The Provocateur: Bank Deregulation and the Financial Meltdown: "how did this act contribute to turning this mortgage crisis into a financial services crisis? If you were paying attention to my description of the act that answer should be obvious. Now, all sorts of financial institutions were free to take a position in mortgages, sub prime mortgages specifically. Merrill Lynch, for instance, bought up 4 sub prime mortgage companies in 2006. These sorts of mergers would have never been allowed prior to the act. The tragic flaw of this bill is that it exposed financial institutions everywhere to financial vehicles which they had no experience with. It wasn't merely that financial services companies were jumping into the hot market, sub prime, but that they were jumping into this hot market with little prior experience in the market.
Many analysts, in my opinion, mistakenly claim that the Merrill Lynch's of the world were buying mortgages they knew the underlying borrower couldn't pay. I don't think that's true at all."
'via Blog this'
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