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In the CNBC documentary “House of Cards” the staff points out that 9/11 was the primary cause of the subprime mortgage crisis.  “How can this be?” you may ask.  Well, after 9/11 you may remember that NO ONE wanted to leave their home and there was very little consumer spending going on for the entire month of September 2001.  This put a halt to financial markets as there was no money in circulation.  Alan Greenspan knew that if this continued, there would be an economic disaster in the United States.  To combat this issue, he forced interest rates extremely low.  By doing this, he was basically giving Americans a chance to spend money at little to no interest.  It also meant that mortgage rates would fall.

When mortgage rates started to fall many individuals wanted an opportunity to buy a home and live the American dream.  Well, the fact that Fannie Mae and Freddie Mac were not the only companies that could back mortgages anymore, Wall Street got involved.  Almost all the financial firms on Wall Street got involved in the mortgage lending business even if they had no idea what was going on.  The fact that mortgage rates were low and individuals were buying homes left and right made if very alluring to be in the market.  Well, not everyone had the financial background to get a mortgage…..until after 9/11.  The idea of the subprime mortgage was finally marketed to all of America.  I am sure many of you saw late night mortgage commercials saying that “YOU could get a mortgage no matter what your credit score!”  Unfortunately, this is what caused the financial crisis we are currently in.

All of this stemmed from the fact that Alan Greenspan was trying to do the right thing by lower rates after 9/11.  Little did he realize that the disaster he was trying to prevent was going to happen a short six years later.