Three sorts of people who were obtaining house mortgages in America prior to the 2008 Crash should never have have been granted them. They were:
(a) borrowers with ‘no-doc’ loans — they supplied no documentary information as to their income;
(b) borrowers with ‘liar loans’ — they, or their firms, or their accountants, gave inflated income figures;
(c) borrowers who were ‘NINJA — people with no income, no job and no assets as collateral.
I’ve recently been reading two books about the years immediately before the 2008 Crash by two former chief central bankers — Alan Greenspan of the US Fed and Mervyn King of the Bank of England — who ought to have been as responsible as anybody for it. Courageously, neither of them try to absolve themselves from their own personal measure of blame in not seeing the warning signs beforehand.
Both of them, however, say that the sub-prime housing crisis was the least of it and only a trigger for all the other spectacular collapses of banks and financial firms during 2008 and 2009. There was a great deal else that was seriously wrong in the financial world than sub-prime mortgages.
Furthermore, both Greenspan and King say that all the government regulations since then don’t touch on the “great deal else” that is wrong with the monetary system. Both of them say that a worse catastrophe is inevitable.