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Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ
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The Causes of the Financial Crisis

05 May 2015 | Pago Pago, American Samoa
Kimball Corson
The Community Reinvestment Act, Fanny Mae, Freddy Mac, and the federal government played minimal roles in the financial crash.The government did not mandate the housing bubble as some claim. The government did, however, allow the financial crisis by removing financial regulations that had successfully prevented it earlier.

Greedy private mortgage brokers nationwide and their greedy private lenders caused the bubble for the most part when they discovered they could sell mortgage loans even to anything that breathed and moved, grabbing and splitting the huge up front mortgage fees, all after they discovered they could sell off those mortgages, many of which were dicey, ASAP to greedy investment bankers who created and hawked "low risk" (supposedly from diversification) Mortgage Backed Securities to others, including each other, smaller banks, pension funds and other financial institutions. The rating agencies and derivatives hugely helped this MBS effort. A pipeline was created. It crashed when the housing market crashed and created the financial crash and Great Recession.

The government did little of consequence except to, as usual, provide easy money and kill the earlier existing regulations. The FBI, after investigation, said it had never seen such massive fraud on a nationwide scale (by the mortgage brokers and their lenders) but the SEC blocked the FBI and Justice Department from acting by claiming exclusive jurisdiction and then never itself acting.

Too many don't understand this. The investment banks knew many of the loans they were were buying were largely suspect but thought by creating MBS's they could sell them off, with better mortgages and rating agency and derivatives help, as low risk investments by virtue of diversification. The risk models they were using said so. When the housing bubble popped, after being pumped up by so many loans, including no credit, low credit questionable mortgage loans, in the primary mortgage market, the ensuing financial crisis took out the entire private investment or shadow banking industry in America, that is, all investment banks that were not also lending institutions.

Primary lenders and their mortgage brokers were the real culprits. They wrote and sold the mortgages loans to buy the houses and pushed their prices up. The government and others, except for the investment banks had hugely less to do with it. The bubble was created in the primary mortgage market. Neither Fannie Mac, nor Freddy Mac (nor the CRA) was major player there either. Private lenders lacked any restrictions and did not enforce their own loan standards once they saw the fees they could share in and that they could quickly dump their loans. The problem was in the primary mortgage market which created the mortgage loans and fueled the housing bubble, not in the secondary mortgages market which thereafter bought, packaged and resold them, except for the investment banks and shadow banks and their activities, as noted.

There is much misunderstanding here and much confusion between the two markets.
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Vessel Name: Altaira
Vessel Make/Model: A Fair Weather Mariner 39 is a fast (PHRF 132), heavily ballasted (43%), high-aspect (6:1), stiff, comfortable, offshore performance cruiser by Bob Perry that goes to wind well (30 deg w/ good headway) and is also good up and down the Beaufort scale.
Hailing Port: Lake Pleasant, AZ
Crew: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
About:
Kimball Corson: I am a 75 year old solo sailor, by choice. However, I did take on a personable, but high maintenance female kitten, now a full grown cat, named KiKiPoo when she is sweet, or KatKatPo after she has just killed something like a bird or bat. [...]
Extra:
Although I was a lawyer and practiced law with good success for thirty years, creating significant new law, I never really believed in the law, the politics of law or in the over reaching self-interest of most lawyers I met. Too much exposure to Nietzsche and other good and seriously thoughtful [...]
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Profile

Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ