> I find that people are interested in my thoughts on the causes until they hear them: while there were some really bad actors at the margins, the bulk of the crisis was caused by many, many people making good-faith, rational decisions which in hindsight proved foolish.
Would it be correct to say the really bad actors at the margins caused a cascade of events that snowballed and caught the people making good-faith decisions?
The bad actors being the people who did not do proper underwriting and verification (“liar loans” or “stated income loans”), and they did this intentionally under the guise of plausible deniability because they were earning profits on volume rather than quality.
IMHO at the margins, bad actors did make what was bad worse. But I think the crisis would have happened regardless.
> The bad actors being the people who did not do proper underwriting and verification (“liar loans” or “stated income loans”)
It's funny that somehow people want to hold people who lie on loan applications blameless. Aren't the victims of the bad underwriters the people they sold the loans to?
"You should have known I was lying and not lent me the money."
(I don't deny that predatory lending exists, but I don't think it was a major contributor to the crisis. I think home buyers and underwriters colluded because they were afraid of missing out on a hot housing market. And for many years this had been the right decision. And back to my original point, when it became the wrong decision, people looked for a simple answer, preferably a one in which they were blameless.)
I did not intend to imply that the people submitting fraudulent applications are blameless.
But I expect better and more from professionals working in lending operations to do their due diligence and verify incomes. I believe I read about underwriter who were simply signing out stamping that they verified the loan application, but did not actually check anything, committing fraud also.
Would it be correct to say the really bad actors at the margins caused a cascade of events that snowballed and caught the people making good-faith decisions?
The bad actors being the people who did not do proper underwriting and verification (“liar loans” or “stated income loans”), and they did this intentionally under the guise of plausible deniability because they were earning profits on volume rather than quality.