The sub-prime mortgage industry is only a small morsel of the problem. When we pull back the covers and see who has been sleeping in the same bed, we namely see both Democrats and Conservatives, bankers, Wall Street brokers, high level executives, appraisers, and benefactors alike. From 2003-2007 we saw a time when the lush life was the sign of the times. However, very few people were prepared for the fallout and economic meltdown that would occur due to the burst of such a grandiose and gluttonous bubble. There is a direct relationship between declines in wealth, and declines in consumption and business investment, which along with government spending represent the economic engine. Between June 2007 and November 2008, Americans lost an estimated average of more than a quarter of their collective net worth.
Further, U.S. homeowners had extracted significant equity in their homes in the years leading up to the crisis, which they could no longer do once housing prices collapsed. Free cash used by consumers from home equity extraction doubled from $627 billion in 2001 to $1,428 billion in 2005 as the housing bubble built, a total of nearly $5 trillion over the period. The U.S. financial sector is basically a "financial crime syndicate," said William Black, a senior regulator in the U.S. government during the "Savings & Loan Crisis" in the 80s. He is convinced that this entire swindle was intentionally orchestrated by U.S. bankers--going all the way back to when Alan Greenspan helped them begin to create the housing bubble.
He reviewed this campaign of fraud in detail. Black began by accusing all major U.S. banks of intentionally writing-up countless billions of dollars worth of knowingly fraudulent mortgages (“liar's loans”) - where the banks knew that these loans could never, possibly be repaid.
The securities fraudsters then knowingly packaged up these fraudulent loans, and took these “securities” to their accomplices: the “credit-rating” agencies. Contrary to their name, these companies never even attempted to evaluate the creditworthiness of these securities, before giving them “AAA” rubber-stamps.
The plot thickens. The financial crisis of 2007 to the present is a crisis triggered by GREED, a liquidity shortfall in the United States banking system caused by the overvaluation of assets. It has resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world.In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s.