Dangerous Loans Were Ignored by Raters

In 2008, the greatest economic crisis since the Great Depression began to unfold. People bought houses on loans and attempted to sell them before their loan debts skyrocketed but this idea only led to thousands of loans not being payed back. The New York Times reports that officials in charge of assessing the risk of these loans ignored proof that the loans were dangerous.

The commission, a bipartisan Congressional panel, has been holding hearings on the origins of the financial crisis. D. Keith Johnson, a former president of Clayton Holdings, a company that analyzed mortgage pools for the Wall Street firms that sold them, told the commission on Thursday that almost half the mortgages Clayton sampled from the beginning of 2006 through June 2007 failed to meet crucial quality benchmarks that banks had promised to investors.

Capitalism is undoubtedly a great system. Survival of the fittest is the most successful way to breed competitive, quality businesses, but when regulations are bypassed, it almost always results in chaos.