Oh I think financial institutions are responsible for the mortgage crisis. The money held worldwide grew by trillions in a 10 year period so they needed riskier investments. When I say trillions i am not kidding. Thus they came up with derivatives. They they needed borrowers so they could fill to derivatives and fulfill demand. So the pressure was on mortgage brokers to make deals. In Florida in particular it was the brokers that committed the most fraud by inflating incomes on applications. Many of those people didn't know better. For the others... The American dream is still a pretty big attractor. The foreclosure rate since the depression used to be about 3% give or take. Makes mortgages a very safe investment. It was now inevitable that rate would skyrocket. Since they were often the bulk of derivatives the entire portfolio could fail. Then aig came up with the brilliant idea to insure investments. Now all those portfolios that are insured are failing. Note that your average individual saving for retirement wouldn't buy insurance so they are screwed. The banks that manage the funds buy insurance. The failing portfolios didn't stop BOA from lying to their investors about their performance.

And it gets better because these same banks are buying rental properties like crazy. They started with converted houses and duplexes. They couldn't care less about quality of living because it is just an investment. So people living there are not able to get management to fix anything. This is the next housing crisis. I am not underwater but I wish I hadn't bought but now that I have there is no way I would willingly rent in the next few years.

Mortgage lenders, fund managers, banks are all linked. There are some exceptions. You can tell which ones because they didn't get hit. Oh and where were the regulators? Well the banks appointed them! Don't be fooled by these people. Top board members (chairman) of the institutions involved are all in the top 1%. Their wealth has increased astronomically since 2006/7 when this really started.

Btw, I worked for a sub prime car loan company that had the equivalent of a mortgage derivative...a portfolio of loans. Almost the exact same story on a much smaller scale. There was insurance and bank investors and exploding default rates that were hidden. The company was forced into bankruptcy but the execs have started other financial endeavors.

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