Posts Tagged ‘bad loans’

affirmative action, bad loans, bailout, crisis

Sunday, December 28th, 2008

The New York Times explains:

creditors came to believe that their loans to unsound financial institutions would be made good by the Fed — as long as the collapse of those institutions would threaten the global credit system. Bolstered by this sense of security, bad loans mushroomed.

Of course any crisis is multicausal. I have been blaming affirmative action loans. But instead of pushing back against government pressure to make bad loans to protected minorities, lenders eagerly embraced bad loans – because of an entirely correct expectation that they would be bailed out