how can anyone be so stupid to be caught in this subprime lssue?

Answer 1

This is a country that most people can not even do their own taxes. You expect them to understand mortage rates and bank interest charges? They are not stupid by the way, most of them have been "sold" on the idea they can just get a new rate 2 years later and they believed their lenders.

Answer 2

I think you already answered your own question - stupidity.
Humans are similar to animals when it comes to getting what they want. They will take the path of least resistance with little regard for the consequences.
Many people just couldn't wait to buy a house. Who cares if their credit is pi** poor, who cares that they have an expensive car note and large credit card balances? All they cared about was what they wanted and they didn't read or understand what they were getting into.
I don't blame the brokers as much as I blame the consumers. No one can *force* you to sign something. It was their choice.

Answer 3

Are you referring to the banks and brokerage firms that are on the verge of collapse? I suspect that is was just greed. They must have known deep inside that they couldn't bundle bad loans together and miraculously turn them good loans. But greed often makes the human mind embrace utter foolishness.

On the other hand, some CEOs of major financial institutions have been fired, but only after making millions for themselves and walking out with the "golden parachute." They can't be called foolish, but investors and those running the government who allowed this catastrophe to develop are clearly very, very foolish.

Answer 4

I'm not sure who specifically your referring too . . . subprime bonds are actually paying . . . it's an accounting issue which has lead to a credit seizure. No one knows how to book the transactions . . . especially on the resets.