Did the Fed Want the Houses Back for Wall Street?
This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/real-estate--reits/did-the-fed-want-the-houses-back-for-wall-street?post=92305&uid=4798 The Fed wanted the houses back for Wall Street. It is hard to prove, but could be the truth. We see that the banks made money on toxic loans in the housing bubble, and then on loans to high powered investors on Wall Street, to buy houses that became available when the toxic loans failed. The conclusion for me is as follows: 1. Wall Street first made money on granting dubious mortgages, which had default risk, but the risk was mispriced. 2. This mispriced risk caused investors who were deceived, to grant more money for lending, and house prices soared due to easy money demand. 3. Then with the help of the Fed, Wall Street crashed the prices of subprime properties in mid 2007, knowing they could not be sustained once securitization was destroyed. Securitization was destroyed when the in