scotts

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In Need of Serious Repair: The U.S. Mortgage Finance System [view article]
The author fails to take into account the early 80's when double digit interest rates made local banks leery of lending money. Many articles were written on how we would never see single digit home mortgage rates again. The creation of a mortgage capital market through securitization was a wonder to behold. Unlike people in most parts of the world, Americans were able to get single digit 30 year fixed mortgages... a real speculation on the part of the holder of the paper. That securitization got taken to extremes and fraudlent extremes at that was a result of lack regulation under "free market" Republican administrations. May 05 10:52 AM
Securitization Shuffle - Source of This Meltdown [view article]
Securitization is garbage but the author makes one hugh historical faux pas. In the late 70's and early 80's, banks had low yielding assets and high cost liabilities.( Remember 14% money market rates under Carter?) Numerous articles were written at the time that we'd never see single digit mortgage rates again. Local banks couldn't afford the risk. The US created a mortgage capital market, the envy of the world, where long term single digit fixed mortgages became available. ( Most of the world offers 5 year arms, so banks assume little risk.) It is sad to see this wonderful accomplishment deteriorate into CDOs! Mar 28 12:58 PM

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