The only time mortgage confusion was higher that it is right now is back when sub-prime mortgages were not known to be the cesspool that we now know them to be. The global economic system has been collapsed by people who were confused about mortgages and didn't know it. Whose fault was it? It was the fault of the sub-prime home buyer. It was the fault of the sub-prime mortgage broker. It was the fault of lazy financial advisors who put their client's money in asset backed paper that turned out to be worth whatever recycled paper goes for and no more. Of these, the most dangerous and most responsible party, the Federal Reserve Bank, is also the malefactor fingered the least.
It was the Federal Reserve Bank, and only the Federal Reserve, that was responsible for increasing the ratio between how much money a bank had on deposit and how much it could lend to 30-1. Jon Stewart repeatedly hammered this point home when demolishing Mad Money host Jim Cramer on March 12th. Why is Republican Congressman Ron Paul the only politician in Washington pointing at the Federal Reserve Bank? Why are heads not rolling and careers ending at Treasury?. Congress must replace the FRB.
Mortgage brokers concocted obtuse mortgage contracts and then began shilling subprime loans to unqualified buyers. Millions who trusted their financial advisors had no idea there money was getting tied up in mortgages to unqualified people.
These shaky mortgages were then bundled and sold to financial firms as 'asset backed paper,' the now infamous 'toxic assets' we, the taxpayer, are buying from the banks. An other word for a so called toxic asses is a liability. And that's what the governement is buying. Your tax money is being used to the American government.
Finally, the people who sit and tell CNN cameras that they didn't know that they had an adjustable rate mortgage are simply too stupid to own a home. I cannot conceive of people so clueless that they make the largest financial commitment of their lifetimes without reading the document they are signing - or at least paying a lawyer or advisor to do so. Pity them, yes. Bail them out? Not a chance.
It was the Federal Reserve Bank, and only the Federal Reserve, that was responsible for increasing the ratio between how much money a bank had on deposit and how much it could lend to 30-1. Jon Stewart repeatedly hammered this point home when demolishing Mad Money host Jim Cramer on March 12th. Why is Republican Congressman Ron Paul the only politician in Washington pointing at the Federal Reserve Bank? Why are heads not rolling and careers ending at Treasury?. Congress must replace the FRB.
Mortgage brokers concocted obtuse mortgage contracts and then began shilling subprime loans to unqualified buyers. Millions who trusted their financial advisors had no idea there money was getting tied up in mortgages to unqualified people.
These shaky mortgages were then bundled and sold to financial firms as 'asset backed paper,' the now infamous 'toxic assets' we, the taxpayer, are buying from the banks. An other word for a so called toxic asses is a liability. And that's what the governement is buying. Your tax money is being used to the American government.
Finally, the people who sit and tell CNN cameras that they didn't know that they had an adjustable rate mortgage are simply too stupid to own a home. I cannot conceive of people so clueless that they make the largest financial commitment of their lifetimes without reading the document they are signing - or at least paying a lawyer or advisor to do so. Pity them, yes. Bail them out? Not a chance.
About the Author:
Frank writes about mortgages and financial matters. He also writes about hypotheken, leningen, geld lenen student and studenten lening in Dutch.
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