Are you confused about mortgages? Good. At least you know you are confused. The collapse of the world economy can, in broad strokes, be laid at the feet of three parties; the Federal Reserve, mortgage lenders, and American home buyers. But the Federal Reserve Bank should carry most of the blame.
It was the Federal Reserve Bank, and only the Federal Reserve, that was responsible for increasing the ratio between how much money a bank had on deposit and how much it could lend to 30-1. Jon Stewart repeatedly hammered this point home when demolishing Mad Money host Jim Cramer on March 12th. Why is Republican Congressman Ron Paul the only politician in Washington pointing at the Federal Reserve Bank? Why are heads not rolling and careers ending at Treasury?. Congress must replace the FRB.
Mortgage brokers concocted obtuse mortgage contracts and then began shilling subprime loans to unqualified buyers. Millions who trusted their financial advisors had no idea there money was getting tied up in mortgages to unqualified people.
These shaky mortgages were then bundled and sold to financial firms as 'asset backed paper,' the now infamous 'toxic assets' we, the taxpayer, are buying from the banks. An other word for a so called toxic asses is a liability. And that's what the governement is buying. Your tax money is being used to the American government.
Finally, the people who sit and tell CNN cameras that they didn't know that they had an adjustable rate mortgage are simply too stupid to own a home. If not, things that are bad now are going to get worse and they may not ever get better again. These people should never have been allowed to purchase a home, and they certainly shouldn't be rescued from foreclosure.
It was the Federal Reserve Bank, and only the Federal Reserve, that was responsible for increasing the ratio between how much money a bank had on deposit and how much it could lend to 30-1. Jon Stewart repeatedly hammered this point home when demolishing Mad Money host Jim Cramer on March 12th. Why is Republican Congressman Ron Paul the only politician in Washington pointing at the Federal Reserve Bank? Why are heads not rolling and careers ending at Treasury?. Congress must replace the FRB.
Mortgage brokers concocted obtuse mortgage contracts and then began shilling subprime loans to unqualified buyers. Millions who trusted their financial advisors had no idea there money was getting tied up in mortgages to unqualified people.
These shaky mortgages were then bundled and sold to financial firms as 'asset backed paper,' the now infamous 'toxic assets' we, the taxpayer, are buying from the banks. An other word for a so called toxic asses is a liability. And that's what the governement is buying. Your tax money is being used to the American government.
Finally, the people who sit and tell CNN cameras that they didn't know that they had an adjustable rate mortgage are simply too stupid to own a home. If not, things that are bad now are going to get worse and they may not ever get better again. These people should never have been allowed to purchase a home, and they certainly shouldn't be rescued from foreclosure.
About the Author:
Frank writes about mortgages and financial matters. He also writes about hypotheken, leningen, lenen student and studentenlening in Dutch.
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