Is the "subprime mortgage fiasco'' a direct result of GREED by banks, investment banks and politicians ?

Question

It was just a short time ago that the media was filled with advertisements about how anyone could create a windfall with a second mortgage and "cashouts".

Answer 1

It's greed by multiple parties including those and including consumers. There was this belief that it was almost endless. Some people believed that real estate would continue returning 20% a year. Smart and astute people recognized that it was unsustainable. Investment banks were bundling these loans into more complicated investments and investors started to get wary and didn't want to buy them anymore. It was stupidity by many people and the top is responsible because they had the power to stop it but they didn't exercise it.  

Answer 2

I think it was due to miscalculation of the risks by banks, based on ignorance, and the greed and dishonesty of mortgage brokers.  

Answer 3

Oh, let's not leave out Wall Street investors, mortgage brokers, and the folks who wanted that huge house even tho they couldn't afford it.  They were all greedy.

Answer 4

A few years ago.  economies were booming,  money was plentiful.   Banks could easily afford to engage in subprime mortgages (loans to high risk individuals).  Economy slows down.   Banks are now faced with high quantities of high risk loans on their books that are liable to be bad.   Freddie Mac & Fannie Mae bore the brunt of it  

Answer 5

Greed was definitely part of the problem.  However, I think you are pointing at the wrong people.  First of all, politicians (as much as most people hate them) had nothing to do with the subprime mess.  The two prime culprits are the two groups most affected by the "fiasco": the lenders (banks) and the borrowers.  The lenders gave out money to people who were not qualified for traditional mortgages in order to make more money.  The borrowers tried to live beyond their means and buy houses when they could not manage their finances well enough to pay for it.  There are a lot of groups that you could blame for the current situation but the people who were handing out money to anybody and everybody and the ones who kept asking for more with no concept of how to pay it back are the primary people responsible.

Answer 6

your are correct,

Don McClanen thinks a condition called pleonexia has overtaken the U.S. 'Pleonexia is an insatiable need for more of what I already have, and it has penetrated our culture to the point where people are angry at the poor,' he states."

Jaye Scholl; Don McClanen Offers the Wealthy a Different Kind of Freedom; Barron's (New York); Sep 18, 2000.