Where does the line between what is morally correct and what is profitable begin? Currently, we are in the middle of a major loan crisis created by a lack of moral and ethical guidelines in the lender industry. This crisis was created by several different factors, but the most obvious of these factors are:

• Mortgages were given to people who should never have qualified for them.
• Mortgages were introduced with amazing low teaser rates while downplaying potential increases to the customer. Whether this was done intentionally is up to the SEC and Attorney General to decide.
• Banks sold off massive quantities of securities to liquidate their subprime holdings, almost as if they knew it was a terrible idea to originate the loans in the first place and wanted to lessen risk.
• People were extended mortgages far beyond their reach and I believe due diligence was not performed by the banks in insuring people could truly afford them.

With all of that said, what would drive a network of lenders to give risky loans to risky people? How could profits possibly trump the potential collapse that could have easily been predicted? Where does it become morally unacceptable to give someone a new mortgage when its apparent they will not be able to afford it after it resets. People are losing not only their homes, but the under reported aspect of this credit crunch is the $10,000’s of dollars in lost equity these foreclosures cause.

People are losing their home and their entire life savings, and all the banks seem to care about is, “when will the government step in and pay off our losses for us”. They showed no ethical or moral aptitude when they gave the loans and now that unavoidable disaster has occurred, rather then owning up to what they did, they are simply demanding the government help subsidize their losses with new legislation.

The moral of my story is: morals and cash do not mix. One will always beat the other.