The Financial Mess

The major source of the collapse was due to a perverted system where the people making loans did not have to worry about the loan going bad.
How stupid. This whole housing mess could have been eliminated with these four simple rules:

1) No loan can be made for more then 95% of appraised value.
2) All loan payments must be fully amortized from payment one with no front end low ball payments.
3) The entity originating the loan cannot sell the loan for 5 years.
4) All funds for closing must be seasoned at least 3 months with income verification.

And it was a very bad idea to let banking and investments merge together creating a massive incentive to game the system. But will we fix this? Probably not. All the talk is of relatively worthless things like controlling CEO pay and requiring more financial reporting won't accomplish much. We have 50% of our financial system tied up in about 4 giant corporations who don’t really care what happens as long as they get their bonuses. And now they are “too big to fail” so they can just about try every crazy idea with little risk of actual failure. We should break up the big banks by separating banking from investment and we should put in simple rules for home lending. The recent credit card bill was the one good idea that Obama pushed through.