Rachel Maddow vs. John Mccain: Economy fundamentally strong

The financial meltdown on Wall Street is more than a cyclic correction brought on by a mismanaged business cycle. It is emblematic of a problem at the very foundation of the right wing economic philosophy that became conventional wisdom during the Bush years — and would be continued in a McCain presidency. The zealots of unfettered “free markets” cast aside the critical lesson that the world learned during the Great Depression: left to their own devices, unregulated financial markets do not necessarily function to benefit the society as a whole — or, in the end, even many individual market participants. For many years after the Great Depression, most mortgages were provided by banks and savings and loans. Traditionally these institutions would originate their own loans, evaluate the risk, and maintain a relationship with the borrower. It was in the self-interest of the institution to make loans — that’s how it made money. But it was also in the institution’s interest to assure that the borrower could pay the loan back, because it was lending its own money. Over the last thirty years, the mortgage market has fundamentally changed. Now most loans are originated by brokers or other mortgage companies who make their money through “origination fees” and often payments from big, unregulated lenders. Once these loans are made, they are then packaged and sold as securities through the secondary mortgage market. Mortgage originators had every incentive to make all the loans …

Posted in Mortgage. Tagged with economy, fundamentally, John, Maddow, McCain, Rachel, strong.

By wealth

June 5, 2010

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cobraman96 said

Rachel Maddow vs. John Mccain: Economy fundamentally strong

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