About the subprime debacle

[Dreamer Tatum]

Poll question: About the subprime debacle

If underwriting standards had remained rigid for subprime borrowers, so that most home loan applications would have been
denied without huge down payments and strict income verification, would you have been OK with that?

Keep in mind that the derivatives that took down the banks would not have existed had those loans never been made, so
you can't place all the blame there.

I ask this because the only way to have avoided the debacle altogether would have been to deny loans, plain and simple.

[Zywiec]

1. Yes, I believe some people make better renters. n/t

[customerserviceguy]

2. I have to go with "yes"

but they are not the sole source of the problem, no matter what the 'conventional wisdom' is.

[leftstreet]

3. Sorta. It would've exposed the reality of shit wages sooner

It was just another tactic by the Predator Class to confuse us, keep us at bay.

(And I mean no disrespect to borrowers who got caught up in the subprime mess.)

[SOS]

4. Subprime is only a part of the banking disaster

The entire subprime loss was about $150 B
The subprime mbs's come to another $550 B
Total $700 B
TARP could have bought out the whole mess.
Here's a chart of all the bank losses:

[ThomWV]

5. I would expect strict income verification in any case, but not necessarily big down payments

I think the point of the subprimes was that by definition they presented more risk. That would have demanded a higher interest rate with a similar down payment, but not a larger one. Of course income verification should have been a given for any loan so I don't even accept that as a parameter.

[rrneck]

6. Yes. And W would have had

a much harder time selling his war without an artificially overheated economy.