The Subprime Mortgage Problem Was Created By Bankruptcy Reform!

I saw an interesting post on the Ron Paul Forum, which referred to an article on bloomberg.com.

Summarizing, the article says that the subprime mortgage problem was caused by recent bankruptcy reform. The banks lobbied to change bankruptcy law to favor banks more. It became much harder for the average person to discharge credit card debt in bankruptcy. The consequence of this is that people with crushing credit card debt wound up defaulting on their mortgages instead!

In other words, banks lobbied for a law that favored them. In practice, it wound up hurting banks. They tried to prevent people from defaulting on their loans. Instead, the defaults moved from one type of loan to another type of loan.