Subprime Excuses

This morning the Wall Street Journal is running a front page article entitled: "DAY OF RECKONING 'Subprime' Aftermath: Losing the Family Home," basically it is another sympathetic piece about the supposed victims of predatory lenders who signed up for loans that they can no longer afford to service. In true form the article chose to focus on a predominately black neighborhood in the decaying city of Detroit to use as an example. The homeowners profiled in the story are painted as innocent lackeys who signed up for high interest or exotic loans at the behest of fiendish, bigoted lenders who deliberately target blacks to entrap them into paying higher interest rates than whites with similar credit histories (what about similar employment records?? They didn't take that into consideration in the article. Steady employment with steady salary is a huge factor in determining rates, no?). So why did these poor helpless souls decide to fall prey to the horrible bigots drooling over their subprime prey, itching to do harm to the black community? The article states:

"Some used the money to buy their houses. But most already owned their homes and used the proceeds to pay off credit cards, do renovations and maintain an appearance of middle-class fortitude amid a declining local economy. "

So the economy is to blame. Or the awful credit card companies? Or the culture of America that drives people to maintain the facade of middle class fortitude? As typical in the mainstream media today and the greater society in which we live, no consideration was given to individual responsibility whatsoever...it took the easy way out and blamed as many outside influences as it could possibly traingulate.

The subprime drama so depressingly (gag) described in the WSJ piece as well as the greater media at large can truly be boiled down to the fact that people simply do not want to take responsibility for making a stupid decision and would like to assign blame to a third party. I can be fairly safe in making the assumption that no mortgage broker held a gun to the head of any of these people and forced them to sign mortgage documents. Any thinking person can take a calculator and figure their budget in order to decide whether or not to take on additional financial commitments...buying a house is one of the biggest decisions one will ever make!

Do I blame the sometimes shady mortgage peddling industry for some of this mess? To an extent, however, it's their job to sell money...that's what they do...it's how they get paid. The onus is truly on the consumer to be responsible enough to make the right decisions. I think the mortgage brokers and the banks purchasing these loans should have had stronger risk management teams in place to weed out possible credit risk prior to issuing these loans, but hey these firms are already being punished by the market for their stupid mistakes. Off the top of my head I can think of several large mortgage lenders who have gone under as a result of failed risk management policies. These companies know they are to blame and are reaping the consequences of their heady ways.

On the flip side of the coin, however, homeowners who took on far more responsibility than they could knowingly handle are absolutely to blame. The buck truly stops at the consumer...hey, it's YOUR OWN FAULT. I'm sorry you can't pay your payments on your home, but you know what? It's not my fault you signed for a $650,000 mortgage when you only make $2,000 a month?? What are you thinking? It's not because you are black, it's not because the economy in your city sucks, it's not because you have to uphold some standard of living, it's because you are STUPID. No one should bail these people out, the banks should forclose on what's left of their property and liquidate the assets...that's life. Maybe next time the poor little unsuspecting consumer will pick up a calculator.