Bankers weren't the villains of the 2008 financial crisis: they were victims of Washington's foolish affordable housing fixation.
Or at least that's the false zombie narrative that's been debunked again and again and again in the years since Lehman Brothers filed for bankruptcy. But as a zombie argument, the banker-as-victim thesis is apparently as impervious as the undead to being destroyed by mere facts, rising again after each demolition to make its way into op-eds and talking points.
But if anything can finish it off, it's a new piece from Rolling Stone's Matt Taibbi, who unearthed a set of training videos for subprime and alternative mortgage lender Household International, a subsidary of finance giant HSBC.
In an interview with HuffPost Live Monday, Taibbi detailed the sales pitches Household International would make to prospective customers, explaining how this aggressive effort to push people into lousy loans undermines the notion that banks were innocent subprime bystanders.
“You can actually see on videotape in their training videos how they coerced, coaxed and conned people into very risky subprime and alternative mortgages," Taibbi said. "The reason that they did this had nothing to do with anyone forcing them to lend to these people. They did it because it made them an enormous amount of money.”
WATCH Taibbi discuss the subprime swindle in the video above.
Household International was an early entrant to the alternative mortgage world. The company has spent years in litigation over loans it made between 1999 and 2002, and the training videos entered the public realm as a result of the lawsuit. Similar practices dominated the subprime lending world as the housing bubble inflated during the years leading up to the crash, with big banks backing millions of garbage loans.
Banks were enthusiastic about this system because it was wildly profitable -- until it imploded.
"The problem with the financial crisis to this day is that people don’t get how the securitization of subprime mortgages works," Taibbi said. "People understand their neighbor who maybe doesn't have a job or is underemployed going and buying a bigger house than he or she can afford. But they don't understand a financial company gathering together thousands of subprime mortgages, chopping them up into securities, mismarking them as AAA-rated securities and then selling them off to a pension fund or a Scandinavian workers union. That process is extremely complicated, and so they don't understand how these how these finance companies profited."
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