Well, Tim, I see that you have many questions, some for me, some not.
I'll start with your basic misunderstanding of the '08 problems.
The Community Reinvestment Act, dating from the days of Carter, required banks to make, what shall we say? Questionable? Yes, that's it, questionable loans.
Later HUD guidelines ("Affordable Housing Goals") put the force of law into unilateral declarations from HUD about the volume of "low and moderate income" loans lenders should make, as in by Cuomo, then the HUD Secretary under Clinton, who jacked the requirement up to 50% of all loans in 2001.
Combine all of that with a swarm of operatives from Fannie and Freddie and HUD and the Federal Reserve (the biggest bank regulator of all) lecturing meetings of bankers about how to comply with the new and much higher requirements for super-easy credit to people who shouldn't have gotten it.
Remember that the Fed and other federal regulators had and have absolute power to deny any bank the right to expand here or there or do this or that. If they weren't complying with HUD and/or CRA loan requirements, too bad for your planned expansion or acquisition.
What did we get? Nothing down loans, down-strokes financed by grants, then later little or no documentation of anything, indeed what ultimately became known as NINJA loans -- no income, no job, no assets loans.
What are known as Alt-A and sub-prime loans. Total junk. All at the behest and unspoken threat of the government.
No sane banker would have done this on their own. Banks only went along with it because they 1) had a regulatory gun at their head and, 2) more importantly, F&F would buy every single piece of crap loan they could originate. And so they did. And there were, of course, a LOT of them to buy. Literally trillions of dollars worth of crap loans.
Fannie and Freddie always insisted that these garbage loans were a small part of their portfolios. Tiny percentages. Those claims were outright (now proven) lies. F&F's financial statements were chock-full of outright lies.
Remember Franklin Raines? Former Clinton OMB director. Then Chairman of Fannie. He was made to give back $24.7 million, years later. Should have gone to prison.
The evil Bush tried (twice) to rein in this HUD/F&F nonsense. No such luck. Representative Barney Frank (MA-D) said (famously, or perhaps infamously) Gee, "let's roll the dice a little longer" during one Congressional hearing on F&F when the idea proposed was to put a stop to the insanity.
Ultimately, about 75% -- 75 PERCENT -- of F&F's portfolios turned out to be made up of absolute JUNK loans -- Alt-A and sub-prime.
All that junk was securitized by F&F, mostly as AAA risks, which turned out not to be the case as defaults snowballed after prices peaked.
The greater fool theory of investment only works for so long. And if the bag-holders at the top have no reserves, which they didn't, the theory doesn't work at all, not even for a month or two.
And F&F went bankrupt anyway -- they couldn't securitize all of the junk and they were stuck with the dregs.
And there you have a government-caused "crisis" which never should have happened AT ALL. And never would have but for the feel-good idea that more people should own their own home ASAP.
100% government's fault. Primarily Carter and Clinton, but ALSO Bush. Bush agreed it was a good idea to increase home ownership rates, and didn't do nearly enough to stop the insane lowering of lending standards. Bush tried, but failed miserably to raise a sufficient stink about what was going on.
Increasing home ownership is always a good thing as long as it's happening because people can afford it and do it of their own volition in their own interest.
If it's caused by ridiculously low lending standards FORCED on lenders by the government (as it was) along with a public perception that "RE can never go down" it will all eventually crumble, the only question is exactly when.
I recommend that you read everything by Peter J. Wallison about it, including his book on the topic "Hidden in Plain Sight.”
As far as I can tell he is the foremost expert on how and what really happened. His analysis is much more detailed than my brief summary.
And fully documented, with all of the ugly facts about F&F. And it is ugly.
As for the banks, they got what amounted to LOANS (in the form of agreements to purchase "troubled" assets above current market prices) whether they wanted them or not (apparently some at the point of the Federal Reserve gun in the hand of Treasury Secretary Henry Paulson.)
"That's a nice bank you've got there, it would be a shame if something happened to it." Which was the message to the few who didn't want any Fed money. Can't have you guys who weren't suckers for "AAA" CMOs embarrassing all of these other fine, upstanding dopes who fell for it, hook, line and sinker. When the Secretary of the Treasury delivers that message to you, you take the money, go home, give it back at the earliest possible moment and keep your head down.
The government via TARP handed out $425+ billion to PURCHASE DISTRESSED SECURITIES from banks (which were causing problems on their balance sheets) and we got it ALL back plus about $15 billion in interest and stock gains, although there are apparently still a handful of small banks who owe $300 million or so. About .007% of the $425 billion. Pretty good for government work. They spill more than that ($300 million) every day in waste, fraud and abuse.
The government has no business GIVING a dime to anyone who made a bad real estate investment, whether a bank or individual.
On top of it all, the government screwed over GM and Chrysler bondholders, in favor of the UAW. In a routine bankruptcy proceeding. NEVER happened before. Nice precedent, government. Introduce more uncertainty to bond investments where it used to be guaranteed that you were first in line to be paid if there are problems.
Not to mention that if GM and Chrysler been allowed to liquidate, ALL of their valuable assets would have been acquired routinely in bankruptcy proceedings. Only difference is that the cars they're making today would have Toyota or Volkswagen or Ford nameplates on them. All the suppliers would be happily making parts for the new owners.
As a final aside on that, I own a small position in Ford. Why? I like auto industry prospects and F never asked for or took a dime from the federal government. They were smart enough to not need any help from anyone. Maybe these guys know what they're doing.
As for grocery stores, they're not going anywhere, at least not in the next 15-20 years. Sure there'll be some attrition, starting with the unionized ones.
Gosh, that'll probably create new "food deserts" in places like Chicago. I guess that'll create new demands for "free internet" so one can order from AMZN or WMT or whoever.
As for the economy in general, we have achieved a lousy average growth rate of about 2% per year for 8 years IN SPITE of the empty suit formerly in the White House, not because of him.
This is the guy who tried to kill the entire coal industry and almost did it, would have restricted oil and gas development EVERYWHERE but only managed to do it on federal lands.
The same guy who said we could never drill our way out of high prices, who said we would never see $2 gas again. And there was something about keeping your plan and keeping your doctor.
And was happy to burden everyone with new regulations of all sorts, for example, ridiculous overtime regulations. There are hundreds of examples.
Oh, and of particular note to thousands of cabinet shop owners who have worked countless 100-hour weeks creating and carefully nurturing their businesses, "You didn't build that."
I reject the conspiracy theories about him being a Muslim. But, when it comes to foreign policy, what would he have done differently in Egypt, Libya, Iran, Syria or Iraq if he actually was a Muslim? Nothing I can think of. None of his actions were beneficial to us.
You know, when you run around bowing to people like the Saudis, people might get the impression that you aren't really big on the idea the America is the most important country in the world. Which leads to conspiracy theories, ad infinitum.
Not my theories, but after 8 years it's understandable how they might have arisen.