Inside the Meltdown – Sub Prime Mortgages and The Housing Bubble
The first of a four-part investigation into a world of greed and recklessness that led to financial collapse. In the first episode of Meltdown, we hear about four men who brought down the global economy: a billionaire mortgage-seller who fooled millions; a high-rolling banker with a fatal weakness; a ferocious Wall Street predator; and the power behind the throne. The crash of September 2008 brought the largest bankruptcies in world history, pushing more than 30 million people into unemployment and bringing many countries to the edge of insolvency. Wall Street turned back the clock to 1929. Lack of government regulation and easy lending in the US housing market meant anyone could qualify for a home loan with little to no government regulation or oversight in place. Hedge funds created demand for mortgage-backed securities by pairing them with guarantees called credit default swaps. When interest rates were raised those with adjustable-rate mortgages couldn’t make these higher payments. Demand fell, and so did housing prices. When they couldn’t sell their homes they defaulted. No one could price, or sell, the now-worthless mortgage-backed securities.