Is the subprime lending mess an example of people who control credit undermining the banking system?

Question

This is the fully worded Q which is too long to fit in the Q-box: Is the subprime lending mess an example of people who control credit undermining the banking system by not following time-tested good bank-lending rules? Who guards the guards?

Answer 1

I think the subprime mess is due to people not being responsible for themselves and borrowing money they KNOW they can never payback

Answer 2

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Answer 3

We also should be responsible for controlling credit.

The consumers shouldn't buy more than they can afford now or in the future.  It was the consumers' fault for stretching their finances too thin.

It is also the lenders/banks fault that they are in their current financial mess.  They should have been more strict on their lending practices instead of thinking about the short-term bottom-line.

What I don't understand is why adjustable mortgages even exist.  What is the point?  These types of mortgages are the main reason why people defaulted on their home loans.  This is why people have had to foreclose and have terrible red marks on their credit reports.  This is why banks and lenders are facing billions upon billions of dollars in bad debt.

Who guards the guards?  No one.  I don't know if there should be laws to prevent another economic disaster, but there definitely needs to be more personal responsibility and accountability.

Answer 4

Undermining? Lenders bought loans quite voluntarily. If they had wanted to take less risk in their lending, they could have. I can invest at all sorts of different risk levels. There is nobody needed to "guard" me.