Thread: Feds to Sue BofA and other Banks.

Originally Posted by CivilWars

Because they were just doing as they were told. Should they have dome more, maybe, but why didn't the fed make the rules tougher for loans they were buying?

If I said all you had to do to sell me a car is kick the tires would you inspect the engine too and possibly lose the sale?


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You keep going back to the bar being lowered. What about knowingly tweaking numbers? Did the givernment tell them to do that as well? Granted the asshole looking for loan going along with it is every bit as guilty but trying to say the banks arent as much to blame is willfully turning a blind eye to reality.

Like i said they may have lowered the bar but that only matters when your concerned about going under it.

Originally Posted by CivilWars

If someone knowingly lied on an application, be it the borrower or lender, then they should be held liable. My point is more along the lines of in MOST, not all, cases the lender didn't have to lie because all they had to ask is are you employed, and if so by whom. If the borrower said yes, by abc, then they ask how much do you make? At that point they could take what the borrower said as 100% truth without any proof.

So that is why I personally say the majority of the blame is on the fed for setting up a system where the banks got paid handsomely to avoid seeking the truth.


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Then we are addressing different issues.

Having worked the past 4 years in a bank, with the people taking the loan applications, I would have to say that the blame can be split at least equally, if not slanted more towards the bank's side. It was not the government pushing those employee's to take loans hand-over-fist, it was the bank's superior officers, so to speak, who did that pushing. The government lower the bar through deregulation, there's no dispute from me there, but all that did was make it a lot easier for the banks to do whatever they wanted.

A responsible business would have verified things like income regardless of whether or not they were required to, because each time a home loan is made they are pretty much making an investment in the person they make the loan to. In fact, there were still banks out there that continued to perform checks on potential home buyers, and while that cost them business at the time, it saved their asses when the bottom fell out of the housing market.

The bottom line is that when you make an investment in something, you should do at least SOME research about what you're investing in, to ensure that it is indeed a good investment. In this case, the banks were not required to do that research, and so they didn't.

And trust me, the people taking the loan applications were being pushed heavily by management to get these applications in. Goals for most bankers are set at rediculous levels, and while meeting them ensures you a bonus, not meeting them can and has led to being let go. Each and every person who took those applications had extreme financial motive to do everything they could to make sure that application passed, and the pressure being put on them to do so is why I would say the blame is at least 50% on the banks, and probably more.

Originally Posted by CivilWars

I would agree with you IF the federal government didn't agree to buy 100% of those loans as long as they met dumbass criteria. If I give you $100, and tell you I will pay you a commission if you loan that money to someone, and I will guarantee the loan not you, and my only requirements are that they are human and have a pulse, are you going to check their financial records to make sure they can pay back my $100 plus interest, or are you going to give it to the first person with a pulse you find? Now, that being said, if the banks were truly on the hook for the loans I can guarantee there would be much more due diligence done.

PS - If we want to throw out credentials I can pull mine out, but not sure if they are necessary to prove my point, just sayin'.

The only problem with that example is that the banks were on the hook for a goodly portion of them, otherwise the loans defaulting wouldn't have hurt them in the least. They may not have been on the hook for all of them, and maybe not even most of them, but some pretty big banks went bankrupt when people started defaulting on those loans. The interest paid on those loans makes up a rather large chunk of a bank's income, and losing that income really hurt a lot.

The Government should Not be allowed to form a public/private Corporation PERIOD End of Story ! BTW how come nobody that ran Fannie or Freddie were Ever Investigated after getting Millions in Bonus Money ie: Franklin Raines ?? The government Appointed these people to run this corporation so why are they absolved from at Least Some responsiblity for running Freddie and Fannie OFF THE CLIFF ??