News and Mortgage Opinions Prompt Rantiness - You Are All Shocked ;)
You all (well, LJ friends at least) know my background, my odd little front row vantage during the big mortgage ick, the personal impact the crisis had in my household (possibly even about the ripples it had into both sides of my family) and my tendancy to get ranty on the subject. A good friend and former manager of mine posted the following article on FaceBook and we wound up having quite the intetesting discussion about it in private messages:
http://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story.html
I think that the essence of what the editorial says about the banks' specfic culpability is correct but disagree with his disire to point the finger entirely at the banks. What the banks say about government culpability is also correct right up until the banks say it exonerates them. No one is exonerated here in my opinion. Honestly, based on what I have seen, it's the idea that there is just one scapegoat that is The Big Lie and everyone who is pointing fingers at just one group, and I mean everyone including a good many of the mortgage customers, needs to turn some of that finger on themselves and then at all of the rest of the parties involved.
The seeds of the crisis really did start back in the Clinton administration with new laws. I think characterizing this as “longstanding” is disingenuous. It’s not like these laws have been in effect for decades. Decade yes. Decades no. Once someone qualifies for a product and they wish to purchase said product, you have to sell it to them. Brokers can no more say, ‘gosh I’m sorry but I don’t think I should sell this to you even though you legally qualify for it’ than the cashier at MacDonald’s can say, ‘I’m sorry sir, but you at your weight I can’t in good conscience sell you this Big Mac and extra large fries’. This is one of the parts of the crisis for which we can blame the government.
Now this does not exonerate the banks. Because once the banks got into the whole routine, any number of bright folks with “Thank You for Smoking-esque” flexible morality said ‘Ah, hah! Now here’s where we can make money off of all of this risk” and created all of the weird investment packages that we’ve all heard so much about by now. This is one of the parts of the crisis for which we can blame the banks.
Then we can cast equal blame on both the banks and the government for what happened next. So, you have politicians saying, hey everyone should own a home. All of you low income folks, go buy a home. And you have the banks saying, ‘wow, now we’re making an a$$loan of money on this, what with these new investments and all. Instead of waiting for just some low income folks to come to us, let’s go out and actively solicit them in droves.’ Now you’d think that with increased sale of riskier loans to riskier clients someone might have proposed some legislation, right? Not with Freddie Mac, Fannie Mae and the big banks actively paying to kill any such legislation…and the politicians taking the money!!! Banks. Congress. Wall Street. Rat Bastards, the lot of them.
And let’s not forget the customers. I’m sorry, but I looked at enough sets of financials when I was putting together loan modification and short sale offers to have very little sympathy on this front. When we bought our first house at 25, we read every word on every page of that loan agreement and asked questions when we didn’t understand something. When my husband lost his job, we busted our asses and cut luxuries so we could pay our mortgage. Yes, some folks are truly victims here and had no choice. But the number of people who told my husband (a broker with no loan defaults to his record who actually tried to walk customers through the ins and outs of everything) ‘I’m sorry, it’s just too many words. I can’t be bothered with that.’ As he was trying to explain it them would make your head spin. And the number of people who lied on stated income loans? And the number of people who would never have needed to default on their mortgage if it weren’t for the huge credit card bills and cars that cost as much as a house in some parts of the country? Staggering. In some folks’ cases it was the loan that was the problem. In more folks cases it was the fact that one some levels they were just as greedy as the banks and the government that was the problem.
And this, this is an extremely simplistic chain of blame. I haven’t mentioned the investment ratings agencies rated the turkey investments, the real estate agents who decided that showing Joe and Sally Customer homes several $100,000 out of their stated price range hoping they’d fall in love with something that netted a higher commission and any number of others. The moral of this story. Greed is not good. Ambition yes. Greed no. We need regulation to keep stuff like this from happening. And we need some sort of laws preventing the institutions who most need the regulation (banks, Wall Street) from bribing their way into no regulation.
You know, for now.
http://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story.html
I think that the essence of what the editorial says about the banks' specfic culpability is correct but disagree with his disire to point the finger entirely at the banks. What the banks say about government culpability is also correct right up until the banks say it exonerates them. No one is exonerated here in my opinion. Honestly, based on what I have seen, it's the idea that there is just one scapegoat that is The Big Lie and everyone who is pointing fingers at just one group, and I mean everyone including a good many of the mortgage customers, needs to turn some of that finger on themselves and then at all of the rest of the parties involved.
The seeds of the crisis really did start back in the Clinton administration with new laws. I think characterizing this as “longstanding” is disingenuous. It’s not like these laws have been in effect for decades. Decade yes. Decades no. Once someone qualifies for a product and they wish to purchase said product, you have to sell it to them. Brokers can no more say, ‘gosh I’m sorry but I don’t think I should sell this to you even though you legally qualify for it’ than the cashier at MacDonald’s can say, ‘I’m sorry sir, but you at your weight I can’t in good conscience sell you this Big Mac and extra large fries’. This is one of the parts of the crisis for which we can blame the government.
Now this does not exonerate the banks. Because once the banks got into the whole routine, any number of bright folks with “Thank You for Smoking-esque” flexible morality said ‘Ah, hah! Now here’s where we can make money off of all of this risk” and created all of the weird investment packages that we’ve all heard so much about by now. This is one of the parts of the crisis for which we can blame the banks.
Then we can cast equal blame on both the banks and the government for what happened next. So, you have politicians saying, hey everyone should own a home. All of you low income folks, go buy a home. And you have the banks saying, ‘wow, now we’re making an a$$loan of money on this, what with these new investments and all. Instead of waiting for just some low income folks to come to us, let’s go out and actively solicit them in droves.’ Now you’d think that with increased sale of riskier loans to riskier clients someone might have proposed some legislation, right? Not with Freddie Mac, Fannie Mae and the big banks actively paying to kill any such legislation…and the politicians taking the money!!! Banks. Congress. Wall Street. Rat Bastards, the lot of them.
And let’s not forget the customers. I’m sorry, but I looked at enough sets of financials when I was putting together loan modification and short sale offers to have very little sympathy on this front. When we bought our first house at 25, we read every word on every page of that loan agreement and asked questions when we didn’t understand something. When my husband lost his job, we busted our asses and cut luxuries so we could pay our mortgage. Yes, some folks are truly victims here and had no choice. But the number of people who told my husband (a broker with no loan defaults to his record who actually tried to walk customers through the ins and outs of everything) ‘I’m sorry, it’s just too many words. I can’t be bothered with that.’ As he was trying to explain it them would make your head spin. And the number of people who lied on stated income loans? And the number of people who would never have needed to default on their mortgage if it weren’t for the huge credit card bills and cars that cost as much as a house in some parts of the country? Staggering. In some folks’ cases it was the loan that was the problem. In more folks cases it was the fact that one some levels they were just as greedy as the banks and the government that was the problem.
And this, this is an extremely simplistic chain of blame. I haven’t mentioned the investment ratings agencies rated the turkey investments, the real estate agents who decided that showing Joe and Sally Customer homes several $100,000 out of their stated price range hoping they’d fall in love with something that netted a higher commission and any number of others. The moral of this story. Greed is not good. Ambition yes. Greed no. We need regulation to keep stuff like this from happening. And we need some sort of laws preventing the institutions who most need the regulation (banks, Wall Street) from bribing their way into no regulation.
You know, for now.