Capital New York

Bear commented on Bloomberg: 'Plain and simple,' Congress caused the mortgage crisis, not the banks

To freelunch: I was in the banking business then and I guarantee you we were pushed to make imprudent loans. The sticks included being audited frequently, being banned from growing (buying other institutions or opening branches), and much much more. The carrot was being left alone to take care of business without auditors directing who to lend to and who not to. Many of the accusations of "redlining" that occurred were the Feds way of punishing a bank for not playing ball their way. That's why when we made the loans, we sold them off instead of keeping them on our books to collect on. And guess who were the big buyers? Fannie and Freddie. And they were staffed with Dem political hacks from top to bottom to zip in make a quick fortune, and then get back to politics. Others got into the act buying the mortgages and then bundling them, and selling shares of the bundles. The problem was that with Congress setting the mandate, and Fannie and Freddie setting the standards, not very many people realized that it would all come crashing down. Some of us did and got into other lines of work. The truth is, all organizations and institutions can run out of money, especially if they are highly leveraged. If the OWS people weren't being led by the same folks that set us up for the financial crisis, they would instead, be Occupying 1600 Pensylvania where the head community organizer took part in some of what I'm talking about.

Posted on November 1st, 2011 8:33pm