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I read some people here trying to defend the subprime mortgage backed security as a viable investment instrument or a viable way to spread risks. I disagree.
Simply I don't believe to provide mortgage loans or to lure people to take the loans they don't qualify for is a RIGHT THING to do. Furthermore, try to package and rate those loans as viable investment instrument again is not a RIGHT THING to do.
I think those bankers were eager to provide those loans to mortgage lenders because they knew they would sell those loans to investors, as a result they didn't need to bear much of the risk.
Long time ago, when a mortgage was a mortgage, not a derative investment instrument, did we see any of the bank was willing to loan money to people with questionable credit or without a steady income? They would not do it because they didn't want to take a stupid risk.
