During the hectic heyday of the real estate boom, many financial gurus touted the tenet of using “OPM” for investments.
Using “Other People’s Money” became standard practice of the day, with the theory being that as long as one did not use their own cash reserves, the downside risks were minimalized.
As it turns out, that was exactly the case. When push came to shove many “investors” simply threw up their hands and walked away. The “other people” took the brunt of the financial assault.
And while many love to portray the mortgage banks as the “Sheriff of Nottingham” and relish the notion of these institutions getting their “come-uppance,” the fact is that most of the paper was sold to various investors that ranged anywhere from mutual fund to 401Ks.
Bank executives are getting raises and bonuses. Security investors are losing their shirts.
If the market is to recover, there must be money available to lend.
I can’t help but wonder if the supply will be able to meet the demand.
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