Enough Demonizing The Mortgage Holders, It Was The Irresponsible Leveraging

[Ichingcarpenter]

Over and over, it has begun to drone on throughout society and media. “Loser homeowners”, “irresponsible borrowers”, et cetera… the mantra is being touted the main reason behind the current financial collapse. The responsible parties at the helm of major banks and government have shifted blame to those who do not have the means nor the power to defend themselves. It is easy for the well-connected ceo’s and government insiders to get their faces on TV and get the meme of their faultless leadership into the public psyche.


Jon Stewart just finished drilling CNBC host Jim Cramer thoroughly, though even Mr. Cramer with his poor hold advice regarding bank stock and complicit knowledge of how to ‘game’ the system, is not the true culprit. I am not a financial expert, do not claim to be one and do not assert to have all the answers, but a major banking institution leveraging itself at 35:1 is not the effect of poor home loans but the irresponsible management and leadership of the institution.

The persons holding the cards look down upon and even blame the defaulting homeowners (they are not blameless, but are hardly the key players in the collapse), when it was the the banking lobbyists pushing to relax regulation and the Securities and Exchange Commission (SEC) who relaxed leveraging rules to allow banks more room to game the system. And when it all crumbled… it was the banking ceo’s with hat in hand before congress begging for the socialist handouts, not the homeowner who was being booted to the street for taking an ill-advised, poorly managed home loan that the banks were all too pleased to use as a means of leverage by granting to sub-prime borrowers.

And then the real estate market began to devalue and the risky 35:1 leverage ratio became unmanageable… toxic as they call the debt… while the monopoly money used to play the game in the brokerage firms and credit markets, was something very real to the ‘loser’ homeowners.

http://uniformvelocity.com/2009/03/12/enough-demonizing-mortgage-holders-it-was-the-irresponsible-leveraging/

[BrklynLiberal]

1. The people who are REALLY responsible for this economic bubble burst are

evading responsibility by using an age old method. It is called "Scapegoating". It really works best if the object is a group of people who are least able to defend themselves.

[Hello_Kitty]

2. K and R!

[JDPriestly]

3. Thanks. It was the leveraging.

It was one huge scam by the hedge funds.

[rufus dog]

4. The mortgage holders are not without blame

In Southern Cal there were a hell of a lot of people snapping up million dollar homes that were 1/3 that cost ten years earlier. There were homeowner taking out 2nd mortgages to put in 75k pools and doing 200k modifications. So why I agree that they only contributed to 3% to the problem they were involved.

[knowbody0]

5. why rent when you can own?

said the man in the suit to the 12 buck an hour father of three. Bad credit, no problem! just sign here, oh, that's just mortgage language, you do not need to read it. proudly they boxed up their belongings and moved into their american dream believing in themselves. immediately they needed a home equity line of credit just to get through the month, but, golly gee the value of their own home made them important and they could buy the big tv and all the shinny appliances. for a brief time, they were happy.

in reality, they are now where they were before they met the man in the suit. they are renters again.

I don't blame them. I don't pity them.

[Greyhound]

6. Let's not leave out the real estate industry. Top to bottom, they knew it was insane and

said nothing while collecting fat commissions and fees.

So, if everybody does it, is it still immoral?

[upi402]

7. If everybody does it, WE are immoral

as a country. And we are.

[DCKit]

8. You nailed it. Housing prices rose to what people could afford to pay/month...

pushed by the realtors and their enablers. ARMs were the kicker that pushed too many over the edge.

Crimes were committed.

[TexasObserver]

9. The Republicans who profit from the real estate boom always demonize the debtors.

The current decline is a good example. It wasn't poor or low income people who built the homes, who advertised 24/7 for borrowers to come on down and get some almost free money to buy their homes.

In every real estate bust, they blame the debtors, most of whom are largely ignorant of the meaning of the documents they signed to get their loan and home. They sign on the dotted line, after being sold by a series of representations that buying a home is just the thing for them.

It wasn't ACORN who thought up and floated the idea of an "ownership society."

[MadHound]

10. Sorry, but irresponsible borrowers are indeed partly to blame

Nobody held a gun to their head, forcing them to take out a nothing down ARM. Nobody forced them to lie about their income, nobody forced them to take out a mortgage on a house they couldn't possibly afford, ever, nobody forced them to cash out what little equity was in their house like an ATM.

Many people are blame for this mess, but the basic fact is that on all sides greed collided with stupidity, and now we have to clean up the mess. We shouldn't absolve anyone of their part in bringing down this disaster upon us.