More on the Mortgage Crisis of 2008

I've heard many views about the crisis and how government responded. There is general disgust that it happened and how government squandered money solving it. My view is a little different. But, for this post I offer two things: one is the link to a movie on YouTube (perhaps uploaded improperly) and a link to the Wayback Machine's archive of a government web page which details a program Pres. George W. Bush signed into law to make home purchase easier. Yes, government has done some things which made the crisis possible or worse.

First, a link to the government web page: American Dream Downpayment Initiative - Affordable Housing - CPD - HUD

 And then, the movie link: Overdose: The Next Financial Crisis

There were many factors behind the crisis: someone created the idea of bad mortgages with a low interest rate up front, a small or non-existent down-payment, and a higher loan rate later, someone allowed mortgage lenders to sell them to larger banks to eliminate their own risk, someone allowed them to be bundled together (not criminal at all), someone enabled them to be rated incorrectly to suit the sellers, someone enabled betting on those bundled securities, someone did all those things. There were thousands of individuals or companies involved.

One of the biggest complains I read or hear is that nobody was put in jail and punished for what was done. That's largely true, but they had so skillfully changed the laws beforehand, so that most of what happened was NOT illegal. There were also so many people involved that to remove them from the financial system might have caused the crash to be much worse. Still, the complain is valid and individuals should pay the price. Some of those are politicians, not just bankers.

So, check out the Affordable Housing web page and watch the movie to see the worst and hear the awful commentary on the situation. Then notice that the economy recovered as Pres. Obama said and the economy, now regulated better, has performed very well since 2010.

This year 2020, we've had an awful downturn for a short time in the Spring because of the COVID-19 pandemic, but the economy will fully recover from that as soon as we have a vaccine which enables people to get back to normal activities. Even Republican President Donald Trump didn't do enough to pull the economy down. He was counting on a strong economy to help his re-election bid.

Update: Here's a link to The Big Short on Crackle. It's free, but there's an advertisement at the beginning.

This movie is Hollywood at tis best, but it is surprisingly informative. It's also incredibly entertaining with a big group of stars.