Re: The Great Wall Street Housing Grab, by Francesca Mari
Ms. Mari’s long and very detailed report of the role played by Wall Street property firms following the great 2008 real estate crisis fails to explain the underlying source of the crisis that ruined the dreams of so many. The 2008 crisis was fueled by massive government money printing–in order to drive down the interest rate–and unprecedented interventions into direct lending through its captive lenders Fannie Mae and Freddie Mac. Ms. Mari notes early in her report that one borrower put down only $15,000 as a down payment on a $840,000 property, for a down payment ratio of under two percent! No responsible, privately owned bank would make such a loan and stay in business for long. Yet this irresponsible loan does not rate a further mention as the foundation of all the sorrow that followed. Unfortunately Ms. Mari focuses the rest of her report on how Wall Street real estate investment sharks took advantage of government’s sloppy and amateurish practices. No one should be surprised that Wall Street firms, whose principals could legally earn millions, ran circles around overworked government bureaucrats. The important lesson here is to understand that the government purposely encouraged hapless thousands to take on debt that neither they nor their bankers would have considered under a sound and private money and banking culture. The final tragedy is that nothing has changed.