re: #114 Dreggas

More often than not the bad loans were “seasoned” with other good loans (something to cover the stink). They were purchased on wall st by investment banks and other agencies that used them to add to portfolios for pension and retirement funds, a lot of city pension and retirement plans took a big hit when these went down. Of course there was the insuring of these packages by groups like AIG, they were bought by others like Lehman bros., washington Mutual was a big player and of course there was countrywide. These things were like a disease infecting everything they came into contact with and like I said, the mortgage companies didn’t care because once they sold the loans they made their money.

there seems to have been some value to society in these ‘securitized mortgages’ in that the banks, having freed themselves of the risk and investment in the bad mortgages, were able to re-use the money to make more loans

(hence it is a mistake to think that banks were necessarily ‘forced’ to make bad loans when it seems it had become so easy to pass them on)

however, the people in the brokerage houses who snapped up these packages of securitized mortgages didn’t seem to notice - as my wife had been telling me for years - that houses were way overpriced and that the market was overdue for a “correction”