Is America's credit crisis more of a result of predatory banks or irresponsible consumer spending?

On one side, I hear it's credit card companies preying on customers with high interest rates, fee hikes and numerous fees. On the other hand, I hear it's people who spend money they don't have.|||I would say that it is the result of irresponsible banks and irresponsible consumers.





The banks were supposed to be evaluating loans and following the rule: 'Only lend money to people who can pay it back.'





The consumers signed contracts that they did not understand (and about 80% of the time never bothered to read) and assumed that the good times would never end.





In addition - both the banks and the consumers failed to observe the warning signs that the housing market was becomming overvalued. They were both looking at the past where the prices were increaseing without considering that just bcause something happened in the past does not mean that it will happen in the future. As a result both the consumers and the banks thought that if anything happened - the increased value of the house would be enough to settle all debts.





Another thing that caused problems was the HELOC (Home Equity Line Of Credit). With these homeowners were taking out mortagages in order to buy new cars and other non-house related items in order to qualify for tax breaks on the interest. Personally, I feel that the tax laws should be ammended that HELOC interest only gains a tax advantage if the money was spent on remodeling or creating an addition on an existing home.|||Predatory lending.





People in general didn't know that the banks had all of that leeway in what they could charge and when. Did you also know that all credit cards are insured so if you don't pay the banks get their money from insurance companies? The banks can then sell the account to another entity that can then collect the SAME AMOUNT that it already obtained through insurance? If that isn't predatory then you can't understand anything.|||it's the banks job to evaluate people they lend money to, there are huge credit systems run by companies such as Experian, lenders should know how much people are in for.





Unbelievably in this case, 'bundled' loans were being sold on to other investors, and the lender did not care if the loans were paid back. By getting credit ratings attached to the loan bundles, they could then sell them and they didn't care that they were lending huge amounts to unemployed cleaners or whatever ludicrous stories emerged.





Fault of banks for being stupid. The borrower can't lose, he might lose his home, but then he'd never have had it in the first place if he hadn't borrowed. In the UK you can go bankrupt and write it all off permanently.|||It's the case of the strong preying on the weak. Think of a 5 yr old child who eats healthy (fruits, veg, water, no sweets) and all of a sudden given a chance to eat all the sweets and candy their little heart desires. Of course they will take the op pt regardless of the cost. They've never been allowed before so why not take the op pt.





Everything is not for everybody and it shouldn't be advertised or accessible as such.|||Both. Greedy consumers and Greedy lenders (who are also greedy consumers!)


But let's not forget Greedy Congressmen ....





Many thanks to Christopher Dodd for doing such an outstanding job [per Harry Reid] with his Committee on Banking, Housing, and Urban Affairs. He has done so very much for the American consumer over the last few years. So very, very much ....





Countrywide Financial loan controversy


Fannie Mae/Freddie Mac controversies


Irish Cottage controversy


AIG federal assistance and bonuses controversy





What a guy, eh? Been hard at work for the American people [per Harry Reid]. Look at all the things Dodd has done for us..... We need more Democrats like him around, don't we?





"We鈥檙e not going to mince words. Chris Dodd is a lying weasel. It is hard enough to swallow that the senator had no idea that he got preferential treatment on his home mortgages that saved him thousands of dollars. Or that, simply out of friendship, a wealthy New York man, who was later convicted in a huge stock swindle, picked up much of the cost of a condo Dodd bought in Washington; or that the stock swindler鈥檚 business partner out of a love of Ireland did the same for Dodd when the senator bought a waterfront house in Ireland."|||In a sense its a conspiracy, the banks lend out money, the people borrows and spend and spend. without thinking of paying.|||Common sense, it is the people who AGREE to the terms and borrow money they cannot pay back.|||the bankers and federal reserve.