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A new RTC? Not like the old RTC
September 19, 2008
Massive injections of central-bank liquidity and talk of an RTC-like agency to absorb potentially vast quantities of bad assets gave the markets respite, but one wonders for how long. I remember writing about the S&L crisis and the role of the Resolution Trust Corporation nearly 20 years ago. The notion that the RTC is a model or precedent for the kind of action now being contemplated is questionable. The RTC swallowed hundreds of little thrifts whole. It was not primarily a selective buyer of bad assets from huge ongoing entities. And the assets it acquired through this process were much simpler (hence easier to value and dispose of) than the assets in question today. This is to say nothing of the scale. The S&L crisis seemed enormous in scope at the time. It was puny compared to the situation requiring resolution today.
Looking back from this distance, one thinks of the RTC as a success. That may be its principal virtue as a “model”: it offers reassurance. At the time, however, the entire episode was a slow-motion mess, and politically fraught throughout. Almost from the beginning, the RTC was underfunded; more than once, its own collapse for lack of resources seemed imminent; and it was the subject of occasionally bitter, invariably partisan bickering for years. Democrats in Congress were usually reluctant to provide the additional funds requested by the Bush (senior) administration.
One thing the episode does underline–and this is far from reassuring–is the inescapably political character of a comprehensive, as opposed to ad hoc, response. Why was it the Fed, and not the Treasury, that quasi-nationalised AIG (not a bank but an insurance company, over which the Fed has no direct oversight responsibility)? Because the Fed has elastically-defined emergency powers that the Treasury does not. Deleveraging an entire financial system under duress is a protracted fiscal operation. In moving from instant-response-to-crisis mode to a comprehensive resolution regime which will have to be in place at huge expense for years, the Fed can no longer be the prime mover. And the Treasury will need legislation–not just whatever might be rushed through Congress next week or the week after, but on a continuing basis right through the next administration–to provide the authority and the cash for its actions.
When you look at the RTC model that way–take the current problem in all its seeming intractability; now give Congress a leading role–it is not so reassuring. But it will have to be that way. There is no alternative.
How ironic that when Clive Crook was writing about weighty matters such as pigs, lipstick and phony charges of Democratic “elitism” dreamed up by slick speechwriters for the same Republican party that so slavishly serves the interests of our corporate elite, there were well over a hundred posts in response.
Now that he has written about a crucially important subject that affects our entire economy, if not that of the whole world, I did not see a single post before making this comment myself. Why is this? Well, I cannot speak for others, only myself.
I will be very clear. I have nothing to say about Mr. Crook’s latest article, because, to my great regret, I do not know enough about economics. Is it just barely possible that the scores of other readers of this blog, who, like me, were so ready to hold forth about moose hunting, teenage pregnancy and whether it is acceptable to call certain people “rednecks”, do not understand anything about this vital issue either?
And if not, as is obviously the case, how many other serious and important issues are there out there that the great majority of voters don’t understand, not because they are lacking in intelligence, but because the media never mention them?
My suggestion to Clive: Please keep on writing informative articles such as this one. But don’t expect to see the same volume of comments that you will see if you write about Sarah Palin’s hair style (not to mention her glasses, which my wife insists must be from a top Japanese fashion company and which we both have to admit are a knockout - absolutely stunning).
Posted by: algasema | September 19th, 2008 at 2:31 pm | Report this commentalgasema,
The creator of Dilbert did a survey — at his own considerable expense — of 500 economists to find out what they thought were the most critical issues. They listed their 13 top issues and not one issue — not one! — concerned the precipitous drop off in American labor bargaining power over the last 35 years — and the consequent loss of 12.5%* of income share from lower 90 percentile earners to top 3 percentile earners.
So to my labor obsessed self anyway, even economists don’t understand the most important economic issues. As Casey Stengel once shouted: “Does anybody here know how to play this game?”
**http://ontodayspagelinks.blogspot.com/2008/08/income-share.html
Posted by: Denis Drew | September 19th, 2008 at 3:30 pm | Report this commentAnd, Denis, as Leo Durocher said: “Nice guys finish last”. He could just as easily have been talking about the overly docile American labor movement, as well as a collection of cowards known as Democrats who are supposed to represent working people and to stand up to the Republican party of the wealthy corporate interests, the party which is not only redistributing our income upward, but taking away our civil liberties as well.
Posted by: algasema | September 19th, 2008 at 3:48 pm | Report this commentTo algasema.
Sometimes a response to an article is even better than the article itself.
Thanks for your lucid comments. You may not be well versed in economics but it appears you excel in emotional intelligence.
Posted by: C. Sitzes | September 19th, 2008 at 5:20 pm | Report this commentDear C. Sitzes,
I have long been a fan of algasema. His posts are a must-read.
Posted by: RCS | September 19th, 2008 at 7:52 pm | Report this commentGood evening RCS and algasema!
As RCS reads German I’m sending him a German link about the outlook for the US economy.
It starts off by saying that the US government is now in the position of having to set up its own “Bad Bank” to take on the toxic debt. And then it gets critical.
http://boerse.ard.de/content.jsp?key=dokument_312468
The Germans of course are aiming for zero borrowing by the state by the year 2010! What are they trying to prove???
P.S. @ algasema. Since I became an habituée on Professor Buiter’s blog I have had fewer bouts of algasemia. I am sure that if I collect the necessary statistics I could probably prove that economists are less likely to suffer from algasemia than lawyers.
Posted by: J.J. | September 19th, 2008 at 9:40 pm | Report this commentI may not be following the news carefully, but at least according to the entry in Wikipedia on losses from the savings and loan failures in the 1980s - after creation of the RTC - the net loss to taxpayers was about $160 billion at the time or about twice that - $320 billion - at current prices. As a consequence I do not know why an “RTC-model” solution could be considered a positive, as Mr. Crook notes.
Presumably it is the idea that the current problems with the financial system will be resolved similarly, i.e. by having the taxpayers absorb comparably large or larger losses caused by private interests. Since there are very few taxpayers who have any idea what the savings and loan failures and RTC cost them, likely very few tax-payers now have any inkling what another RTC entity will cost them this time.
Clearly the (private) equity markets think that the aborption of the bad debt by tax-payers is a good idea based on the dramatic rebound in stock market indices after the announcement by federal authorities that something along those lines is planned, however.
Whether Mr. Crook’s final sentence is true “There is no alternative” I am less sure.
The potential for problems with derivatives and the massive overbuilding of residential real estate spurred by the creation of securitized mortgage debt with grossly inflated (now deflated) assets to back it has been known for years, but conveniently ignored by the Bush Administration and the Republican Congress who presumably continued to live in the world of “unregulated free market” fantasy as an absolute public good regarding all economic sectors.
John Gapper’s commentary on this is very good I think. He cites Warren Buffett’s 2002 annual report that deals with the dangers of overuse of derivatives, an example of one source of information from an honest and savvy investor who foresaw current circumstances.
Personally I think that the American tax-paying public should be skeptical of the instantly announced “bipartison” agreement among the Administration, Democrats heading key committees needed to write the legislation and the Federal Reserve.
It may well be true that there is “no alternative”, but tax-payers should at least hear more about why the situation is what it is and what other alternatives in fact exist, rather than having the plans - and the massive costs implicit in them - simply forces upon them.
Posted by: Wendell Murray | September 20th, 2008 at 12:04 am | Report this commentI want to thank C. Sitzes and ECS for their flattering comments about my posts. Even though this kind of encouragement is completely undeserved, it is always nice to see other people agreeing with some point or other that one makes. In this case, there seems to be more or less unanimous approval for Sarah Palin’s choice of glasses, at least with regard to the frames. One has to wonder about her lens prescription however, since she obviously can only see to her right and has no left or center vision at all.
RCS, especially, is an astute observer of American politics and I appreciate his views as a welcome balance to my own, because he can find virtues in John McCain and shortcomings in Barack Obama that escape me entirely. But this is what makes politics so interesting.
With reference to J.J.’s link to the article: “Kein gutes Omen fur die US Wirtschaft” (sorry, my keyboard doesn’t have either umlauts or accent marks, so algasemas are guaranteed when I stray away from English), I thought it might be fun to combine two of my areas of ignorance, economics and German, to see what would happen.
But, at least as far as the German is concerned. I was pleasantly surprised to see that it has almost turned into English compared to the language that I struggled with at Harvard fifty years ago (even though I did not come quite as close to failing as I almost did with economics), if expressions like “Greenback”, “Bad Bank” “Warnsignal” and “unter die Rader” are any example. (J.J. - does the last one mean “under the radar”? - if so, isn’t that a little curious? “Under the radar”, of course, means invisible, which is exactly what the Euro was not if it fell three cents in one day, as I understood the article to say. Oh, well, I guess that is why I always had so much trouble with German.)
But there was one sentence that struck me in the article (perhaps because it may have been the only one that I correctly understood): “Doch wenn der Staat selbst zur ‘Bad Bank’ wird, ist das eher ein Warnsignal”.
This raises the question of what meaning concepts such as “capitalism” and “free markets” have at all, since, without state intervention, everything would collapse anyway and we would all go back to bartering stone tools in exchange for pieces of mastodon meat (apologies to Sarah Palin for this reference to both her cuisine and her politics) or, perhaps, temporary shelter in a cave somewhere.
Does it really make sense any more, if it ever did, to talk about the difference between a market economy and a planned economy? Are not all of the major economies today, including the US economy, a combination of both free market and state control? Shouldn’t we be asking, not what type of system we have, but who benefits from the system in question? I have a few random and not particularly informed ideas about this which I will throw out for consideration in my next post to see how quickly they can be shot down by people who, unlike me, really know something about this subject.
Posted by: algasema | September 20th, 2008 at 12:15 pm | Report this commentSorry, RCS, yet another algasema, this time with respect to your initials, since I wrote “ESC” by mistake. My apologies.
Posted by: algasema | September 20th, 2008 at 12:27 pm | Report this commentalgasema,
Your Groucho Marx-like wit proves my point that your posts are a must-read.
As for “unter die Räder”, that means “under the wheels”.
Posted by: RCS | September 20th, 2008 at 1:24 pm | Report this commentalgasema. You did VERY well indeed and your observations are excellent. Yes, Germans, and less so the French, have taken many English words in banking & finance into the German language without any attempt to “germanize” them.
However there are still some exceptions like “Leerverkäufe” (lit empty sales i.e. short selling). The French still prefer to fabricate a French word if possible. My favourite business/economic newspapers are “Les Echos” (Paris) and “Finanz und Wirtschaft” (Zürich).
The French are extremely well-informed, and their logic is second to none. The Swiss-Germans pay great attention to detail.
Unter die Räder (note the Umlaut) means “under the wheels” i.e. crushed (in the context in question).
Now I’m going to watch a replay of an 80min. TV debate on the Swiss-German channel - all about the UBS bank (badly hit in the current crisis), with the CEO and other guests plus the audience taking part.
Mit herzlichen Grüssen aus der Schweiz!
Posted by: J.J. | September 20th, 2008 at 2:46 pm | Report this commentRCS and J.J., Thank you both for correcting my German without throwing me under the wheels. I wonder if there is a common origin for “under the wheels” and “under the bus”. Maybe I should ask Reverend Wright.
The distinction between the almost constant media and political focus on US election campaign trivia up to this past week or two and its prevailing back burner treatment of the economic meltdown reminds of of a quote from the classical Arabic poet Al-Mutanabbi that I picked up from a Middle Eastern acquaintance many years ago, and which I will try to interpret as best I can remember, even though I know I am butchering the Arabic quote so badly that probably every syllable will be some sort of an Arabic algasema (which is fitting anyway, since my own original Sephardic family name, Algazi, is of Arabic origin). My apologies to anyone who knows Arabic:
“Wa taathumu fi ‘ayn assaghir assagharihim/wa tasgharu fi ‘ayn al-’azim al-’azaimu.”
“Those who are small look on their small matters as great, while those who are great look on their great matters as small.”
The first line, of course, refers to the American media in general, and the second, to the FT, with Clive Crook’s articles showing a nice (?) balance between the two sides.
As for the economic publications that J.J. mentions, I would like to read them if I can find them anywhere in the provincial place where I happen to live, Manhattan. Unlike the case with German, I do read French without much difficulty, but my favorite French paper, as might be expected from a lefty like myself, is Liberation. I have also been a Der Spiegel fan for many years, for whatever I can make out of it, even though I understand that there is now also an English edition.
Again from my left standpoint, I also like the Italian paper, La Repubblica. RCS, would you recommend Haaretz, which is now available in English at almost every other newsstand in New York?
Posted by: algasema | September 20th, 2008 at 4:26 pm | Report this commentalgasema,
I can speak only of the Hebrew edition of Ha’aretz: for anyone interested in internal Israeli affairs it is invaluable; other than that I doubt it would be of much use for those who read the best international publications, like the FT.
Posted by: RCS | September 20th, 2008 at 5:47 pm | Report this commentThere ia at least one Arabic algasema above: “ta’athumu”, not taathumu”. There are probably many more examples of algasemia in this quote than I will ever be aware of, since I do not know Arabic at all, but just a couple of badly mangled fragments.
I am also embarrassed that even if RCS recommends Haaretz, I cannot read it in Hebrew, since mine does not go very far beyond the Passover Four Questions.
To get back to the subject of this blog, there is an interesting post by “bunkerbuster” under Clive Crooks’ article “Democrats should stop digging” making the point that less educated voters who feel insulted by the Democrats’ supposed lack of respect for their “values” are in the habit of taking revenge by voting for the Republicans against their own economic interests, and that this is Clive Crooks’ real point.
If so, this is a very important point, one also made by Thomas Frank in his memorable book “What’s The Matter With Kansas?”
From this standpoint, the entire Republican campaign is nothing more than an exercise in finding various ways to distract people from focusing on their real economic interests.
But what else is new? This was true when the Republican war hero, Dwight Eisenhower, was elected in 1952. It was true in 1968 when Richard Nixon rode a backlash against the civil rights movement and Vietnam War protesters to victory in 1968, and it was true in 1980 when Ronald Reagan proclaimed that it was “Morning in America”, as it indeed was - for the super-rich - and has been for them ever since, until now.
It was even more true in 1988, when George Bush Sr. won with the help of the openly racist Willie Horton ads, and it is most of all true now, when the Republicans, who bear the lion’s share of the responsibility for the orgy of deregulation that is responsible for what might turn out to be the world’s worst economic crisis ever, still hope to hold on to the White House by combining Jeremiah Wright’s bus wheels with Sarah Palin’s glasses.
Posted by: algasema | September 20th, 2008 at 5:49 pm | Report this commentalgasema,
Ha’aretz is also very good on the Israeli-Arab/Palestinian conflict. But for anyone interested in Israeli business and finance, it has a more expansive rival — Globes newspaper.
Posted by: RCS | September 20th, 2008 at 6:15 pm | Report this commentNicht zuletzt hat dieser massive staatliche Eingriff die unerwünschte Nebenwirkung, dass die Banken künftig wohl noch aggressiver und risikoaffiner vorgehen dürften. Schließlich haben sie nun die absolute Gewissheit, dass im Zweifelsfalle schon der Staat für ihre Fehler gerade steht. Diese neue Verantwortungslosigkeit dürfte ebenfalls zur Entstehung von Blasen beitragen, die wiederum neue Gefahren für die US-Konjunktur bergen.
Just read the article referenced by J.J. Unfortunately I happen to agree with the last two sentences above.
In addition, the decision to propose legislation within a few days of panicked deliberations that will commit tax-payers to spending $1 trillion on questionable securities and then to expect Congress to act on the legislation immediately continues to erode any confidence I might have in the proposal.
There is an article in the WSJ today about all the lobbyists for financial institutions talking to legislators about what should or should not be included in a bill. That is to be expected, but not very encouraging. I am sure very few - perhaps no - legislators have much of a clue about how to evaluate the proposed legislation.
All indications about this “solution” are negative. The various comments by Secretary Paulson among others that this is no time to be pointing fingers of blame also makes me wary because it strongly implies that any legislator who might want to understand why the situation has come to this point and what the alternatives in fact are will be branded as obstructionist.
It further boggles my mind that the next USA President will have to spend who knows how much effort and time simply trying to undo the consequences of the recklessness of the Bush Administration in every important area of government activity: peace and war, tax policy, financial regulation, energy policy, negligence of healthcare policy and non-sensical initiatives in education policy.
Posted by: Wendell Murray | September 21st, 2008 at 3:29 am | Report this commentWendel Murray, are you sure that the next US president will in fact spend time and effort “undoing the consequences of the recklessness of the Bush administration”, and not, instead, make these consequences even worse by continuing and building on them through even more militarization, confrontation overseas, destruction of civil liberties, devastation of the environment, politicization of the Justice Department and other government agencies, upward wealth redistribution, persecution of minority immigrants and steps toward imposing a fundamentalist Christian theocracy?
Despite the normal vagueness, blurring of distinctions, obfuscation, lies, and obsession with trivia that we have become used to in presidential campaigns back as far as I can remember (i.e. for the past sixty years) there are stark ideological choices in this campaign, just as there were in 2000 and in 2004, if not even more so, now that we have one of the most far right candidates since the time of Coolidge on the national ticket of one of the major parties.
If people who, as I assume both of us do, tend to be sympathetic to the liberal side on many issues, complacently think that even yet another Republican president (and vice president) will somehow try to “fix” things because they cannot get any worse, we will find out, even more than we did under Bush/Cheney, just how much worse they can be.
Here is one prediction: Just as Bush lost no time in “rewarding” the American people for their foolishness in reelecting him in 2004 by trying to destroy the Social Security system immediately after the election, so will McPalin take steps to reimpose the draft immediately after inauguration, if the American people are really blind enough to let themselves be taking in yet one more time by the far right politicians who are destroying our economy and strangling our democracy.
Posted by: algasema | September 21st, 2008 at 7:42 am | Report this comment“be taken in”, not “be taking in”. Sorry for yet another attack of algasemia.
Posted by: algasema | September 21st, 2008 at 7:44 am | Report this commentHere is another prediction: Argentina style US hyperinflation as a result of the bailouts, which we can no more afford than we can afford the Iraq war, both of which, indeed, have the same goal - i.e. lining the pockets of what even a Republican president, Dwight Eisenhower, long ago accurately called the “military industrial complex”. If Eisenhower were alive today, however, he probably would call it the “military/financial complex”, since we hardly have any industry any more, except for big oil (think Sarah Palin and her Alaska drilling) and the war profiteers in the “defense” industry (think Senator McBomb, Bomb, Bomb).
Posted by: algasema | September 21st, 2008 at 8:06 am | Report this commentalgasema: Assuming the next USA President is Senator Obama that is in regard to “positively” addressing the mess. A President McCain would inherit the same mess obviously and therefore have to try to do something about it, but I have no positive expectations from a McCain Presidency whatsoever.
My point is that President Bush inherited a solid economy, a federal fiscal regime that would eliminate the federal debt in less than 10 years and a middle-of-the-road foreign policy from President Clinton among other stable policies.
Now after 8 years of truly unbelievable recklessness in virtually every policy sector by the current Administration - with the connivance of a right-wing-tipping Supreme Court and extreme right-wing-controlled and equally irresponsible Congresses - the next President has to deal with its aftermath simply to achieve the stability the USA had at the end of the Clinton Presidency.
There is no hope of anything positive for the majority of the USA citizenry under a McCain Presidency. Based on the conduct of the McCain campaign, the selection of Governor Palin as the running mate, the true lunacy of any and every policy-oriented statement made by either of the Republican candidates, the willingness of both Palin and McCain to continually slander and brazenly lie about Senators Obama and Biden, it is clear to me that a McCain Presidency would be even more irresponsible than the Bush Administration the past 8 years.
Alas, the campaign style of slander the opposition no matter how outrageously conducted by Republican candidates going back to Reagan (including the senior Bush) and most notably by President Bush in the 2004 campaign is being used apparently with very positive effect - at least based on the polls - by the McCain campaign.
The behavior of the McCain campaign is so astonishingly reprehensible however that the media of all stripes should be excoriating it daily for its behavior as well as reporting the abundance of facts about the actions and opinions of both Republican candidates that fly in the face of virtually any public pronouncement now by either. The current claim by both that they will change “Washington” while McCain has been a key participant in the irresponsible actions of that very “Washington” for decades is an outrageous lie which should be labeled that by the media.
So far however, not much hope for counteracting all the propaganda.
Posted by: Wendell Murray | September 21st, 2008 at 2:09 pm | Report this commentGood article. I agree the collection of assets was simpler for the RTC considering they were entire thrift institutions instead of “illquid assets.” I wonder who decides what assets qualify as illiquid? and who will be the government’s purchasing representative? Paulson did get AIG for a steal so it might work out if he agrees to stay on.
The commentary here is rather uninformed. Not sure if you are all foreign. Put simply the principal cause of the financial crisis is the great number of untradeable and difficult to value securities backed by mortgage loans that are in default. The reason for the high default rates is that the underwriting standards of the banks became too loose. This was because the biggest purchasers of mortages on the secondary market FNM and FRC were continually lowering their guidelines to accept 100% LTV loans to borrowers with no means to repay them and no stake if they lost their home. These companies were privately traded but relied upon an implicit government guaranty to borrow more cheaply than competitors. A great deal of their income went to pay a team of lobbyists to maintain their status as too big to fail but too wealthy to regulate. These companies donated millions to Congress to defeat any reform or oversight. Barack Obama was their second biggest beneficiary over the past 20 years, despite serving just 2 years in the Senate. Congress completely shirked its oversight responsibility. McCain was one of the few people on Capitol Hill who actually spoke against FNM and FRC. The Democratic Party almost universally opposed any reform because these companies were subsidizing loans to lower income people who could not otherwise afford to buy a home. The mantra of evil deregulation is wrong in this instance. It was the implicit guaranty of Fannie and Freddie’s debts that allowed its management to pursue these risky mortgages without regard to underwriting standards or common sense that real estate could not appreciate forever. It was a tacit understanding between the Congress and the GSEs that they would retain their privileged status if they kept ledning to unqualified people. In other words if the market had been allowed to work these companies might have required 10% down payments and higher credit scores. Political considerations overrode market discipline. The top managers of FNM and FRC were mostly Democrats by the way.
Posted by: Ted | September 22nd, 2008 at 3:15 am | Report this commentTed, what a great job of turning reality on its head and claiming that your Alice-in- Wonderland view of the subprime mortgage crisis is “informed commentary”. Yes, of course, only a “foreigner” (or an FBI agent, see the book by Muolo and Padilla mentioned in my post in answer to today’s Clive Crook’s article) could possibly think that anyone in the saintly mortgage lending industry actually might have taken advantage of all those clever, cheating, sophisticated, poor, elderly, African-American and immigrant subprime borrowers.
And only “foreigners”, we can be quite sure, must have read Barack Obama’s call in his FT article for more subprime regulation while Alan Greenspan, for example, was fighting against it tooth and nail in the same paper.
Nice try, anyway.
Posted by: algasema | September 22nd, 2008 at 11:07 am | Report this commentI didn’t say anyone in the subprime mortgage industry was saintly. How did you take that from what I wrote? I don’t understand why people have to misconstrue things people write.
Many years ago I was an attorney at Fannie Mae, and over the past 15 years I’ve handled thousands of real estate transactions as an attorney and title insurer. I have heard plenty of anecdotes of mortgage fraud. Ocassionally the victim of the fraud was a little old lady who got tricked into taking a mortgage she didn’t need and couldn’t afford. As sad as these cases are, they really have nothing to do with the current financial crisis. The vast majority of mortgage fraud was committed by mortgage brokers against end lenders by overstating borrowers’ income, using bogus comparables to inflate values of collateral, and so on. In almost all these cases the borrower was a willing participant in the fraud, though some signed the false applications without knowing what they were signing. The borrower had no down payment so nothing to lose. Some even received cash at the closing for signing the loan documents. The principal reason for the financial crisis is that the big mortgage lenders lowered their underwriting standards to lend to people who could not afford to pay back the loans. They did this based on the false assumption that they would be protected from loss because real estate would continue to rise in value and because of a tacit understanding with the Congress that this policy would prevent a stricter oversight regime.
As background here is a New York Times article from 2003 about a Bush administration proposal for a new agency to oversee FNM and FRC, which was defeated in the Congress. I quote:
“At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.”
My favorite quote in this article:
” ‘These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,’ said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ‘The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.’”
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&partner=permalink&exprod=permalink
The drive to provide loans to people who could otherwise not qualify is the reason for the lax oversight which resulted in the huge default rates and the bad securitized loans.
Posted by: Ted | September 23rd, 2008 at 9:27 pm | Report this comment