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DU Home » Latest Threads » Forums & Groups » Topics » Economy & Education » Economy (Group) » Housing crash of 2008 / R... » Reply #5

Response to SWBTATTReg (Reply #4)

Wed Aug 15, 2018, 11:36 AM

5. Not housing - mortgage-backed securities

The 2008 financial crisis came about from the collapse in value of mortgage-backed securities. These are what were bought and sold, not houses.

The banks sold fraudulent mortgages - true. But the the rating agencies and wall street brokers converted them into mortgage-backed securities, which spun out of control. That supplied the money the banks used to issue more mortgages.

Without the easy money from the securities, the banks would not have been able to issue enough bad mortgages to bring down the economy.

It is inaccurate to blame a Scottish bank for crashing the American housing market.

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