What You See is What You Get?

“Don’t have any money? Turn to N.I.N.A.”

The subprime mortage crisis is a crisis that I’m sure everyone literate and familiar with some aspects of the economy would know, but do most people understand why that crisis came to be?

Being a business student for almost a school year now, I can honestly say I cannot fully discuss the matter confidently because there are too many complicated factors just like the matter itself. The situation first began with no problems. It was just an “ordinary housing bubble”. The guidelines to receiving a mortgage were strict and tight to filter only the qualified people, but as there were more demand in owning properties, the guidelines we began to loosen.

Why would the banks allow that? It is all about decision making and prioritizing what is more important. Because the banks were selling the mortgages to Wall Street, they essentially did not feel that they would be in great danger if they reduced the restrictions on qualifications. But how far did they go? Up until the point where only a credited score was needed to verify one’s eligibilty.

Is this a plan gone wrong? I say it was all based upon poor decision-making…along with a little bit of greed, and poor futuristic outlook. Business is heavily based on decisions and being able to make good ones is an asset to have. Of course the American banks fail to possess that asset and in return lost everyone else’s assets.

Of course there are three players in this crisis: the buyers, the banks, and Wall Street. Imagine how it would be if each player took a moment to evaluate their own decisions and then thought about the other two players. What a difference that would be.

*N.I.N.A is an abbreviation for No Income No Assets

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