Echoes of the Financial Crisis
Another Major Bank Faces Fines for the 2008 Crisis
On August 1st, the Justice Department stated that Wells Fargo has agreed to pay a $2 billion fine for its role in the 2008 crisis.
Similar to other major banks like Bank of America, which payed $16.7 billion in 2014, Wells Fargo recklessly embraced the philosophy of “courageous underwriting” in its mortgage loans.
This philosophy encouraged bank underwriters to give out more loans by being ignorant to the client’s financial status.
The resulting disparity between the client’s debt and the actual amount they could afford was present in 70% of the bank’s loans during that period according to the DOJ.
These loans were sold with most bankers knowledgeable of the fact that these borrowers could never pay back these loans. Furthermore, often the loan would be sold off to another institution, further increasing the desire to aggressively originate.
The combination of increasing demand met by aggressive loaning from banks formed the housing bubble in 2008, which ultimately crashed, leading to the Great Recession.
Read more from RebellionResearch.com:
Why a Machine Learning Investment?
Interview with Astronaut Scott Kelly: An American Hero
AQUAPONICS: How Advanced Technology Grows Vegetables In The Desert
A New Breed of Airline Looks to Take the World by Storm!
$91 Million for a Pair of Gloves: Chelsea Leads Global Sports' Spending Spree
The World Cup Does Not Have a Lasting Positive Impact on Hosting Countries…
Dating Wine Using Nuclear Signatures
Baseball Attendance Keeps Falling
Giancarlo Stanton: A $300 Million Dollar Question Mark
A Conversation with Boston Red Sox Vice President of Player Personnel
Derek Jeter is Facing up to Half a Billion Dollars of Losses on the Miami Marlins
On Black Holes: Gateway to Another Dimension, or Ghosts of Stars’ Pasts?
Are Derek Jeter & the Miami Marlins Going to Face a Cash Crunch?
Written by Michael Ding, Edited by Rachel Weissman & Alexander Fleiss