A letter appearing in your Sept. 19 edition blames the current recession on policies that encouraged unqualified individuals to buy homes. Not mentioned is the starring role of the white collar criminal cabal on Wall Street. Those folks came up with an obscure and unregulated investment vehicle called a mortgage-backed security, a type of derivative that even sophisticated investors erroneously thought safe and insured. This vehicle allowed Wall Street to realize a longtime goal: to gain access to pension funds which, by law, were to be placed in “safe” investments.
Suddenly, Wall Street couldn’t get enough mortgages to meet the demand of this new market. The banksters were pooling mortgages and selling them off as fast as they could get their hands on them. This fueled demand for huge quantities of low-quality loans, jokingly called, “Ninja loans,” standing for “no income, no job, no assets.”