Why are we faced with another crisis in th banking system that is exactly the same as the S&L crisis of the?

Question

1980s?
Mortgage backed securities were the cause of the failure of many savings & loans across the country in the 1980s. Billions of dollars of deposits were lost, which lead to a government bailout and a recession.
Today, we are facing exactly the same scenario only on a much greater scale. Hundreds of billions of $ will be lost worldwide in this latest mortgage scam. The only difference is these loses will not come from federally insured deposits. The result, however, will be the same. Investment capital will dry up and a robust economy will stall.
Why are we facing this problem again? Did we not learn anything the first time around?

It is of interest that Niel Bush was deeply involved in the S&L scandal.

Redrum;
I am talking about the mortgage securities bundled and sold in the international market, not the individuals who mortgaged their house with bad terms.

Answer 1

We're facing the same problem because Congress and the President won't enforce the existing laws on the books.

Makes you wonder how deeply involved Neil Bush is in it again.

Answer 2

*Niel Bush got caught up in it just like that staight talking John McCain did and three other congressmen. They were known as "The Keating 5".

The big difference here is the people getting financing knew what was going on with this subprime. They were told how they could get financed. They went for it and got caught. For Others it was a case of pure stupidity Of not taking a fixed rate mortgage.

Answer 3

I think you've answered your own question. No one was made to learn and so they didn't. Does anyone (other than me) remember the lobbyists in the final Clinton years getting a law passed raising interest rates? And then during the early Bush years getting the laws governing who qualifies for bankruptcy changed? All you need do after that is begin handing out "loans" to those that don't otherwise qualify and the next thing you know, the real estate bubble bursts! Stupid is as stupid does.

Answer 4

I was thinking it all sounds way to familiar myself. I also remember the Bush connection. I was wandering if anyone else would put it together. Thanks I guess I am not crazy after all lol. What is going on here, hum?

Answer 5

by and large, the US banking industry did learn -- they exported the potential problem loans to others.

There are a limited number of very specialized firms whose business was subprime and alt-a loans that will disappear. Nearly all the rest of the US industry will survive just fine.

As to the buyers of these "securities" [loans repackaged with credit guarantees and credit ratings], some of them obviously did not learn back in the 1980s. The marketplace is rapidly driving them to the unemployment line, as it should.

***
the other effects you are impliedly commenting about are due to the winding up or scaling back of businesses that over relied on shaky loans to their customers that perhaps should not have been made.

their risk, their loss.

Answer 6

Because we allowed the republicans to take control of the government. Wolves guarding the hen house is not a good idea.