Here is how I see it...
For the past twenty years, our government has proclaimed they want us to be the nation of ownership or some crap. Therefore through legislation like the "community reinvestment act" and so on persuaded banks to relax their credit polices. This ofcourse results in banks extending credit to people who frankly can\'t afford it. But this is ok, because the prices of homes are going up, and deadbeats can take out second mortgages and have all the money they want. Meanwhile the banks take the mortgages, sell them off, they become securitized, where these big investment banks and corporations buy them.
Now fastforward when all these shitty ARM mortgages rate\'s go up after 5 years. People can\'t pay their mortgages, they default, the banks get screwed, these big companies get screwed, because nowadays so many more people have a stake in someone\'s loan.
Now my concern is when these big Investment banks bought these mortgage securities, they bought them based on their credit ratings. Moodys S&P etc. gave all these securites A ratings, meaning low risk.
Now these banks were basically paying the ratings agencies for the good ratings. Why isn\'t anyone going after these companies that falsely rated these mortgage backed securities? I feel that if these securites were accurately rated to begin with, so many of these big companies wouldn\'t have such a high stake in them.
