subprime mortgage crisis

Luke Skywalker (the lgbt community) initiates a plan to rescue Han Solo (socialism) from the crime lord Jabba the Hutt (capitalism) with the help of Princess Leia (the feminist movement) and Lando Calrissian (the black community). After Luke (the lgbt community) survives his battle with Jabba’s Rancor (congressional opposition to the Employment Non-Discrimination Act), Jabba (capitalism) sentences him and Han (socialism) to death by taking them to the great pit of Carkoon (the senate), where Luke (the lgbt community) frees himself and battles Jabba’s guards (the republican party). During the chaos, Boba Fett (the increasingly disestablished evangelical christian middle class) attempts to attack Luke (the lgbt community), but falls into the Sarlacc pit (the subprime mortgage crisis)

2008 Mortgage Crisis in a nutshell

So the government forces banks to make shoddy sub-prime mortgage loans, because of racially dubious practices which ultimately leads to a climate of lax mortgage practices.

Banks, plush with all these shoddy mortgages try to reduce risk, by bundling slices of thousands of these mortgages into MBS, or mortgage backed securities, then get these MBS insured by AIG against default with credit default swaps.

Then they convince ratings agencies Moody’s and S&P to rate them highly, and they get them backed by Fannie and Freddie Mac, which are government-sponsored agencies (much like the Federal Reserve). Sp when they sell these high yielding MBS’ to unsuspecting investors and banks it turns out all the mortgages are junk and everything collapses and the government bails out the very banks they induced into making this mess in the first place.

As wages stagnated and the income gap widened, growing segments of the home-owning working class sustained their consumption by taking out second mortgages on the bubble-inflated values of their homes. The apparent guarantee of forever-rising housing prices led to an increase in the share of consumption financed in this way—from 1.1 percent in the 1990s to 3 percent in 2000–05 (with a similar trend occurring in the growth of investments in “home improvements”).
  It is significant that this went so far as to include poor African-American communities, so long the Achilles heel of working-class integration into the American Dream. The roots of the subprime mortgage crisis thus lay in the way the anti-inflation commitment had since the 1970s ruled out the public expenditures that would have been required just to start addressing the crisis of inadequate housing in US cities. As we saw earlier, a key factor in the steady expansion of Americans’ consumer and mortgage debt since the 1970s had been reformers’ faith that private finance could be used by the state in the public interest—in other words, that financial institutions could be so regulated and reformed as to ensure their functioning in the interest of social groups that they had hitherto excluded. The rising demand for home-ownership at lower income levels had been encouraged by government support for meeting housing needs through financial markets backed by mortgage tax deductions. Of course, the desire to realize the American dream of home-ownership on the part of so many of those who had previously been excluded was one thing; actual access to residential finance markets was another. Access for such unprecedented numbers by the turn of the century was only possible because financial intermediaries were frantically creating domestic mortgage debt in order to package and resell it in the market for structured credit.
—  The Making of Global Capitalism - Sam Gindin and Leo Panitch
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The U.S. Is Finally Holding Banks Responsible for the Financial Crisis

The Justice Department is widening its investigation of the subprime mortgage crisis — and they are paying for it with a fittingly ironic source.

Last November, JPMorgan Chase agreed to pay $13 billion in a global settlement over issuing mortgage-backed bonds before the financial crisis. While $4 billion of that will go to the Federal Housing Finance Agency to resolve claims, U.S. attorneys are now hoping to use some of the money to speed up prosecution of other lenders.

Now that’s karma.

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