Letters to the Editor
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Root cause of credit crisis
Once again, the credit crisis is laid at the feet of subprime mortgages. I am curious as to whether this assignment is strictly correct, given its magnitude and sudden onset. Mortgage failures are certainly higher than historical norms, but not that high. To what extent is the crisis really the failure of mortgage-backed securities and other derivatives, rather than the mortgages themselves? In other words, who should bear more of the blame -- individuals who took too big of a mortgage under unfavorable terms, or the investment banks that resold these mortgages in little pieces, but couldn't keep the pyramid scheme going?