It's Everyone's Fault

Here's the relevant data. It's about the mortgage/economy recession/meltdown/whatever-it-is.

Here's the relevant quote:

You can't blame the borrowers for obtaining mortgages they couldn't afford to handle. They were innocent lambs set up for a trip to the slaughter house by conscienceless mortgage lenders who allowed their greed to distort their judgment and make the riskiest of loans to the riskiest of borrowers.

To coin a phrase: "Yes we can." Perhaps not "blame," but certainly not condone.

The news is full of sob stories to the effect that poor little old people took out mortgages they could have afforded, only something bad happened and now they can't. How exactly is that the bank's fault?

See, the people who want you to believe that middle America doesn't share some blame in all this, those people want to have it both ways. They want you to believe that the big bad banks are responsible for this crisis. That's partially true. They want you to believe that it's the bank's responsibility to check and see whether or not someone is a liability in the loan department. It's not a responsibility, but it makes sense for the banks, because frankly, it's good business to loan money to people who are going to give it back.

But the "banks are bad" crowd also want you to believe that all the people losing their houses would have been able to keep them, were it not for unforeseen circumstances. So then how is that the bank's fault?

"[D]ecent, hard-working black lad[ies]" who buy houses which were within their means, but only if nothing went wrong, are either risky borrowers, or they aren't. The "banks are bad" crowd want you to believe that they're risky, until they aren't. See, they were risks, so the bank shouldn't have loaned them money. But they shouldn't be held responsible for trying to get a risky loan, because they weren't risky, until something went wrong, "which of course it did."

If things going wrong means you move from a stable, assured asset to a horrible, gaping liability, you're not terribly stable. I'm not saying that, worst-case scenario, everyone should still be able to afford everything they can now. I'm just saying that, come on, people who are losing their homes are not all losing them because little Jennifer fell down a well. They're losing them for lamentable reasons, at least the examples you hear, but those reasons are things which could happen to anyone, "which of course it did."

So either they were risky loans, or they weren't. If they were risky, it was poor business sense that led the banks to give out those loans (or maybe not, since now the banks will be bailed out). But you have to ask, were these people too stupid to understand the concept of living within your means? It's patronizing to assume that everyone who got a bad mortgage was too dumb. So we must assume that most of them, "decent, hard-working black lad[ies]" and all, were greedy too. They wanted something they couldn't afford, or that they could barely afford.

I could purchase a lot of things. I could spend all my money on beer and pornography. I could afford to do that. Then, when I starved to death, I could claim that I had been a victim of the horrible beer and porn companies, who should have known better than to sell me things I couldn't really afford, because I didn't leave any money for food (well, I couldn't claim that, because I'd be dead, but my survivors could sue).

I don't buy things I can't afford. Having enough money to do something doesn't mean you can afford it. Living on a razor's edge, where as long as nothing bad happens, you'll be okay, is no way to live. These people were not all too stupid to realize that. They were greedy.

That being said, the current crisis is not just about people losing their homes. It's about debt-peddling, which maybe I'll get to in another installment. Suffice to say, however, that while some blame must be parceled out to people who were greedy home-buyers, more of it should probably go to banks which traded in risky debt. Once again, it's everyone's fault.