Did you really just say that? yeah yous did. how exactly did the Gov induce it? by forcing lenders to be greedy and give mortgage loans to people they knew couldn't afford it? the borrowers knew they couldn't afford either.... aren't ya gonna blame them too??
i call that bad business decisions. you know why Bank of America had to acquire Countrywide Financial yeah? because it was cheaper to do so than not. BofA held so much bad paper from underwriting Countrywide it was dragging them down. if they absorbed Countrywide they could write off far more than if they hadn't.
Originally Posted by The_Waco_Kid
You're right that BoA's decision to buy Countrywide ranks among the top ten worst business moves of all time (right up there with, say, the Time Warner-AOL merger). It cost CEO Ken Lewis his job. You're wrong to say they had to absorb 100% of Countrywide because it was "cheaper to do so than not" or because they wanted larger write-offs. That makes no sense. After paying $4.1 billion to complete the acquisition in July 2008 (on the eve of the financial crisis), BoA wound up paying out over $40 billion in legal settlements related to Countrywide's mortgage activities over the next 5 years.
There is plenty of blame to go around for the 2008/09 financial crisis. To blame it all on the Fed for supposedly "creating a housing bubble" is stupid and simplistic. It would be more on-target to blame quasi-government agencies such as Fannie Mae and Freddie Mac. They played a more central and direct role in encouraging looser underwriting standards throughout the mortgage industry.
And yes, the borrowers who stupidly and knowingly took out loans they couldn't afford deserve much of the blame too! Absolutely!