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Essay On Return To The Giant Pool Of Money

583 Words3 Pages

In the show, “Return to the Giant Pool of Money,” Ira Glass and Adam Davidson discusses the details of what happened during the housing crisis that occurred in the mid to late 2000s. We hear the stories of people from both sides who were negatively impacted by the collapse of the housing market. They go in depth about how easy it was for people to take out mortgage loans and how they were the big reason why we went into an economic recession (Chapter 6, pg.181).

A big reason for the housing crisis was the amount of loans given to people who couldn’t afford them. Before the crisis occurred, more people were able to take out mortgage loans than ever before. People could obtain mortgage loans without having to provide any proof of income or …show more content…

The housing market was viewed as a low risk and high return investment. This was crucial to the housing crisis because it pushed Wall St. to compete with one another to sell as much mortgage-backed securities as they can without acknowledging the consequences. Mortgage-backed securities were mortgage checks that only included the benefits of a mortgage without any risks. Brokers would sell mortgages to a banker, the mortgage bankers would sell to Wall St., then Wall St. would sell to the global bank and make big profit without acknowledging the negative effects. This caused mortgage bankers to push brokers to provide more mortgage checks. Since brokers were paid on commission, there was an incentive to secure more loans in-order to increase their personal income. This was compounded by the use of NINA loans and the increasing demand for mortgage backed securities. In some cases brokers lied or misunderstood the loan applicant’s income and asset information, which lead to much higher than normal defaults. These mortgage bankers and brokers were making big profits and they were not paying attention to where the money was going. The data and spreadsheets were the only source of information they cared about. But the money they were making during that period wasn’t there and because of that, they lost that non-existent

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