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The Sub-prime Mortgage Crisis Hurts EVERYONE!

Main Boise Home Loans

It is not only the mortgage broker who is taking heat and getting hurt these days as we watch the sub-prime housing crisis unfolding before our eyes.

It is not only homeowners who are feeling the squeeze as their ARM rates reset…Wall Street is hurting as well. And although no one is ever surprised when ordinary homeowners take on too much debt, or don’t read the “fine print” and end up losing their money, it now appears that the “financial geniuses” on Wall Street made some of the same mistakes.

The collapse of Wall Street investment bank Bear Sterns is essentially one large foreclosure, with J.P. Morgan repossessing them. A large number of Bear executives had their savings tied up in Bear’s stock, and their money has practically disappeared. I read in a recent Reuters article that one Bear investor actually lost over ONE BILLION dollars ($1,000,000,000)…wow, that’s a lot of zeros! Thousands of jobs are disappearing at Bear Sterns, Lehman Brothers, Morgan Stanley, and other investment banks as a result of this mess.

Wall Street executives are losing huge chunks of money as this meltdown materializes, but may not be losing the literal “roof over their heads.” However, the common view I have found is that the majority of people feel that the sub-prime housing crisis is mostly hurting the individual homeowner…it’s time to take the blinders off.

With the sub-prime collapse, EVERYONE got greedy. Homeowners wanted more house than they could afford. Mortgage originators wanted larger commissions. Bankers wanted higher returns than they could get from conventional securities. No one sector should bear the blame for what we are in now. All parties involved were equally responsible, and now, all parties are getting hurt.

This too, shall come to pass. Let’s just hope that we learn our lesson, and not live to watch history repeat itself in the future.

Posted by Eric Leigh at 3/28/2008 1:00:00 PM

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