By Yulun Hung
Recently I have watched a great documentary relating the the financial crisis. It is called the House of Cards: a CNBC report about the origins of today's credit and economic crisis.
What I learned from the documentary is just how greedy people are. There were so many people borrowing money to buy unnecessary luxeries when they clearly couldn't afford to do so. People with bad credits and low incomes were somehow able to take out huge amount of loans to buy newly build, mansion like houses. It doesn't stop there, some of these people even decide to refinance and cash out more money to pay for a new swimming pool, a new car, etc.
Recently I have watched a great documentary relating the the financial crisis. It is called the House of Cards: a CNBC report about the origins of today's credit and economic crisis.
What I learned from the documentary is just how greedy people are. There were so many people borrowing money to buy unnecessary luxeries when they clearly couldn't afford to do so. People with bad credits and low incomes were somehow able to take out huge amount of loans to buy newly build, mansion like houses. It doesn't stop there, some of these people even decide to refinance and cash out more money to pay for a new swimming pool, a new car, etc.
What is even more outrageous are the lenders of subprime mortages. Places such as Quick Loan Funding should have never existed. Basically this company's motto is "You can't wait? We won't let you!" One of the employees working for Quick Loan said it takes only minutes to have a loan approved, and pretty much anyone (low income to no income) can borrow money. He goes on saying that some of Quick Loan's lenders were former pizza deliverers with no degree in finance!
The bankers who bought up subprime mortage loans probably weren't as clueless as some of the borrowers, but nevertheless, the high returns were too good to pass up so they played the game. They knew many of the loans were bad investments, so they packaged them into highly complicated CDOs (Collateralized Debt Obligation) so investors had no idea what they just invested in. Many of the investors, even the government, were tricked by the AAA rating and the potential high returns.
When the reporter of House of Cards asked the question of who is to blame? No one stepped up to the plate, from Alan Greenspan all the way down to the borrowers.
If you are interested in House of Cards, you can watch the full documentary at hulu.com
Sources:
http://www.hulu.com/videos/search?query=CNBC+Originals
http://www.cnbc.com/id/28892719
http://en.wikipedia.org/wiki/Collateralized_debt_obligation
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