[ExI] Sudden outbreak of democracy baffles US pundits

Stathis Papaioannou stathisp at gmail.com
Tue Oct 14 10:44:02 UTC 2008

2008/10/14 Lee Corbin <lcorbin at rawbw.com>:

> Quite right. But did anyone mention the legal climate that congress
> has created since the late sixties? Mortgage and loan lenders can
> be *sued* for turning down loans, and very often successfully so,
> because of pieces of legislation going back to 1977. And the last
> thing that the lenders want is a law-suit.
> I think that their solution was, later on, to very cleverly start bundling
> what they feared were bad loans into packages, packages which
> ultimately would receive backing from Fannie Mae and Freddie Mac,
> which ultimately have the implied power of the government behind them.

Did the government also force the free market to bid up the share
prices of the banks making these obviously bad loans, and to pay the
executives hundreds of millions of dollars in salaries and bonuses?
Well, perhaps the market didn't know how bad the loans were until it
was too late. But then how would the market have known if the bad
loans were due to some smart banker realising he could make a quick
profit, rather than the alleged government encouragement?

Stathis Papaioannou

More information about the extropy-chat mailing list