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SirClintonPortis · 10-20-2011, 11:35 PM

The reason banks went and gave out subprime mortgages like crazy was that they could pass off the risk on those mortgages to investors who bought mortgage-backed securities. They were protected from the risk those mortgages had and thus didn't give a damn about whether the mortgages would get paid off. Hence, it is a matter of incentives leading the banks to do what they did. It was, as an economics guy would call it, an agency problem, and specifically "moral hazard".
Moral hazard - Wikipedia, the free encyclopedia

And I wouldn't call the consumer blameless. Not many will sympathize with falling for advanced-fee fraud(i.e Nigerian scam) schemes, so why should those "hoodwinked" by banks get a pass. Not to mention that low credit score people usually have no inhibitions about lying their asses off or deliberately ****ing around with you into giving them money to spend(or in the case of renting, "ethical" leverage into not filing for an eviction or not paying rent).

10-20-2011, 11:35 PM	#69
SirClintonPortis Pro Bowl Join Date: Oct 2008 Posts: 6,052	Re: 'Occupy' types The reason banks went and gave out subprime mortgages like crazy was that they could pass off the risk on those mortgages to investors who bought mortgage-backed securities. They were protected from the risk those mortgages had and thus didn't give a damn about whether the mortgages would get paid off. Hence, it is a matter of incentives leading the banks to do what they did. It was, as an economics guy would call it, an agency problem, and specifically "moral hazard". Moral hazard - Wikipedia, the free encyclopedia And I wouldn't call the consumer blameless. Not many will sympathize with falling for advanced-fee fraud(i.e Nigerian scam) schemes, so why should those "hoodwinked" by banks get a pass. Not to mention that low credit score people usually have no inhibitions about lying their asses off or deliberately ****ing around with you into giving them money to spend(or in the case of renting, "ethical" leverage into not filing for an eviction or not paying rent). __________________ Analysis using datasets (aka stats) is an attempt at reverse-engineering a player's "goodness". Virtuosity remembered, douchebaggery forgotten. The ideal character profile shoved down modern Western men and women's throats is Don Juan.