![]() ![]() With the invention of mortgage back securities, banks would make a loan to you, and then immediately sell it to an investment firm, which would package it with thousands of other mortgages, and then resell them to investors. They had a lot of interest in making sure you could pay your loan back, because if you didn't they were out of a ton of money. Basically, back in the day, if you wanted a loan to buy a house, you'd go to your bank and they'd give you a loan to buy your house, and then you'd pay them back over twenty or thirty years. The collapse was driven mainly by mortgage backed securities. That being said, there was a lot of behavior that many people would consider fraud at many levels of the financial system. Whether it was illegal or not, it was wrong. They still behaved in completely immoral ways that nearly led to the financial collapse of the global financial system, just to line their own pockets. So whether they committed a "crime" or not doesn't really matter at some level. ![]() They're the ones who wrote the laws, and they wrote them in such a way that they could legally screw their own investors. Some people argue that the people on Wall St didn't break any laws, but it's kind of a moot point. So, for instance, financial derivatives were largely unregulated- there were very few laws governing them, and they are considered a main cause of the financial crisis. You have to remember that Wall St firms spend billions of dollars lobbying politicians to write laws that benefit them. Okay I spent like twenty minutes trying to explain it like I would to a five year old, and I failed, so here it is as simply as possible.įirst off, you're kind of asking the wrong question. ![]()
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