In the US there was quite a series of legal moves requiring banks to lend mortgages to people who didn't previously meet the banks criteria. Were German banks similarly compelled or was it just bad judgement of the banks?
I believe it was bad judgement^H^H^H^H^H^H^H^H^H a business decision on the part of the bank(s).
[1] http://en.wikipedia.org/wiki/Community_Reinvestment_Act [2] http://www.ritholtz.com/blog/2009/06/most-subprime-lenders-w...
A article of history [4] and the numerous WSJ articles provide a pretty clear picture. CRA had some very foolish amendments including some that affected the deployment of ATMs of all things.
It wasn't the single cause, but it was a major player.
Which brings me back to my original question "Were German banks compelled to make bad loans or was it their failed risk judgement?"
3) http://www.ocregister.com/articles/loans-20542-subprime-bank...
4) http://www.businessinsider.com/the-cra-debate-a-users-guide-...
It wasn't a cause at all, as I pointed out above (with citations to the relevant studies).
The line you keep spinning is the same line used by the banks as they tried to dodge responsibility for the subprime crisis: blaming it on Congress "forcing" them to lend to black people.
The Community Reinvestment Act was at its heart about ending redlining of poor, black neighborhoods.
This is not at all a controversial part of the story.
Instead, German wanted to lend to Greek banks / Greece because they got slightly more interest in return for debt that they believed (or, more accurately, hoped) had essentially the same implicit guarantees as the German equivalent. Given how the crisis has played out, that gamble paid off. It probably shouldn't have, but then there would have been downstream issues (German banks collapsing, etc.).
I do wonder what the political implication would have been if German banks had refused to lend to Greek banks?
http://newamericamedia.org/2011/02/loans-to-minorities-did-n...
http://econpapers.repec.org/article/ucpjlawec/doi_3a10.1086_...
"On average, the CRA appears to have had little impact on mortgage lending, even during the mid-2000s, when lending to lower income areas nevertheless soared."