Villains in the Mortgage Mess? Start at Wall Street. Keep Going. – washingtonpost.com
Once again, too many people had access to other people’s money with too little oversight. Once again, the White House, Congress and federal bank regulators failed to police the financial services industry because they mistook deregulation for a system without any reasonable rules. And now as then, our saga is chock-a-block with people and institutions deserving special mention in the Subprime Hall of Slime.
But make no mistake: Today’s crisis dwarfs the S&L fiasco. The eventual cost to taxpayers of this scandal is likely to make yesteryear’s culprits look like pikers.
The short version of how we got here: Lenders, fat with money made cheap by the federal government, aggressively coaxed millions of borrowers to take out unaffordable mortgages. They lent this money without assessing whether borrowers could repay it. They assumed, in fact, that most wouldn’t be able to and would have to refinance into new, equally unaffordable loans. This process would produce an endless cycle of fees for the lenders — but only if home prices rose, fairy-tale-like, forever.
On what planet would that be an acceptable business plan?