it goes like this...
the normal lending rate is say 5%
someone with no income, job or assets (a ninja) in a trailor park wants to buy a house
they are a bad risk so they take a loan at 10%
the borrower doesnt care because they arent going to repay whether they borrow at 5% or 10%
the lender doesnt care because there is enough profit in the deal to insure and sell on the loan within packages of mortgage based equities
so you buy mine and i buy yours...seems a good spread of risk
obviously not when these packages are rated AAA when the housing stock behind the valuation is seriously overvalued... and there is no market for the property
so, do we blame the finance salesmen for lending to unsuitable clients irrespective of their position, ability and inclination to pay?
do we blame the ninjas for taking up the loan offer?
do we blame the banks etc for getting involved in this fraud?
i think all three answers are yes, but without the banks thinking this was a great earner none of the problems would have arisen