Thursday, October 2, 2008

Bailout-we're giving the money to the people who caused the problem.

According to that most liberal of papers, the Wall Street Journal, 80% (got that? four/fifths) of the subprime loans -- the underlying reason for the ginormous bailout package were caused by deliberate frauds by finance industry insiders.

From the article:
Most of the mistakes for which we are paying now, Mr. Black told me, were actually made "by four entities that under conservative economic theory should have exercised effective market discipline -- the appraisers, the originators of the mortgages, the rating agencies, and the investment banking firms that packaged the subprime mortgage-backed securities." Instead of "disciplining" the markets, these private actors "served as the four horsemen of the financial apocalypse, aiding the accounting fraud and inflating the housing bubble." It is they, Mr. Black says, who "turned a crisis into a catastrophe."

There is no way to measure the number of people who took out mortgages they knew they couldn't afford, of course, but for what it's worth, a 2007 report by the Mortgage Bankers Association reports that the FBI estimates "80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders." That means the lenders, not the borrowers.

Read the whole thing here: The GOP Blames the Victim

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