Good film but totally ignores the governments role in the collapse

The following class action case is an example showing Obama Sued Citibank on the grounds of racial discrimination in 1994 https://iusbvision.wordpress.com/2008/09/30/obama-sued-citibank-under-cra-to-force-it-to-make-bad-loans/:

Case Name
Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance
Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011
State/Territory Illinois

Case Summary
Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctive relief, actual damages, and punitive damages.

U.S. District Court Judge Ruben Castillo certified the Plaintiffs’ suit as a class action on June 30, 1995. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 322 (N.D. Ill. 1995). Also on June 30, Judge Castillo granted Plaintiffs’ motion to compel discovery of a sample of Defendant-bank’s loan application files. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338 (N.D. Ill. 1995).

The parties voluntarily dismissed the case on May 12, 1998, pursuant to a settlement agreement.
Plaintiff’s Lawyers Alexis, Hilary I. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Childers, Michael Allen (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Clayton, Fay (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Cummings, Jeffrey Irvine (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Love, Sara Norris (Virginia)
FH-IL-0011-9000
Miner, Judson Hirsch (Illinois)
FH-IL-0011-7500 | FH-IL-0011-9000
Obama, Barack H. (Illinois)
FH-IL-0011-7500 | FH-IL-0011-7501 | FH-IL-0011-9000
Wickert, John Henry (Illinois)
FH-IL-0011-9000

In 1993 President Bill Clinton made changes to the Community Reinvestment Act to make mortgages more obtainable for lower and lower-middle-class families. In 1993 the Federal Bank of Boston issued a report entitled “Closing the Gap: A Guide to Equal Opportunity Lending." The 30 page document was intended to serve as a guide to loan officers to help curb discriminatory lending [10] "Closing the Gap," instructs banks to hire based upon diversity needs, sweeten the compensation structure for working with lower income applicants, encourages shifting high risk, low income applications to the sub prime market, by saying "the secondary market [Subprime Market] is willing to consider ratios above the standard 28/36," and "Lack of credit history should not be seen as a negative factor."

While, "Closing the Gap" was not an industry-wide mandate, it illustrates the efforts banks took to meet public pressure to overcome mortgage discrimination. Under the Clinton administration community organizers pressured banks to increase their loans to minorities. Karen Wegmann, the head of Wells Fargo's community development group in 1993 told the New York Times, "The atmosphere now is one of saying yes." [11] The same New York Times article echoed "Closing the Gap," writing, "The banks have also modified some standards for credit approval. Many low-income people do not have credit-bureau files because they do not have credit cards. So lenders are accepting records of continuously paid utility bills as evidence of creditworthiness. Similarly, they will accept steady income from several employers instead of the length of time at one job."

Because of looser loan restrictions many people who did not qualify for a mortgage before now could own a home. The banks issued loans with teaser rates, knowing that when higher variable rates kicked in later the borrowers would not be able to meet their payments. As long as housing prices kept rising and borrowers could refinance easily, everyone appeared to be doing well.

Federal Reserve chair Ben Bernanke has stated that an underlying assumption of the CRA – that more lending equals better outcomes for local communities – may not always be true, pointing to "recent problems in mortgage markets". However, he notes that at least in some instances, "the CRA has served as a catalyst, inducing banks to enter under-served markets that they might otherwise have ignored".

Why were adjustable rate mortgages getting popular? From what I understand is that Clinton administration established a task force to sue banks refusing give loans to people on the grounds of racial discrimination because a lot of people with bad credit ratings are minorities. But banks do not want to lose money on this, so they are forced to write the loans but sell these money losers right away. But you can't sell the loans if you know people are going to default very quickly because you have to pool thousands of loans before you can sell. So they give very low interests on the first few years of the loan so people can pay, then they have enough time to sell the loans as bonds before people default. Of course bankers were naughty, but between losing money and being naughty, they choose being naughty.

Were bank customers, the consumers, stupid? No, they were actually not. They thought they could live in a house for few years and pay less money on mortgage than rent. And in few years they will sell for a profit or refinance. But that only works if housing market always go up, and looking at history (before 2007) they were not wrong or stupid.

You think the big banks are the problems, well, actually investment banks securitizing these loans noticed big pick up on demand of mortgage securities. They were buying these loans from small mortgage houses mostly because big banks were not writing enough subprime loans, and they were making so much money the big banks were just catching up.

The difference is that the small mortgage houses don't get rescued. You think breaking up big banks into smaller ones are better? Think what happens if all banks were small and none of them worth of rescuing and they all failing then what you do? Having big banks means government could at least do something, instead of choosing doing nothing and let every bank fall or rescuing every bank which would have costed many times more money that no government could afford.