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fallacy:
2008 happened because everyone in the real-estate and loan business was making money and no one gave a ---steaming pile of meadow muffin--- about the bigger picture or even what the other guy was doing. That has not changed a few more regulations just means a few extra steps to get around them to make that money.

dkersten:

--- Quote from: fallacy on May 03, 2017, 01:43:23 pm ---2008 happened because everyone in the real-estate and loan business was making money and no one gave a ---steaming pile of meadow muffin--- about the bigger picture or even what the other guy was doing. That has not changed a few more regulations just means a few extra steps to get around them to make that money.

--- End quote ---
And since all the home owners were fiscally responsible adults, none of them got themselves into a loan they couldn't afford, and of course they all made sure to plan for the future and have enough down payment where they could sell in a down market too. Not their fault at all, it's all the banks. :laugh2:

Yes, banks took advantage of relaxed laws that allowed them to give out loans to people with bad credit and no money down and the government entities that underwrote those loans let it happen. It was horrible lending practice and the banks that went belly up from it deserved what they got.

You could point the finger at banks, at the govt., and at morons who signed on the dotted line and pretended that since a bank told them they could borrow 10 times what they make in a year, it must be OK. In every case you would be right, as long as you don't exclude any of the above from fault.

The practices that led directly to the crash of 2008 are no longer allowed. Idiots will still try to borrow more money than they should, and banks will still sometimes loan it to them. But as long as you don't have some guy making $50k getting a $500k loan with no down payment, the risk of a market dump causing the reaction it did in 2008 is low. Besides, what happened in 2008 and 2009 went way beyond a bunch of crappy loans and some real estate that lost value.

As for "predatory lending", when I was a young adult and in debt up to my eyeballs, I blamed the banks for all my problems too. I mean, they just sent me a card that allowed me to spend thousands of dollars I didn't have, and then expected me to pay INTEREST on that loan. They nerve of them!! They duped me into making bad decisions! Aaaaaaannnd .... then I grew up. Oddly, if you pay attention in 7th grade math, as an adult you will understand that when you make $50k per year, you can't ever afford a $500k house. There is no scenario where it adds up. No matter how compelling the banks made it to go out and buy that ridiculously expensive house, even the dumbest people should have known better.

ChadTower:

While I agree with all of that, the banks and the mortgage companies made so many billions of dollars during that period, it will all cycle back again. It might take 20 years for people to forget enough to allow it but it will happen.

pbj:
As always, I point out that most mortgages didn't default, and the real issue was a relaxation of laws allowing banks to borrow 100 to 1 against them. The irresponsible home buyers bit is a line pushed by those that sought bailouts.

Mike A:
+1 to that.

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