fraud

A good article here, by Dean Starkman at the Columbia Journalism Review, worth reading, making the claim that much of the current financial crisis (who's roots lie in the mortgage meltdown) are attributable not to anodyne cyclical factors, but rather outright fraud.

The gist is that the push for ever-increasing profits led first the sleazy subprime mortgage outfits, but then, increasingly, the 'respectable' lenders such as Countrywide, to push loans on unqualified individuals. They knew these folks couldn't afford the payments, but tried to 'sell' loans as quickly as possible. Sometimes things were even worse: since loans carrying higher interest rates could be sold for more when they were repackaged as securities, mortgage sellers pushed the most onerous conditions they could get away with.

Meanwhile, "Wall Street was not just a cog in the lending machine. It was its master mechanic and chief driver. Pushed to provide higher yield to a booming debt market, it funded the most egregious of the boiler-room operations and ignored the plainly deteriorating quality of the loans..."

Link via Kevin Drum