Foreclosure Phil--McCain's economic advisor

Years before Phil Gramm was a McCain campaign adviser and a lobbyist for a Swiss bank at the center of the housing credit crisis, he pulled a sly maneuver in the Senate that helped create today's subprime meltdown.   (cont)

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Who's to blame for the biggest financial catastrophe of our time?

I presume that the author is speaking of the 21st century as 'our time'. Otherwise, this statement is inaccurate hyperbole.

There are plenty of culprits,

Well, I'm so glad that the author admits, however briefly, that there may be more than one person responsible for the poor economic conditions in the U.S. For just a minute there, I thought it was entirely the fault of one single person. To continue:

but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown.

Did you get that? Eight years ago, when Bill Clinton was President of the United States and winding up his second term in office (that means he was a lame duck president), Bill Clinton failed to protect us against evil republican former Senator Phil Gramm. Doubtless, President Clinton had his reasons.

The article seeks to place blame everywhere except where it belongs; First and above all else, blame goes to the men and women who took out mortgage loans that they could not pay off. These people defaulted on their loans, and as a result are losing houses that were purchased at inflated prices with usury mortgage rates. What do you expect to have happen? Secondly, a very small, minute portion of blame can be placed on the loan officers who approved these loans. They shouldn't have approved the credit.

This article is ridiculous. It rehashes ancient history with outlandish accusations. It appeals to emotion rather than restating facts and allowing the reader to arrive safely at their own conclusions. It's serves as a prime example of yellow journalism.

Mad Jack
Mad Jack's Shack

Firstly, this is not a prime example, but a subprime one. Ba-dum-bump. You can smack me later.

Secondly, a mortgage transaction has many participants. There is a buyer, a seller, (unfortunately) a lender to cover the buyer, an appraiser, perhaps a broker or realtor, and further removed people like bank regulators, rating agencies and mortgage-backed-paper investors (who are now, and even MORE unfortunately, behind the lenders).

It is undeniably true that the buyer's failure to perform due diligence in the transaction (i.e. "buying" (i.e. renting money from a bank to buy) at over 2.5 times his income) is a primary failure.

However, all that created money is still the responsibility of the LENDER.

The lender didn't care anymore about due diligence on the loans they made since the regulators didn't care, the investors took it all anyways, and the ratings agencies rubber-stamped any mortgage they made.

Imagine how much more foolishly the investment banks and individual investors would have been during the Dotcom Bubble, if they knew some Arab or the American taxpayer would cover their losses.

I just don't follow your reasoning that "a very small, minute portion of blame" applies to the lenders. Since the transaction requires a minimum of a seller, a buyer and a lender (since the buyers are morons for not saving enough money to purchase a home outright), and the seller isn't taking risk per se when selling, then it only follows logically that the buyer and his covering partner the LENDER are fully to blame.

Of course, we can follow the blame up the chain. Why were realtors and brokers claiming they "aren't making any more land", and that "home prices never fall" and all the rest of the lies promulgated during the boom? Why were appraisers "meeting the number" as demanded by sellers and brokers and even lenders, instead of fairly and objectively valuing housing? Why did the ratings agencies fail completely to realistically rate the securities based upon these unpayable mortgages? Why did the investors believe any of this crap? Why did the government regulators sit on their hands?

And even further: Why does the Congress insist that this is all salvageable, when it's STILL TRUE that you can't survive paying a mortgage over 2-3 times your annual income?

I can at least understand the failing of the common homeDEBTor, when she failed to understand financial basics like cost of credit, adjustable interest rates, housing cycles, and all the rest ... since considering public education in the USA is wickedly awful, the young couple in their 20s signing a mortgage for 4-6 times the income of one of them, is a natural stupidity that REGULATION and LENDER DILIGENCE is supposed to compensate for.

At least the person in their 20s making unsustainable wages "buying" (i.e. renting money from a bank to buy) a house or condo (aaagh! -- EVEN WORSE!) has the excuse that his schooling failed to prepare him for any financial transaction whatsoever that's more complicated than buying a hot dog from a stand. Of course, understandable or not, he's STILL responsible.

But the responsibility of the money-renter (i.e. buyer) is not being fully enforced in the current system. What enforcement that does happen is hardly noticeable. Banks were even failing to file the proper 1099 form for the forgiven margin in short sales. Other 1099 filings are also not being done, even today. And chasing borrowers for the balance? HAH! That's a rare issue.

Judges in Ohio are leading the nation in questioning the chain of ownership with these foreclosures, too. That you even have A CASE with questioning the mortgage ownership, shows fairly fully how screwed up (hence CULPABLE) that the lenders really are.

So, sorry Maddie. The lenders are very much a part of the blame picture. They should not be bailed out. Their shareholders should watch their ownership (in Bush's "PWNership Society") crash as the banks fail due to their stupidity. Of course, the supply-side assholes in today's righwingnut government aren't letting that happen. So we're undergoing huge commodities inflation. The middle class is being destroyed.

It's a good time to be armed, in America.

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