cartoon by TFT

Wall Street found a way to make money three times.  They lent money to financial institutions to make loans that looked great and were affordable when taken out.  Told individuals how to ensure they make changes before interest rates go up but knew most would not.  Took out insurance to ensure that when the loan went sour they still get their return.   The covenants of the loans to the financial institutions caused these companies to have to come up with cash and created a default of a number of financial institutions which are now owed by these entities loaning money.  The government now pays to have these bond holders take over the companies with little risk.

So to some degree it makes it necessary to ask the question. Did certain bond holders set up the system to collapse and then profit from it?  Wall Street built housing on an unsound foundation.  If a contractor would go to jail for fraud, a few of them just might as well.

The across the board blaming of home owners as the cause of the collapse is misdirected. The real cause is the fact that the financial system was allowed to invest several times over on the same property. There are more securities leveraging the same property.

AIG is the best example of how billions on the tax payers money has made leveraging worth while.  Too big to fail should not be the practice.  The opposite action is what the Feds should have ordered. The investments were paper and the defaults on housing is still not a huge number, it is only a perception because the default was so much lower than investing in a new business.

Nonprofits can make the greed a benefit for affordable housing.  The use of government funds for purchasing affordable housing is the best return on reducing future government payments for section 8 vouchers.