The repeal of the Glass-Steagall Act of 1933 effectively removed the separation that previously existed between Wall Street investment banks and depository banks and has been blamed[attribution needed] for exacerbating the damage caused by the collapse of the subprime mortgage market that led to the Financial crisis of 2007–2010.
Of the roughly 300 failed institutions listed on the Mortgage Lender Implode-O-Meter site, the vast majority were not chartered banks. Because they weren't deposit-taking banks, they didn't have to abide by CRA rules. Time after time, lenders closed their doors because they couldn't afford to buy back the bad loans they had originated and quickly sold on the secondary market. (Like a grocer selling spoiled milk, if a lender sells a loan that goes bad right away, they have to buy it back.)
Some lenders advertised their lending policies in their names. What did customers of No Red Tape Mortgage expect? How about Right-Away Mortgage? Is anyone surprised that both Southern California-based lenders went under in June 2007, a few months into the subprime debacle?
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