Savings and Loan, Mortgage Meltdown, and Moral Hazard
Recent posts on Sweet Digs Seattle:
- November Sales Statistics on the Eastside
- The Mortgage Skinny & Northeast Price Reductions
- Look Deep: Value over Price
- Broadview Celebrates New Library Today!
As 2007 draws to a close, the words “mortgage meltdown”, “subprime”, and “foreclosure” will forever be associated with this tumultuous year in real estate.
Reflecting on billions of dollars of loss brings to mind a history lesson we all seemed to have slept through back in the 80s and 90s – the Savings and Loan debacle. The subsequent taxpayer bailout “may have created a Moral hazard and acted as encouragement to lenders to make similar higher risk loans during the 2007 subprime mortgage financial crisis”.
A few more interesting factoids – Neil Bush, George W’s brother, was director of Silverado Savings and Loan when the institution collapsed in 1988, costing taxpayers $1.6 billion. Big Daddy George Bush Sr. took office in 1989 and we had the recession of 1990-91 as the dust of Savings and Loan settled. Now Junior’s in office and here we are in the midst of the subprime crisis on his watch.
Let’s hope history doesn’t repeat itself, again!
