Common_Denominator

U.S. Records Another Huge Current Account Deficit

The main problem is that all of the junk mortgages were sold by banks to Freddie & Fannie. Those two outfits had orders to encourage home ownership by the poor. When government guarantees are available, Fannie & Freddie then sold those mortgages pooled together in tranches as high rated bonds.

This problem is similar to what happened in the Savings & Loan fiasco a few years back. People put money in S&L's since the government backed it up. That led to crooks operating S&L's using saver's money to be lent to their crooked friends.

Moral of the story is....the government should never give cheap guarantees to banks, S&L's, Wall street Bankers or any one else.