Originally Posted by Herbie Gaines

First of all, lenders make about a quarter to half a point when they do a loan...so, a $200,000 loan (let's use half) makes the lender about $1000...then they sell the loan to Freddie or Fannie in a huge block by bundling alot of loans together. THAT'S ALL THEY MAKE ON IT PEOPLE...NOW...


A lender, before deregulation, had to have, by law, 10% instant liquity on the money he lent. So a lender (banker) made money hand over fist because he could make ten $1000 loans and only have to show $1000 in the coffers. That means that if he charged 8% interest, his return was not 8% but 80% per year on every dollar he actually had. After deregulation, lenders were lending money at 25 to 1 or 40 to 1 or even 100 to 1. So at 100 to 1 the banker lent the same $1000 100 times and at 8% interest per loan, his return on $1000 was 800%. That is why bank buildings are the biggest and highest skyscrapers.

The mess was caused because these bankers didn't have any money to cover the risky debts they took, shuffled, concealed and scamed.

"Imagination is more important than knowledge." - Albert Einstein