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The deceitful practices of mortgage lenders from "summary" of The Big Short: Inside the Doomsday Machine (movie tie-in) by Michael Lewis
Mortgage lenders were engaging in practices that were not only deceitful but also harmful to the financial system. They were making loans to people who had no way of repaying them, simply because they could sell those loans off to someone else. These loans were then bundled together and sold to investors as securities, with the lenders making a profit at every step of the process. The problem was that these securities were built on a foundation of bad loans. As more and more people defaulted on their mortgages, the value of these securities plummeted. Yet, the lenders continued to push these loans, knowing full well that they were toxic. They were more concerned with making money in the short term than with the long-term consequences of their actions. To make matters worse, the rating agencies were complicit in this deception. They were supposed to provide an independent assessment of the risk associated with these securities, but instead, they were giving them top ratings, even though they were essentially worthless. This gave investors a false sense of security and allowed the lenders to continue their deceitful practices unchecked. The result was a financial crisis of epic proportions. When the housing bubble burst, it sent shockwaves through the entire economy. Millions of people lost their homes, while others saw their retirement savings wiped out. The greed and recklessness of mortgage lenders had brought the financial system to its knees, and the consequences were felt by everyone. In the end, the deceitful practices of mortgage lenders were a stark reminder of the dangers of unchecked greed and the need for greater oversight and regulation in the financial industry. It was a cautionary tale that highlighted the devastating impact that such practices can have on individuals, communities, and the economy as a whole.Similar Posts
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