Home Sweet Gone

Behind every great bubble and its subsequent bust lies the power of Wall Street’s trading operations. In the case of our national housing market saga and toxic subprime fallout, it’s true that banks and specialist lending institutions rapaciously extended credit to ill-equipped borrowers.But that’s not the whole story. Housing value fluctuations weren’t just caused by lending run amok, but by the trading that enabled the lending and made a precarious situation even worse.

Regardless of whether you adopt the progressive view of the crisis (banks lured borrowers with reckless procedures) or the conservative one (borrowers should have known not to get in over their heads), lenders knew it was an easy game to lavish money and extract fees from consumers as long as they had lots of customers wanting to own the home of their dreams.

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