Who to Blame for the Housing Meltdown

I hear people all the time passing blame for the housing meltdown.  Is it the banks, home owners, mortgage brokers, policy makers, other?  Let’s take a closer look.

Policy makers – These are the people that set the rules for the banks.  They allowed the banks to offer the subprime and risky loans.  They are experts in finance, lending and the economy.  They are supposed to be protecting the country from self inflicted meltdowns.  Well they failed.  When the market is up, they should be tightening lending.  When the market is down, they should be loosening lending.  They did the opposite.  They are at the top of the food chain and stand at the bottom of the hill.

Banks – Also experts in finance, lending and the economy.  They became greedy and should never have loosened lending so much when the market was so overinflated.  They are 2nd in line and should have known better.  They made the decision to make risky loans such as the zero down and subprime loans and must also be accountable.

Mortgage Brokers – Many slimy and greedy salespeople made as much money as they could.  Why?  They were permitted to do so by the banks above them and the policy makers above the banks.  That doesn’t make it ok though as many did not know the first thing about what was right for the homebuyers.  They marketed heavily the dream of owning a home to many, even those who had no business owning.  They marketed refinances, with money out and many refinanced and went on a spending spree.  Business was good and anyone with a pulse was approved.  They took full advantage, even if the buyers had no business owning.

Home Buyers – They made the decision to take on the loans.  No one expected the market to take such a huge drop and as fast as it did.  You can call them victims or you can call them accountable for their loans.  Either way they cannot make the payments.

So who is to blame?  Well it all starts at the top.  The housing market became so overvalued because of the policies allowed by the policy makers and it rolled down the hill to the greedy banks, mortgage brokers and to the home buyers.  All deserve blame, but the top of the food chain need to protect our country and the world economy with better decisions in the future.