52 Words That Explain the Financial Crisis

Reader Comments
Back to blog

The same greedy lenders and politicians are now carving up the
$700 billion.

Andy of CA 5:50PM October 15, 2008

How did congress put presssure on Freddie and Fannie without the president being involved? Big Q is how to fix it.....surely not with taxpayer $ unless Taxpayers have a share in the recovery..e.g. Bank stock

Helen James of CO 1:47PM October 15, 2008

I used to originate sub-prime loans. I helped a lot of people get into homes. Neither me or my customers were criminals, but I knew people who DID take advantage of the greed these MBS (Mortgage Backed Securities) generated.
Some folks are just not cut out for home ownership.
The Congress decided MORE deregulation was the answer, even though they KNEW it was a bad idea from the Saving & Loans Crisis of the late 1980's.
Now we, the People, have to suffer.
Info_Junkie

Mike Johnson of IN 1:35PM October 15, 2008

Finally someone else got it right. It is a CREDIT crisis stemming from the Democrat's misguided "affordable housing initiative" carried to an extreme and bankrolled by Fanny Mae and Freddie Mac. Banks ran out of money when the people who should not have mortgages in the first place, defaulted. It has nothing AT ALL to do with George Bush's policies. It had to do with Chris Dodd, Barney Frank, Nancy Pelosi and Barak Obama. John McCain and other Republicans were not able to stop it. Why is the blame put on Bush and others?
The Bush economy has actually been quite resilient when you consider 9/11, the rise in the price of gas (also a fault of Democrats who would not drill and opposed oil refineries) and now the credit crisis. 6.8% unemployment is only 1.8% above the "full employment" number of 5%. It is far less than Jimmy Carter's double digit unemployment rate that occurred the last time the gas price rose.

John Yoder of MA 9:43AM October 15, 2008

Why doesn't he mention that the same people who forced the banks to make these sub-prime loans are the same people running Obama's campaign???? Maybe he could add another 52 words and point that out.

MR Stratton of WA 9:01AM October 15, 2008

THE Government took A risk Alread They shouldn't had that 700 bilion Dolar bailout in the first place there were other ways to find solutions Without burdening the TaxpayerWe are alrerady burden the the smoker for this healthcare plan for children Yeah one tax on one thing that is burden. What will taxed be next in order to kep the books cleared with thi 700 bilion dollar deal . will the taxpayer win or lose only time and more money will tell.

John of NJ 11:33PM October 14, 2008

It was plain old greed. The banks could have made loans on AFFORDABLE housing, the builders and flippers could have not inflated the value to make money on top of money, the assessors who assess a house's value could have not lied about the true value of each house. The loan makers took their fees, the builders took their profits, the flipper took their profits over and over, which had the lenders get their fees over and over. They would not have made as much money on AFFORDABLE house transactions. The buyers were greedy too, they wanted a house they could not afford. The govt should follow the paperwork back on each transaction (and there is paperwork on each transaction) and take the money away from the middlemen all the way to the top of the food chain, and give this money to the govt to pay back the $850 Billion we taxpayers just gave to the same greedy SOBs.

Michael of FL 11:04PM October 14, 2008

The 52 words stated by Mr.Gordon are right on the money.
I have taken out several mortgages in my life time and allways was graded on my ability to pay them off.
Congress did no one a favor by their actions.
As a citizen of this great country, I'm ashamed of the mess were in.

Jerry of WA 10:29PM October 14, 2008

Congressional action to force banks to lend to lower income & minority buyers were based on culture war that disallowed these buyers from loans. At the time, banks were mostly local & always chartered by states. Later, Fannie & Freddie were formed to buy mortgages from these local banks so they had more assets with which to make more loans. Good ideas at the time! Then, banks went "national" and regulations were both loosen and unenforced. Some banks, and mortgage lenders, saw a chance to game the system and started making more risky loans. As their profits and commissions grew, so did their greed...52 words, indeed. 52 words without those silly little details that tell the real story.

Malford of CA 8:26PM October 14, 2008