I don’t really fault borrowers too much. The banks knew at a glance these people couldn’t afford loans and in may instances fudged numbers.
I do blame the borrowers as much as the lenders, if not more. Also, the problem is – it was not the banks who gave the bad loans, but the mortgage lenders. They in turn packaged 1000s of loans together and sold it to the banks as “mortgage-backed”. If the borrowers were responsible payers – there would have been no problem – the housing market would have continued to rise, or at least be stable, and those subprime loans would have been a decent bet. The subprime market was a great opportunity for many people to provide a secure roof over their families, unfortunatelly many BORROWERS got greedy.
Blaming the banks for offering loans is like blaming the caisnos for offering blackjack. 101 of gambling is play within your means, 101 of borrowing is borrow within your means.
Another big problem was the “house flippers”. A lot of folks took loans on 2-3 homes just so they can sell them (not live in them) a couple of months later. Many were people with perfect credit who just got greedy beyond their limits, also making a high risk bet they did not fully understood. All this led to homes increasing in value only through speculation, which led to people having to borrow more money to buy an over-evaluated home.
I understand that the market could work out this crysis on its own, the problem is that I do not want to participate in such process. In order for me to continue to receive a paycheck, thousands of people have to also conitnue to receive paychecks, something highly unlikely if we leave the markets to themselves. Many of us saw our income significantly declining thanks to 30%-40% increase in gas prices alone. Can you imagine what we would make if the unemployment rate doubles or triples???