Mar 31, 2008, 09:31 pm
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#106 (permalink)
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| Igneous Magma | Paulson's Plans Quote:
We've made it no secret that we prefer market-based solutions to market-based problems. That said, looking at the mess surrounding subprime lending and the subsequent housing meltdown, it's hard not to fault the government.
Those old enough remember the Community Redevelopment Act of 1977, which in essence compelled banks with U.S. charters to lend to people who didn't have sterling credit histories. The idea was to help poor, deserving minorities get access to credit and homeownership.
But banks and mortgage lenders started putting marginal credit risks into homes they clearly couldn't afford. Today, according to Goldman Sachs (NYSE:GS) , the unwinding of this problem will cost upward of $460 billion in the U.S., and more than $1 trillion globally.
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