patrick.net

http://ochousingnews.com/blog/criminal-bank-executives-go-jail/

Punishing shareholders with corporate fines does little to deter bad behavior among corporate executives. Some of them need to go to jail.

If I had to narrow my list down to the people most responsible for the housing bubble, Anthony Mozilo would be near the top of the list.

The Option ARM loan was the primary loan product that inflated the housing bubble. Using negative amortization and teaser interest rates, people were able to borrow more than twice the amount than they could afford with a conventional 30-year fixed-rate amortizing mortgage. Once the Option ARM imploded and lending retreated to conventional mortgages, prices needed to fall significantly to rebalance affordability. The Option ARM was the Ponzi virus that caused the debilitating financial disease that inflated the housing bubble and created the current economic morass still plaguing the country.

The only person perhaps more responsible for the housing bubble is Alan Greenspan. If he hadn’t let the Ponzi virus out of its vial, and if he didn’t allow unregulated insurance “swaps” to encourage dumb money to flow into what they thought were riskless transactions, the air that inflated the housing bubble would not have found its way into Option ARM loans being peddled by Mozilo. Greenspan and Mozilo are my nominees for the fools most responsible for the housing bubble.

Source: http://ochousingnews.com/blog/criminal-bank-executives-go-jail/#ixzz38Cj9d9z6

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