The Blame Game- With Pollage!

[Stunt]

The banks with poor implementation of risk management.
The people for living beyond their means.
Government intervention always serves as a piss poor method to protect people from themselves.

 

[BoomerD]

Originally posted by: Pabster
How about an option for "All of the above"?

That's my thought as well.

Yes, people were encouraged to buy homes they couldn't afford.

Yes, banks/mortgage companies financed people who couldn't afford the homes they bought.

Yes, the government looked the other way while both the above happened.

Yes, Bush was so desperate for good economic news that he both encouraged the situation and had the regulators look the other way.

 

[Rainsford]

Originally posted by: palehorse74

Originally posted by: smack Down

Originally posted by: palehorse74
primarily? The buyers themselves. always.

Personal Responsibility FTW!

What about the personal responsibility of the banks to make sure the people they are lending money to can repay the loan?

The blame lands on the parties who lent the money. They are the only group that is responsible to ensure that the loan can be paid back.

So the ignorant masses who made very irresponsible and uneducated financial decisions share little, or no, responsibility?

It's sad that the concept of personal responsibility is nearly gone in this country... mistakes have consequences people, and the first step toward recovering from one is admitting that you've made one.

Certainly their is some fault for everyone involved in the process, but the question was who was primarily responsible. You people who excuse the actions of the irresponsible idiots who took the "too good to be true" loans are only encouraging more poor and uneducated decisions in the future... after all, it's never their fault, right?! Blame the rich people!!! :roll:

bah...

Give me a break, personal responsibility is great and all...but there is a difference between taking reasonable steps to ensure you're making a good financial decision and being totally immune to every possible scam someone could target you with. Personal responsibility is limited by personal knowledge and ability, it is not reasonable to (always) blame consumers if they are tricked by big business.

Had lenders presented the options in a factual and unbiased way, you might have a point, but they worked VERY hard to sell truly crappy mortgages to home owners. I'm not sure how "personal responsibility" can be used to overcome the disadvantage of being a plumber talking to a team of people with years of financial and economic training who are trying to mislead you.

Which isn't to say that consumers are totally free of blame here either. They might not be financial experts, but there was a lot of advice from actual financial experts out there if they had looked that said you're an idiot to get anything but a fixed rate mortgage within your price range. But I reject the idea that "personal responsibility" is some magic wand we can wave around to solve all the problems in the world...particularly when the personal responsibility fairies like yourself only seem interested in waving the wand at certain groups of people. Where was the "personal responsibility" of the banks selling dumb mortgages that would bite them in the ass in the long run?

 

[Rainsford]

Originally posted by: TastesLikeChicken

Originally posted by: ProfJohn
^ I think a lot of them let themselves be fooled into thinking their rates would stay low and thus they could afford their loans.

I don?t think it was greed driving people to buy houses, it was greed driving bankers to make loans that the people couldn?t afford.

Plenty of car salesmen will be happy to talk people into buying a car they can't really afford as well. Does that alleviate any responsibility from the buyer not to make a stupid decision though?

No, but flip it the other way around. Does having a gullible buyer free the car salesman from his personal responsibility to not rip people off?

This conservative desire to always blame the little guy is puzzling, especially when it almost always comes with advocating a complete lack of responsibility on the part of businesses. It's particularly strange in the case of the mortgage crisis because it WASN'T just a bad idea from a moral perspective to sell crummy mortgages to home buyers, it has REALLY hurt the mortgage companies as well. It was as stupid an economic decision for the mortgage companies as it was for the home buyers, yet I only see you leveling blame at one of those groups. Where's the personal responsibility for businesses?

 

[techs]

Originally posted by: Rainsford

Originally posted by: TastesLikeChicken

Originally posted by: ProfJohn
^ I think a lot of them let themselves be fooled into thinking their rates would stay low and thus they could afford their loans.

I don?t think it was greed driving people to buy houses, it was greed driving bankers to make loans that the people couldn?t afford.

Plenty of car salesmen will be happy to talk people into buying a car they can't really afford as well. Does that alleviate any responsibility from the buyer not to make a stupid decision though?

No, but flip it the other way around. Does having a gullible buyer free the car salesman from his personal responsibility to not rip people off?

This conservative desire to always blame the little guy is puzzling, especially when it almost always comes with advocating a complete lack of responsibility on the part of businesses. It's particularly strange in the case of the mortgage crisis because it WASN'T just a bad idea from a moral perspective to sell crummy mortgages to home buyers, it has REALLY hurt the mortgage companies as well. It was as stupid an economic decision for the mortgage companies as it was for the home buyers, yet I only see you leveling blame at one of those groups. Where's the personal responsibility for businesses?

BUT mortgage lenders are LICENSED by the government. In order to stay in business they have to adhere to government regulations. Just like a bank that is required to keep a certain amount of money liquid versus how much it loans out, the mortgage brokers also have rules as to what constitutes a reasonable portfolio of risk. It was the government that basically said it was ok to lend to everyone without any realistic oversight that caused the problem.
Once you let one lender make unsound loans then other lenders are under financial pressure to also make unsound loans.

Seems people forget the Savings and Loan fiasco. Same thing, same causes. Government failed to prudently supervise.

 

[Moonbeam]

Originally posted by: Rainsford

Originally posted by: TastesLikeChicken

Originally posted by: ProfJohn
^ I think a lot of them let themselves be fooled into thinking their rates would stay low and thus they could afford their loans.

I don?t think it was greed driving people to buy houses, it was greed driving bankers to make loans that the people couldn?t afford.

Plenty of car salesmen will be happy to talk people into buying a car they can't really afford as well. Does that alleviate any responsibility from the buyer not to make a stupid decision though?

No, but flip it the other way around. Does having a gullible buyer free the car salesman from his personal responsibility to not rip people off?

This conservative desire to always blame the little guy is puzzling, especially when it almost always comes with advocating a complete lack of responsibility on the part of businesses. It's particularly strange in the case of the mortgage crisis because it WASN'T just a bad idea from a moral perspective to sell crummy mortgages to home buyers, it has REALLY hurt the mortgage companies as well. It was as stupid an economic decision for the mortgage companies as it was for the home buyers, yet I only see you leveling blame at one of those groups. Where's the personal responsibility for businesses?

Shit, you expect people who have all the comfort of black and white to step into quicksand gray? Not going to happen. There is nothing in the world better to deflect introspection than being able easily to blame. You're asking people to wake up and see they are judgmental pricks and assholes. And you can't blame them; they have too much inner pain hidden not to be that way.

 

[ProfJohn]

Originally posted by: TastesLikeChicken

Originally posted by: ProfJohn
^ I think a lot of them let themselves be fooled into thinking their rates would stay low and thus they could afford their loans.

I don?t think it was greed driving people to buy houses, it was greed driving bankers to make loans that the people couldn?t afford.

Plenty of car salesmen will be happy to talk people into buying a car they can't really afford as well. Does that alleviate any responsibility from the buyer not to make a stupid decision though?

Most banks won't loan the money to buy a car if the people can't 'afford' it.

I walk on to the lot to buy the cheapest BMW I can find and the salesman thinks he can make more by getting me into to a nice car so he tries to sell me a bigger and nicer one, but then the bank says "no way" and I end up driving off with the cheaper one.

In the current housing crisis both sides messed up.

 

[Moonbeam]

Originally posted by: Vic
When the primary means of purchasing an asset is through financing, as it is with real estate, then the cost of that financing figures predominately in the price of the asset. So when the cost of financing goes down, the price can go up.

So suppose you bought a house in the 80s for $50k and 15% (yes, 15%) interest making for a monthly 30 year fixed mortgage payment of $632.22. Your household probably made around $25k annually, meaning about a 30% housing expense DTI (plus property taxes and homeowners insurance). And before I get any BS about 20% down supposedly required nonsense, let's assume this was an FHA loan. The down payment would have been 3% or less (as it still would be today), roughly $1500, and the mortgage insurance only $20/month.
Fast forward to the last 90s... now the same house costs $120k, but the interest rate is only 7%, making for a P&I payment of only $798.38/mo. But now your family makes $40k/year, and you have substantial equity to transfer from your previous home. But even assuming you frittered that away, the DTI is only 24%.
Moving into the 00s... now the same house costs $250k, but the interest rate is only 5.5%, making for a P&I of $1419.47/mo. And now your household makes $50k/yr. DTI is 34%, but most buyers have even more equity that they're transferring across from previous homes after nearly 2 decades of constant appreciation in nearly all the markets (Southern CA had a housing downturn in the early 90s caused by massive layoffs in the defense industry, but that's an anomaly).

So where's the mystery? No need for blame, it just happened. It's a bit more complicated than that, of course, but the general pattern is there. If you need blame, then I would say it was the standardization of lending guidelines and interest rates on a national level that took place as Fannie Mae/Freddie Mac took over the industry following the collapse of the S&L's.

But, but, somebody has to be blamed. What am I going to do with all this free-floating rage? There's got to be somebody I can crap on!

 

[techs]

Originally posted by: Moonbeam

Originally posted by: Vic
When the primary means of purchasing an asset is through financing, as it is with real estate, then the cost of that financing figures predominately in the price of the asset. So when the cost of financing goes down, the price can go up.

So suppose you bought a house in the 80s for $50k and 15% (yes, 15%) interest making for a monthly 30 year fixed mortgage payment of $632.22. Your household probably made around $25k annually, meaning about a 30% housing expense DTI (plus property taxes and homeowners insurance). And before I get any BS about 20% down supposedly required nonsense, let's assume this was an FHA loan. The down payment would have been 3% or less (as it still would be today), roughly $1500, and the mortgage insurance only $20/month.
Fast forward to the last 90s... now the same house costs $120k, but the interest rate is only 7%, making for a P&I payment of only $798.38/mo. But now your family makes $40k/year, and you have substantial equity to transfer from your previous home. But even assuming you frittered that away, the DTI is only 24%.
Moving into the 00s... now the same house costs $250k, but the interest rate is only 5.5%, making for a P&I of $1419.47/mo. And now your household makes $50k/yr. DTI is 34%, but most buyers have even more equity that they're transferring across from previous homes after nearly 2 decades of constant appreciation in nearly all the markets (Southern CA had a housing downturn in the early 90s caused by massive layoffs in the defense industry, but that's an anomaly).

So where's the mystery? No need for blame, it just happened. It's a bit more complicated than that, of course, but the general pattern is there. If you need blame, then I would say it was the standardization of lending guidelines and interest rates on a national level that took place as Fannie Mae/Freddie Mac took over the industry following the collapse of the S&L's.

But, but, somebody has to be blamed. What am I going to do with all this free-floating rage? There's got to be somebody I can crap on!

http://blip.tv/file/520347

 

[Vic]

Originally posted by: techs
BUT mortgage lenders are LICENSED by the government. In order to stay in business they have to adhere to government regulations. Just like a bank that is required to keep a certain amount of money liquid versus how much it loans out, the mortgage brokers also have rules as to what constitutes a reasonable portfolio of risk. It was the government that basically said it was ok to lend to everyone without any realistic oversight that caused the problem.
Once you let one lender make unsound loans then other lenders are under financial pressure to also make unsound loans.

Seems people forget the Savings and Loan fiasco. Same thing, same causes. Government failed to prudently supervise.

ummm.... using big words doesn't hide the fact that you have no clue whatsoever what you're talking about here. I'm not even sure where to begin here... except to say that you should stop believing everything you read on blogs....

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: techs
BUT mortgage lenders are LICENSED by the government. In order to stay in business they have to adhere to government regulations. Just like a bank that is required to keep a certain amount of money liquid versus how much it loans out, the mortgage brokers also have rules as to what constitutes a reasonable portfolio of risk. It was the government that basically said it was ok to lend to everyone without any realistic oversight that caused the problem.
Once you let one lender make unsound loans then other lenders are under financial pressure to also make unsound loans.

Seems people forget the Savings and Loan fiasco. Same thing, same causes. Government failed to prudently supervise.

ummm.... using big words doesn't hide the fact that you have no clue whatsoever what you're talking about here. I'm not even sure where to begin here... except to say that you should stop believing everything you read on blogs....

QFMFT

 

[Moonbeam]

Originally posted by: Vic

Originally posted by: techs
BUT mortgage lenders are LICENSED by the government. In order to stay in business they have to adhere to government regulations. Just like a bank that is required to keep a certain amount of money liquid versus how much it loans out, the mortgage brokers also have rules as to what constitutes a reasonable portfolio of risk. It was the government that basically said it was ok to lend to everyone without any realistic oversight that caused the problem.
Once you let one lender make unsound loans then other lenders are under financial pressure to also make unsound loans.

Seems people forget the Savings and Loan fiasco. Same thing, same causes. Government failed to prudently supervise.

ummm.... using big words doesn't hide the fact that you have no clue whatsoever what you're talking about here. I'm not even sure where to begin here... except to say that you should stop believing everything you read on blogs....

I knew it was my fault. I am the government, the very one I deserve.

 

[1EZduzit]

Originally posted by: 1prophet
The sheep blame the shepard for leading them over the cliff and the shepard blames the sheep for not being educated enough to stop before taking the plunge.

What neither realizes is that both were blinded by greed, the blind leading the blind.

I have to ask, in your scenario did the shepard also go over the cliff, or just the sheep?

 

[jman19]

Irresponsible lenders and consumers.

 

[CADsortaGUY]

A & B.

 

[jman19]

Originally posted by: CADsortaGUY
A & B.

I rarely agree with you CAD but :thumbsup:

This isn't a government issue, it is a lack of responsibility. The government intervention comes in the form of helping banks survive the messes they create, but it is more than just bailing them out, it is to keep the markets moving.

 

[IronWing]

Originally posted by: Pabster

Originally posted by: techs
Whose primarily to blame for the mortgage crisis?

I would have to say the buyers. Then again, I believe in personal responsibility.

I would have to say the bankers. Then again, I believe in personal responsibility. It takes two to sign a contract.

 

[Fern]

Originally posted by: Lemon law
I agree thats its all of the above and more. But also agree with techs, that its primarily a regulatory failure still not being actively addressed.

Riiight.

And people like you would be the first to complain that those "tougher regulations" were holding down lower income people, and therefore w/b racist because of black people etc, from buying a home.

Some regulations were eased exactly because of that kind of thing.

IMO, it's the banks and the borrowers mostly.

The banks should be re-examining the "factory line" of professionals involved as well. I mean r/e appraisers and credit score companies, as well as their "models" used in this type lending decision.

Fern

 

[woodie1]

The lenders. They should have know these people would not be able to uphold the terms of the deal yet their greed to make an immediate profit blinded them to this fact.

 

[TheSlamma]

Originally posted by: LegendKiller

Originally posted by: Vic

Originally posted by: techs
BUT mortgage lenders are LICENSED by the government. In order to stay in business they have to adhere to government regulations. Just like a bank that is required to keep a certain amount of money liquid versus how much it loans out, the mortgage brokers also have rules as to what constitutes a reasonable portfolio of risk. It was the government that basically said it was ok to lend to everyone without any realistic oversight that caused the problem.
Once you let one lender make unsound loans then other lenders are under financial pressure to also make unsound loans.

Seems people forget the Savings and Loan fiasco. Same thing, same causes. Government failed to prudently supervise.

ummm.... using big words doesn't hide the fact that you have no clue whatsoever what you're talking about here. I'm not even sure where to begin here... except to say that you should stop believing everything you read on blogs....

QFMFT

Word

 

[Fern]

Originally posted by: techs
Seems people forget the Savings and Loan fiasco. Same thing, same causes.

Not really.

At that time people (owners) were using their S&Ls as (personal) vehicles for real estate speculation.

Fern

 

[WHAMPOM]

Deregulation, of course. The same people who gave us the S&L Crisis, ENRON, and the present Mortage Fiasco. Republicans, right?

 

[Rainsford]

Originally posted by: Moonbeam

Originally posted by: Rainsford

Originally posted by: TastesLikeChicken

Originally posted by: ProfJohn
^ I think a lot of them let themselves be fooled into thinking their rates would stay low and thus they could afford their loans.

I don?t think it was greed driving people to buy houses, it was greed driving bankers to make loans that the people couldn?t afford.

Plenty of car salesmen will be happy to talk people into buying a car they can't really afford as well. Does that alleviate any responsibility from the buyer not to make a stupid decision though?

No, but flip it the other way around. Does having a gullible buyer free the car salesman from his personal responsibility to not rip people off?

This conservative desire to always blame the little guy is puzzling, especially when it almost always comes with advocating a complete lack of responsibility on the part of businesses. It's particularly strange in the case of the mortgage crisis because it WASN'T just a bad idea from a moral perspective to sell crummy mortgages to home buyers, it has REALLY hurt the mortgage companies as well. It was as stupid an economic decision for the mortgage companies as it was for the home buyers, yet I only see you leveling blame at one of those groups. Where's the personal responsibility for businesses?

Shit, you expect people who have all the comfort of black and white to step into quicksand gray? Not going to happen. There is nothing in the world better to deflect introspection than being able easily to blame. You're asking people to wake up and see they are judgmental pricks and assholes. And you can't blame them; they have too much inner pain hidden not to be that way.

I do expect people to do that, because while the absolute ideas allowed by a black and white world view may be comforting...so is whiskey, but that doesn't mean the answers to life are found at the bottom of a bottle of Knob Creek.

And helpfully enough, embracing the world of shades of gray is not difficult. In fact there is really only one rule...if The Truth of an ideology can fit on a bumper sticker, you might want to keep looking. Beware the easy answers, and embrace the idea that it's better to be looking for truth than to find it.

 

[TastesLikeChicken]

Originally posted by: Rainsford

Originally posted by: TastesLikeChicken

Originally posted by: ProfJohn
^ I think a lot of them let themselves be fooled into thinking their rates would stay low and thus they could afford their loans.

I don?t think it was greed driving people to buy houses, it was greed driving bankers to make loans that the people couldn?t afford.

Plenty of car salesmen will be happy to talk people into buying a car they can't really afford as well. Does that alleviate any responsibility from the buyer not to make a stupid decision though?

No, but flip it the other way around. Does having a gullible buyer free the car salesman from his personal responsibility to not rip people off?

This conservative desire to always blame the little guy is puzzling, especially when it almost always comes with advocating a complete lack of responsibility on the part of businesses. It's particularly strange in the case of the mortgage crisis because it WASN'T just a bad idea from a moral perspective to sell crummy mortgages to home buyers, it has REALLY hurt the mortgage companies as well. It was as stupid an economic decision for the mortgage companies as it was for the home buyers, yet I only see you leveling blame at one of those groups. Where's the personal responsibility for businesses?

Actually I didn't speak of a car salesman ripping anyone off. Talking someone into spending a load of cash and buying something they may not want, need, or afford is not ripping someone off, it's a salesman's job. Anyone so gullible that they don't recognize that in the first place deserves what they get.

 

[CPA]

Originally posted by: techs
Ok, whose to blame for the subprime, and actually also, the prime mortgage crisis?

I had to go with the Bush administration. While it was a failure of regulation, ultimately it was the Bush administration that encouraged the failure. While at the same time continually sending the message that economic policy would continue to prop up the industry regardless of real world economic conditions.

Please, if you're going to blame Bush then you might as well lump ol' Bill into there as well. This had been encouraged since the 90s.