The reason that we’ve got this mess is not just because money was lent to people that couldn’t pay it back; it is because the people who were forced to make those loans came up with products to try to make their paper worth something. Hence, like I said, the pooling of all those mortgages into what was called a mortgage-backed security. You pool $130 million worth of mortgages into a single security and you run out, sell it, and you tell people, “Yeah, the income stream from this value, look, you can retire, set for the rest of your life. Real estate never goes down. We’re never gonna lose value here,” and so forth. And all of that plus you’ve heard the term “derivatives.” That’s above my pay grade to explain, but the derivatives of the mortgage-backed securities, it was just another way to pass off the loss to somebody else, to get somebody to buy your loss from you so that you’re somewhat whole if not fully whole, and you hoodwink whoever is buying it.

The end of the trail, that final buyer realizes he’s been had, that’s when you go to TARP. And that’s when you go to the federal government, bail everybody out. Jimmy Carter, same thing. The savings and loan crisis, Jimmy Carter extended federal deposit insurance on accounts from $40,000 to a hundred thousand dollars to help the poor. What happened then was that the, quote, unquote, smart guys just exploited that and they bundled their shaky loans into $100,000 bundles in order to get the government protection. But Carter’s motivation was to make it easier for more people to get home ownership, just like the Community Redevelopment Act was. I mean that’s the stated purpose, social justice, the American dream.

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