Liar’s loans were profitable because that mortgage junk was ground into hamburger and re-sold as tranched securities, much of it AAA. Fannie and Freddie made the same decisions private investors were making en masse - in fact they performed better than private counterparts.https://twitter.com/dacrimmins/status/1232669345899261953 …
Nah, they were profitable because housing prices were exploding, so even when the liars defaulted the banks profited: they now owned a house worth more than the value of the loan. Securitization was just the veil of complexity that hid this underlying truth.