Subprime Suspects

It would be interesting to examine exactly who is most affected by foreclosures and who is facing the most difficulties paying off their mortages. I doubt that it would be the rich. Casual observation around the LA area suggests the problem is most acute in low income, minority neighborhoods. To the extent that ACORN lobbying, the CRA and the Clinton administration advocated greater homeownership rates for the poor and minorities, and to the extent that they mostly hold the subprime mortgages gone bad, it would be hard to escape the conclusion that encouraging lending to these categories is at least partly responsible for the meltdown. Excessive leverage and financial innovations only played a multiplicative effect, but the original sin is the accumulation of bad debt.
This column feels more like an angry rant than a dispassioned look at the facts. Maybe a bit less anger and a bit more scrutinizing of the facts would be called for?

It would be interesting to examine exactly who is most affected by foreclosures and who is facing the most difficulties paying off their mortages. I doubt that it would be the rich. Casual observation around the LA area suggests the problem is most acute in low income, minority neighborhoods. To the extent that ACORN lobbying, the CRA and the Clinton administration advocated greater homeownership rates for the poor and minorities, and to the extent that they mostly hold the subprime mortgages gone bad, it would be hard to escape the conclusion that encouraging lending to these categories is at least partly responsible for the meltdown. Excessive leverage and financial innovations only played a multiplicative effect, but the original sin is the accumulation of bad debt.
This column feels more like an angry rant than a dispassioned look at the facts. Maybe a bit less anger and a bit more scrutinizing of the facts would be called for?

Actually, during the 90's we shipped 15 million jobs to China. During the 2000's we shipped 10 million jobs to India. Currently their are 10 million W-2 type americans unemployed, and another 10 million contractors and tech workers unemployed. Those 25 million jobs would have kept the economy roaring. To bad all now have to suffer from the greed of the CIO's and CEO's Great job boys!

Taiho

We are going through this crisis because people with an income of $75,000 thought they could have $350,000+ house, not because of the poor. If you had made "good" financial decisions all of you're "live" you wouldn't be in this situation approaching retirement. I'm 37 and paid cash for my home, cash from "good" financial decisions.
Speaking of Welfare I bet you can't wait for your check from Social Security. A check ripped from the income of the productive.
By the way, with 2+ kids and an income of about $75,000, you are upper working class(and not all that upper).

FINALLY!!! the trut h has been put into print! I spent the last 30 yrs of my career in the mortgage business, IT WAS NOT subprime loans. It was the stated income stated assest and no income no assest verification programs that started this mess. If only CNN, FOX, ABS, CBS and NBC woiuld state the truth and not tell lies on TV we could start to fix the prioblem.. BUT, why tell the American public the people with credit scores of 650 and above bought million dollar home for investment properties along with straw buyers and crocked title comppnies, brokers and lenders caused this problem.
I never liked these so called "Niche" products. I firmly believe the FICO scoring is to balme and its a false positive of how a person can or will repay debt. KUDOS, to you for telling the TRUTH.

http://clinton.senate.gov/issues/housing/subprime/index.cfm

http://clinton.senate.gov/issues/housing/subprime/index.cfm

I will have to disagree with Gross,who is a partisan.[beating up on Cavuto of FOX and the conservative Krauthammer does not get the job done].

To be sure,one cannot fault the poorer lender. But one CAN blame the ones who exploited these. ACORN goes to the Chicago machine,which in turn is represented by state and federal congressional sharks that in turn go to FANNIE and FREDDIE,who in turn stack their portfolios[which the Republicans tried to combat in the 04-05 reform legislations that the Democrats did not want to happen],from the LEHMAN fatcats which in turn huck the dough through F and F back to smaller -fry lending institutions that included COUNTRYWIDE,SUPERIOR,and HLC,with FANNIE and FREDDIE guaranteeing the loans based on their portfolios to the point where no-one even asked for credit or income verification [Acts 33 and 34 of the Securities and Exchange Commission legislations in 2004 and 2006] which were ignored by FANNIE and FREDDIE] towards the end,with the LEHMANS and the AIGS gobbling up more foreign investment capital.
It is no mistake that the chief impacted regions of the country which saw the meltdown in its most radioactive sense are in Democrat-dominated regions that are headed up by members of the Black Congressional Caucus. It is neither ''racist''nor is it unfactual,based upon the sheer weight of their surly testimony[Waters,Meeks,Clay,Jackson and all the rest], that there was nothing ''wrong''with Fand F,and also seeing how much money they were given by these,to nail them as chief culprits on the government side,joined by homeownership-by-all-means liberals such as Frank,Dodd,Kucinich,and Scharkowsky. Indeed,it is such a hot potato,that yesterday,before the House Banking and Oversight Reform Committee led by Henry Waxman,when GOP Rep.Chris Shays demanded a full airing of the F and F mess,and how we got here,requiring the last six years of any and all House business relating to F and F,he was gunned down by the Democrats.

Why?

I don't believe the author gets his partisan facts straight. Conservatives blame utopian Democrats like Carter, Clinton and Barney Frank for pushing policies that resluted in bad loans. Please show me, however, where any conservative says that they are solely to blame. This article is a straw man attempt to create another finger of blame against Republicans so to convince the masses of the poor picked up in illegal ACORN early voting efforts to for Obama. I've not doubt the author is a complete partisan trying to cover for his political heroes like the super inpressive Jimma Cartuh.

I think where most go off course in their assessments of rightness or wrongness of actions with respect to the financial industry is beginning with the assumption that it has a moral foundation of any kind. It is amoral. It exists to act as a conduit for money and to make a profit from its movement from one party to another. It would be wrong to believe that the people in the business are in it for any other reason than to make money and lots of it. Every investor, whether small or large, mimics this same behavior when he shops for the best rate, the highest return, the greatest opportunity.

In the case of the financial pandemic before us, what we are seeing is the effect of individuals who have made personal and business choices whose objectives were to seek only their own best interests at the expense of others. Home buyers sought mortgages with terms that should have scared them away in droves, but they bought them nevertheless out of fear that they would never have a piece of the American Dream. Bankers loaned them money knowing they probably couldn't afford it with the belief that when rates ratcheted up, someone else would bail them out through refinancing. Investment bankers bought the mortgages, repackaged them, and sold them to individuals, institutions, funds, foreign investors, and pension plans, sometimes with a prospectus and sometimes without.

The fact of the matter is that no one is uniquely guilty, and at the same time no one is guiltless. Each of us has contributed toward creating the perfect financial storm, a storm that threatens to carry this nation not only into a deep recession but possibly into a genuine depression fed and nourished by the calamity that is revealing its growing magnitude across the world.

Herbert A. Simon, the recently deceased Nobel Prize winner, observed in his discussions on business management that successful businesses are those that know when to accept a less than an optimal result. Clearly, neither businesses nor individuals in this country and around the world over the nearly past two decades have shown that they know when to push themselves away from the table. They have pursued ways to cut the safety margins to slimmer and slimmer dimensions, all in the name of capturing more profit and personal gain. The result is what we have staring us in the face.

It is disingenuous to assert that the blame should be laid at the feet of CEOs of banks, insurance companies, and investment firms. It should be placed at the feet of a culture that has shown in every conceivable way that the aggregation of wealth is defensible under all circumstances and that to leave well enough alone is symptomatic of mental instability.

Mr. Gross, speaking of Ideology!! Unfortunately for you, and unlike you, Charles Krauthammer and Neil Cavuto are correct..

The last thing I want to hear from the socialist democrats is that the Poor Poor people need help. I am white, middle class, and a baby boomer approaching retirement, which has now benn extended and may never reach what I had thought it would be. I have watched my conservative investments for my daughters college loose the gains they made over the last eight years loose all those gains in just a couple of weeks. I had built a small 401K account up to help me and my wife afford to meet our house payments after retirement...maybe not going to happen! Do not come to me with bleeding heart liberal left wing redistribution of wealth posturing. I am fed up with being bled by tax happy government officials at every opportuniy so they can buy poor people votes with my hard earned income. I have watched those "poor" people learn to manipulate welfare systems so the can live comfortably with a minumum of work effort, if any. I do not want to live in their neighborhood and I do not want them in mine! They lack work ethic and their lifestyle is day to day with no concepts of property value or responsibility. The live for thier next handout from the "government" and have been taught by the lioberal socialists that this dole/ welfare is now their right! No wonder they jumped all over offers to move up to a nice neighborhood that they could trash and hten complain that it was not their fault. Of course the want to be bailed out by the government (as in my tax dollers). I say let the system work. Do not bail them out. Do not give $$$ to banks that made stupid loans that had very high risks. Let the poor go back to renting apartments, let the bad banks fail. They will be replaced by banks like mine that made low risk loans and will not make loans to the high risk people. I anyone needs a break it is people like me! Give me a lower interest rate. Obama says he wants to give tax breaks to the middle class. Has anyone asked him on TV to define his "middle class"? I'll bet I am not included becaus I made good decisions all my live to slowly build my earnings from less than $10 K a year to over $70K per year......bet he wants to take a bunch of that away and resdistribute it to his "missle class".