macrae11 wrote:Well that's one take.
Historically adjustable rates have typically been the best route to go. It's only been in the last 5-7 years that fixed is clear and away the best choice.
I'm paraphrasing, but that was one of the factors. The dot-com crash kinda forced the fed to drop the rate to begin with I suppose... but when you combine sucha low rate with people pushing subprime lending. Well, whatdya expect?
Of course it wasn't the only factor by a long shot, the lack of regulation over lending policies was the biggest thing. Sure one can argue that the people should never have gotten in over their heads, but you can't trust the consumer to smart enough to make the right choices when they are having their "banking professional" telling them that it's a good idea. There were just so many questionable workarounds to allow homeowners to get homes that they could never really afford.
Housing bubbles pop, it's what they do. The reason this one became such a big deal was because so many homeowners were foreclosed (because they should never have gotten the loan to begin with.) When the banks tried to recoup their cost they couldn't since the market values dropped and the loans were way overleveraged. This isn't normally a problem for the banks if the home owners keep making payments. But when the banks foreclose and try to get their money back on a $250K house that they have $400K tied into, well things get interesting.
Again there are a number of factors, but if subprime lending didn't get so out of hand the shift from growth to recession would have been much less of an issue.
But like you said, much of it has little to do with presidents.