Who is to blame for the credit crunch?

Question

Considering that subprime mortgage lenders were not regulated where due diligence on extending credit to individuals was unchecked, who is to be blamed for this? when lenders found that the debt was of poor quality, they simply kept selling their portfolio to banks and hedge funds to throw the debt on their books and gain immediate profit.
Where was the SEC or Fed Resv to ensure compliance? for the past 5 years or so, the R.E.market has been booming.Were they not aware that the bulk of the industry was fueled by low interest rate offers 3/27 financing schemes? how stupid was the Government to sit back and not realize the growing risks? Now that the sh** has hit the fan are the NECONS ( SEC/Fed Resv) starting to probe into this issue. Typical typical ! now we are in a free fall. Do you think that the USD 38Bln dollar injection of the Fed reserve will solve this problem? its only a temporary solution to liquidity.

Answer 1

Republicans... they say the market regulates its self?

apparently something went wrong?

oh yeah... that's right... some people don't know what they are doing and get into horrible loans...

which granted, it's that person's stupid fault for getting into a bad loan... but when the stock market starts dropping because of it... all of a sudden... it's your problem too... and it's everyone that has a 401k that's invested into that company's problem too...

it's all tied together... other people's stupid mistakes in their own lives can give you a headache years later...

I don't own a lot of stock... so frankly... I don't care... but if I did own much stock... I sure would wish that maybe the government would have stepped in...

Answer 2

I would say the blame lies between the sub prime lenders and the borrowers. There were to many lenders eager to loan money to just anybody and the borrowers took out mortgages on more house than they could afford. I had a lender try to talk me into borrowing $45,000 more than I wanted when I was looking for my home. I dropped him like a turd from a high dog and found a lender that was more interested in what I wanted not their commission.

Answer 3

To sound cliche both. Mortgage lenders have been more or less acting recklessly when it came to loaning money. But consumers do share some responsibility. People have been taking out loans things that are in general way out of their league. Think of this a family making 80k a year is paying a mortgage for a home that is above 500k. In the end it is the mortgage lenders who are responsible since it is there money, but many consumers who did not exercise common sense are not victims as they would claim to be.

Answer 4

It's more like a liquidity squeeze.

The reason? greed. At all levels, lenders were willing to accept applications from very risky borrowers, and wall street seemed completely disinterested in considering the risk in sub prime as long as the short-term return was strong.

As far as consumers, not understanding the implications of an ARM is a poor excuse. Quite frankly, most were only interested in the short-term as well.

The economy is strong enough to sustain this, although we have yet to see the worst in foreclosures and delinquencies as the bulk of ARMs have yet to hit their increase. Property values will likely decline further. It will be clear in a few months if recession is a real possibility.

Answer 5

Typical ludicrous irresponsible garbage !!!!!!!

Those that are fully responsible for the credit crunch and liquidity problem are those people who took loans/bought houses they should have known they could not afford .Many of these irresponsible fools didn't even read the fine print of their mortgages and are now paying the price and causing ALL OF US TO PAY THE PRICE FOR THEIR STUPIDITY .

I am justifiably irrate about these irresponsible idiots and the problems THEY are causing me and most others.

To blame the government or anyone else for the mess as the primary cause because of the irresponsible borrowers is simply a nonm starter.

Should we take a look at the rules/regulations/laws surrounding this entire issue MAYBE BUT this must never be seen as the solution.RESPONSIBLE CITIZENS ACTING RESPONSIBLY is all important.

Answer 6

Your assertion:- "the actuality of the situation is that the credit crunch became into began by using extra effective call for of food & potential which raised expenditures ; which raised the fee of living ; which meant many assets vendors ought to now no longer save up funds on their mortgages." Is untrue - it became into began by using banks over extending credit to those who could no longer take care of to pay for it and the two had their residences repossessed or declared themselves bankrupt lowering earnings of banks with the aid of fact of this they wont make greater funds to one yet another. it somewhat is real that the extra effective fee of food and potential has made the placement worse. householders have been extra effective than happy while quotes of activity have been decrease and living house expenditures the place going up. a pair of years in the past inflation became into lots under 2% and fairly some (no longer all) have been spending funds like it became into water. Now quotes of activity have long gone up, living house expenditures are falling, and inflation is greater than 2% human beings desire to coach to the government and say why did no longer you hold funds for a wet day - it is your activity to bailout householders. incorrect incorrect incorrect - in case you study any very own loan furnish it factors out how lots the money would be if quotes of activity went up by using a million% and warns you what's going to take place in case you fail to make funds. it is your duty to furnish on your loved ones and which potential careful making plans and prudence. I even have saved funds each month so as that I also have a minimum of three months gross sales saved in case of unemployment. And which potential saving for the duration of the reliable circumstances to help for the duration of the undesirable circumstances. There are actual situations of families stepping into problems and that i agree they desire a hand up - yet fairly some the folk in monetary dificulty purely have themselves to bame

Answer 7

No one. This is what happens in a "free market." Perhaps, if we must assign blame, Greenspan's Fed which maintained artificially low interest rates for an extended length of time.

Answer 8

The subprime mortgage lenders and the customers who bought their products are to blame.

If you bought a house with an ARM and now you're whining because you are in foreclosure, you *deserve* to lose your house for being stupid!

Answer 9

Lots of fees and money changed hands and Guess who is going to get stuck bailing this mess out .

The tax payers , Bush already dumped like 50 billion to help out and more will need to be done .

Answer 10

Credit crunch?

So, if its too easy to get loans, that's bad.

If they tighten the restrictions, its a 'credit crunch' and that's bad too?

Good double-speak justification for granting government unspecified power...


PS: Hamilton was power hungry and his vision of a strong centralized government is the root of this mess we're in today.