If you think about it, the classic Christmas film It’s a Wonderful Life is really about subprime mortgages. An example: George Bailey’s emotionally manipulative speech directed at bank manager Mr. Potter in support of a $5,000 home loan given to someone with dodgy finances, a loan with which Potter disagreed:
What’d you say just a minute ago? . . . They had to wait and save their money before they even ought to think of a decent home. Wait! Wait for what? Until their children grow up and leave them? Until they’re so old and broken-down that they . . . Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you’re talking about . . . they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?
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The problem isn’t sub-prime loans. The problem is these investment banks are staffed by Talebian villians that nefariously create mortgage portfolios with blow-up risk since they can collect bonuses for several years until the inevitable day of reckoning.
I love this comment by mort_fin responding to a Calculated Risk story on a forced CDO liquidation:
Is it only me but didn’t Pottersville look a lot more fun than Bedford Falls?