Subprime Suspects

Let's get real. Home owners who over extended themselves are losing everything. Are they accountable for their own behavior? Yes. Are they paying the price for that behavior? Yes. On the other hand, most of these people didn't have the experience to recognize what they were getting themselves into.
Meanwhile, Wall St., et al, was allowing these loans to be made by buying them up and turning huge profits. These people DID know better, as a recent article about Freddie Mac made clear. The CEO fired his Chief Risk Officer for warning him one too many times. Negativity was bad for business. This problem is *entirely* the fault of the Lords of Finance. The worst thing is, they will escape with enormous sums of money, while the rest of us suffer, even if we never defaulted on anything.
That they have the gall to blame minorities is... I don't have a word for it. They should be stripped of their wealth and put to work in a labor camp, so they won't be a burden to the economy while they serve long prison sentences.

Derivatives, ARMS, and the religion of deregulation turned this all into the toxic brew it has become. The housing market has always had less than stellar loans but what made this situation nuclear was Wall Street trying to leverage the risk involved . No derivatives, no ARMS... no meltdown. It's just easy.

Interesting and factual points always make for a good article. I have a problem with blame being propelled on the minorities where it usually goes. A lot of peoplehaven't had ANY say in what has happened to them. I've lost college savings and my earnings for the year, I'm 23, white, and now I'm broke and homeless, and I've done nothing but work and be continuously employed.

I think it's right to set aside places like Manhattan and Southern California for blame on the housing crisis. This has been an example of the wealthy right-eous (banks, conservatives, government "programs", liberals) sucking the *** of America until they're dry stumps. They did a good job. There ain't nothin' left.

I think we need to stop worrying about how far left and how far right we are, and when we make comments, they need to be about material, and not sides. This is about how far screwed we are, and instead of making a hobby out of how strangers' political views measure against ours, its time for constructive commenting.

I thought the views below were-- oh wait, it doesn't matter. Cause I'm still broke. Right.

Dan, I think you hit it right square in the nose. All these banks were encouraged to offer the American Dream of home-ownership to people with modest means, by offering low interest rates and then either a ballon payment or adjustable rate mortgage, promising them that they could get a low fixed rate before these baloon rates or ARMS kicked in if they payed their mortgage for 6 months. When 6 months came around, and they applied for a fix rate, they were denied, because they suddenly did not have enough earned income to cover the ballon/ARM mortgage. These brokers, lenders were vultures and taking advantage of the meek. There is a place in hell for these people, who swindled main street on the back of our foundation, the poor, and the middle class. May we have a forgiving God. Tina in Tempe.

Call it what you will. The bottom line is people who couldn't afford mortgages got them. What's offensive is this article. Do us all a favor and crawl back under your rock Dan.

Your article completely ignored the element of greed. Not all subprime loans are for poor credit candidate. It was also used by a number of professional people who did not qualify for the homes that they wanted because they simply could not afford them, or the down payment. These people (credit scores of 700+) wanted 100% financing, Interest Only payments, and felt that the market would increase the value enough that they could either refi or sell in a year with profit. These will be a large segment of the foreclosure bonazza.
Did lenders get greedy themselves... yes, but they are not the sole problem.
I'm sorry that the media has never choosen to address the borrowers responsibility in this matter, or the effect this has all had on the employees ( or rather former employees) of this industry. I am 58, with 25 years in the mortgage business. Last year I lost my job when my company closed. I have no hope of returning to the industry, and although I have Industrial experience, no one wants to hire a beginner at my age. You have focued on the extremes of this problem (Executive pay, and people who were defrauded) and have ignored the middle ground of unemployment and borrower greed.

Leave it to the left to not only blame the Republicans for this mess but also accuse Republicans of racism at the same time. Perhaps the author should explain why up to 25% of subprime or equivalent loans are late or in default...

I was waiting for the left to start spinning this. Figures it would be Newsweek. Sorry, Daniel, but the truth is already out there.

You have got to be kidding me. The subprime default rate is at 13% and this embicile finds a way to pin it on "rich white people?"

Here's a statistic for you research, Gross: find out what kind of mess we'd be in if the subprime default rate equaled the default rate on non-subprime loans - in other words: if these people had paid their mortgage like they said they would.

And it isn't about "race" pal, it's about "poor" people. The mistake here was opening the world of home-ownership to people who aren't responsible enough to be homeowners in the first place.

I bet it won't happen again after this, they had their shot and it damn near brought this country's financial system down with it. I hope the defaulters like their rentals - 'cause that's where they're going to spend the rest of their life, hopefully.

Why can't people accept blame where blame belongs. Since when has anyone been entitled to own a home. When I built my home I had to have 20% down. If you can't put 20% down or if you don't have the income to support the purchase of a home then you shouldn't be allowed to own a home. Its that simple. Thank you to the left wing buffoons for making sure everyone has the ability to own a home(or at least they tired to a home). Who gets stuck. Everyone who pays on time and lives within their means.

Obama is getting a bump out of this because people are not being reminded of the whole history where the economy is concerned, and who did what when. Call it bias by omission. The media simply says that the economy is Obamas strong issue, but never discusses the facts in detail. Further, who had a majority when is rarely relevant. If the simplistic Party In Power model were true, then the Democrats would not have needed the House Republicans when they tried to pass the bailout bill, as Democrats have the majority in both houses and there is no threat of a veto. In theory, they do not need the Republicans to vote at all. In fact, something like twelve (12) Democrats from Barney Franks own banking committee voted against the bill. Obviously, it is not so simple and the media does the voter a disservice by doing little more than reinforcing the error. A similar argument would be to say that the economy appeared to be doing fine until the Democrats took over control of Congress and the power of the purse, then it tanked. As an aside, the media also misleads regarding the Clinton economy when they fail to mention that it also ended in a recession, requiring the first round of Bush stimulus checks immediately after he took office..


Do Obama and the Democrats deserve a lift in the polls as a result of the financial and mortgage problems? The answer from history is a clear NO. Here's the lead of a New York Times story on September 30, 1999:

"Fannie Mae Eases Credit To Aid Mortgage Lending" [link below]. That's 1999 folks. Clinton Administration, I believe.

Here's the lead of a New York Times story on Sept. 11, 2003:

"The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. "[see link below] The Democrats killed the reforms.

McCain said in co-sponsoring the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190:

"If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole. The Democrats killed the Bill.

What was Barney Frank and fellow Democrats saying at the time of these attempted reforms? According to reports, Representative Barney Frank(D-MA) claimed of the thrifts :

"These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Representative Mel Watt (D-NC) added of the reforms "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing." [ See Community Reinvestment Act, link bel

Where is the article about Joe Bidens longstanding relationship with the credit card industry lobby? Is that what you call looking out for the middle class?

The link below contains a purported list of the top 25 in Congress who got contributions from the folks at Fannie and Freddie. Obama is listed third, after Dodd and Kerry, even though Obama is just a junior Senator. Obama is followed next by Clinton. Barney Frank and Nancy Pelosi are on the list as well.

http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080918

For an interesting article purporting to detail the House Financial Services Committee Chairs long history with Fannie Mae, See http://www.businessandmedia.org/printer/2008/20080924145932.aspx

"House Financial Services Committee Chair promoted GSEs while former 'spouse' was Fannie Mae executive."

The last link below describes how some in Congress tried to use the original version of the bailout bill to divert money eventually recovered to groups like ACORN. See:

http://online.wsj.com/article/SB122247015469280723.html?mod=googlenews_wsj

http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080918

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

http://article.nationalreview.com/print/?q=M2QwNDhkZTg2OGYzZjkzM2E2NDEwM2U5OGVkNTc0YzU=

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260

http://www.businessandmedia.org/printer/2008/20080924145932.aspx

http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080926

http://online.wsj.com/article/SB122247015469280723.html?mod=googlenews_wsj

This is an excellent and concise analysis of our current crisis. I find it amazing how much ideology can blind people to an actual analysis of a problem, but that has been the wishful thinking of the last eight years!

The right wing picks it's easiest target for this mess: minorities. The Republican party uses closet racism to scare us white folks into voting for them. They use Arabs to scare us, minorities in this country for the housing mess, they try to sow doubt about Obama by using subtle hints that he's not one of us, they parade around people at their rallies to emphasize Obama's middle name. The Republican voices (Limbaugh, Hanity, etc.) are out and out bigots. Never mind the fact that a lot of minorities today are fighting and dying for this country.