The Hill’s show Rising has the segment Debunked: Bloomberg’s claim that redlining led to the housing crisis
Aaron Glantz shares his thoughts on Michael Bloomberg’s comments about redlining.
Now here is where Krystal Ball and Saagar Enjeti do the typical pundit game of playing extremely dumb. They and their expert don’t get anywhere near the problem that caused the housing bubble. I could have explained it better than they did, at least in the part of the video I could watch before I almost threw up.
The housing bubble started when the banks figured out they could sell their mortgages to “investors” by packaging up whatever mortgages they could originate into collateralized debt obligations (CDOs). Once the bank was going to recoup what ever money it lent by selling the loans to investors, they had no reason to care about the quality of loans. They just needed lots of loans to sell. If they had to lie to the “investors” about the quality of the loans they were selling them, no problem. Bribe real estate appraisers, bribe bond rating agencies, no problem. Anything they had to do to originate a mortgage that they could sell. Mortgage brokers writing lies on mortgage applications that the borrower never even saw, no problem with that either. Mortgages to sell the investors (suckers) were so desperately needed that there was no depth too low for bankers to stoop to. Tell me if Krystal, Saagar, and their expert ever got around to telling you that story.
I know the story because I was an investor trying to stay clear of this kind of investment, and I got sucked in anyway a little bit.