inuyasha wrote:
I'm not saying that greed wasn't a contributing factor, however it does not negate the fact that Banks faced retailiatory action from the Federal Government if they exercised better judgement and refused to make said loans. Therefore, the bulk of the blame is on the Government, not the banks. If it was just incentives from the Government and greed in play, then I would be agreeing with you that it was simply corporate greed. However, the Government was also retailiating towards banks that attempted to buck the trend and not go along with this, which is why I'm saying you can't chalk this up to simple greed, that the Government is effectively to blame for causing this mess.
But you are forgetting one extremely important fact: because of derivative instruments,
these banks never had to accept any risk inherent in subprime mortgages, whether CRA or otherwise.These are the self-same banks that were involved in an orgy of greed when it came to non-CRA mortgages. These banks couldn't give a toss whether the borrowers had jobs, assets or income. They couldn't care less about the realizable value of the property. They knew that within days of issuing the mortgage they could package it up into collateralized debt instruments and sell it on.
It still doesn't change the fact that some banks did attempt to not participate in this scheme, and the Feds punished them as a result. Just because there were all these incentives, you shouldn't discount the fact there was a stick too.
