From the WSJ this morning “FDIC Faces Mortgage Mess After Running Failed Bank“:
It turns out that the U.S. government itself was one of the lenders giving out high-interest, subprime mortgages, some of them predatory, according to government documents filed in federal court.
Reminds me of Lisa Simpson’s line in “Homer the Vigilante“, when Homer sets up a group to track down a cat burglar. Lisa’s line goes along the lines of (paraphrase): “but if you’re the police, who’s going to police the police?” To which Homer replies “I don’t know, the Coast Guard?”
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Some want to blame the Feds for the subprime mess
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on Jul 22nd, 2008 at 9:54 am
Indeed! Just goes to show that we need to look out for ourselves and not assume that the system will watch out for us. Sometimes the best intentions can go astray.
– Louise
on Jul 28th, 2008 at 10:59 am
The FDIC is losing more money every day. In July 25, it took over First National Bank. A week before, it took Indymac.
The U.S. Treasury bailed out Freddie Mac and Fannie Mae. Months ago, the feds, together with JPMorgan, bailed out Bear Stearns.
People say the real estate crisis and present credit crunch started with the subprime collapse. Lenders were giving loans to people who have low credit ratings or don’t have the capacity to pay at all. Lenders overvalued the mortgaged properties or the collateral just to close deals with people, some of them illegal aliens. Hence, the collapse of Aegis Mortgage, HomeBAnc, NewCentury, People’s Choice.
The ratings agencies gave high credit ratings to securities backed by these mortgage loans.
tsk tsk.
Who’s to blame here? Now knowing that the Feds have issued subprime loans themselves, I think everyone is to blame here.