Mortgage Backed Securities Lead to a Crisis

The article “Mortgage-Backed Securities” discusses the issue behind mortgage backed securities. Lenders are coming up with new loans that are easier to get, for people who wouldn’t be able to get a normal loan, and then they sell their agreement and do not care if the borrowers actually pay the money. Basically it means that it increases opportunity for people to get more in debt. Lenders would trick people into relying on the fact that house prices are rising. Since they fell, instead of rose, many families were not able to refinance their homes for their previous mortgage. Since many of the investors who bought the mortgage backed securities were international investors, they believed that these investments were secure, when in fact they were not. Now, more people have loans that they cannot pay for, and the U.S. is forced to pay for it.
One thing that strikes me as interesting is that lenders are allowed to sell mortgage backed securities. I think that lenders should be able to either make loans, or sell investments. Not do both. When this was the rule, it made it so that you could only lend money to people who could pay it back, otherwise you would have to pay for it. I believe that this would greatly decrease the greed of lenders, and help decrease the debt of consumers. A decrease in debt will help economic growth because people have more savings. However, since we are able to sell mortgage backed securities, (which eventually make their way internationally, and forces the U.S. to pay off the debts of lenders, investors, and financers), we are digging ourselves into a hole that we cannot dig ourselves out of.
There are many things that contribute to an economic crisis, and right now, mortgage backed securities are one of them. If we continue to allow this problem, then we will only continue to increase our debt as a country. It is a horrible fact: that people responsible for all of this terror are bailed out, and suffer less, while it causes the rest of their own economy to suffer greatly. These few people get rich, while many others get in debt, and are forced to pay off the debt of others mistakes. Mortgage backed securities are a bad idea, and is leading to economic despair.