We watched predatory lending, and watched the mortgage crisis build. Most people did not realize financial folly would lead to a crisis of great proportion, but we did. Here at Mortgage Crisis Daily we documented abuses and changes to laws that permitted abuse in mortgage and lending.
We are starting a segment that looks at where major subprime mortgage players are today. With many of them it is easy because they don’t exist any more. I know you’ve seen television, Internet, and newpaper ads for Ally Financial, which used to GMAC.
Eighteen hours ago, as I write this article, CBS News confirmed what our staff writers have known for years. The subprime mortgage crisis was caused by greed and economic incentives that outweighed potential fines. Then there were the fraud investigation cover-ups.
It’s late 2011 and we look back to 2007, and where we are now. Mortgages were at the epicenter of the financial crisis that began in 2007 and resulted in more than $2 trillion in writedowns and losses at the world’s largest financial institutions based on data compiled by Bloomberg.
Complicated portfolios made up of subprime mortgages, known as collateralized debt obligations, or CDOs, received the stamp of approval from rating agencies, but turned out to be a contagion that wreaked havoc on the global economy.