At the ten year anniversary of the financial crisis, Huffington Post contributor Dean Baker suggests that if mortgage debt had not been tied to the housing bubble, an asset he describes as “hugely overvalued,” the crisis could have been avoided.
Baker claims that had economists and reporters paid more attention to the housing bubble and the dubious loans homes were being purchased with, alarm bells would have gone off well before the crash hit. He blames corruption and complexity for the oversight.
The fact that houses were being purchased with dubious loans was also hardly a secret. It was common to refer to “NINJA” loans, which stood for no income, no job, and no assets. Banks were happy to make loans to anyone who would take them since they knew they could resell these loans almost immediately in the secondary market.
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