(By Eric Falkenstein) Every week brings a new billion dollar settlement against the banks that supposedly rammed this stuff down the throats of the noble savages who couldn't afford the homes they bought. Luigi Zingales notes a study on how culpable banks were:
Predatory lending is commonly defined as lending that imposes unfair and abusive loan terms on borrowers. The immediate effect of this mandatory counseling was to discourage almost half of the loans. ... While the paper calls it predatory lending, the better term would be crazy lending, because it is not clear that the banks were forcing these loans on ignorant consumers, and not the other way around. In fact, the reason why the program was suspended only 20 weeks after its beginning was that the local population complained with the legislators for the negative effects this law had on the availability of mortgages.
I wonder what happened to all those community organizers aligned with ACORN who advocated more no-down payment loans?
The head of CountryWide continually bragged about how they were easing mortgage requirements in the name of increasing minority homeownership when he was doing it. So, their public stance went from being admirable to brazen. This same government that applauds excess and piles on when things go wrong is supposed to moderate financial cycles.