Blaming the bankers

I love it. Folks are blaming everyone else except the very people who caused this actual financial mess - the people who actually bought homes that they couldn't afford.

Face it. They were the ones who signed on the dotted line at closing and they were the ones who had greedy expectations concerning the real estate market. They made bad decisions and now they expect to be bailed out.

The rush to blame the bankers, the government, Wall Street is truly remarkable. Perhaps we should be blaming ourselves, because if it wasn't for millions of Americans buying houses they could never remotely afford, with little money down, none of this ever would have happened. The banks may have greased the wheels, but each homeowner still signed on the dotted line.

The housing bust is a systemic failure. The banks, the lenders, the government, Wall Street and, yes, John Q. Public, are all to blame. It's a failure of each of us to take some personal responsibility for our lives.

I'm not here to defend the financial industry or realtors, but hey, Joe the Plumber no one forced you to buy a home. If you bought a home you could not afford that is your problem. Take responsibility for your actions and stop blaming others.

Yes, not to let anyone off the hook. Many people are in a bad situation because of their own lack of judgment and foresight, buying houses they couldn't really afford, not understanding their loan documents, betting on skyrocketing prices to continue upward forever, and all that. But it does not excuse the behavior of others, deceptive and sometimes outright illegal. Yes, people lied on their loans, but in other cases, brokers lied for them. Brokers forged documents. Banks pressured appraisers. Brokers and real estate agents often worked closely to railroad buyers with loan products that earned the largest commissions, not what was best for the customer. All kinds of kickback deals were created. Documents were switched at the closing table, so that buyers had to take the new terms or walk away. Yes, it's a shame that many were gullible, or let their desires overrule their good sense (who hasn't ever had that happen?). People who made mistakes are going to have to pay for them, but that doesn't make unethical and illegal actions any less unethical or illegal. Brokers, bankers, and realtors pulled every skeezy trick in the book, and invented some new ones. Forgetting or waving it away as inconsequential only asks for it to occur again in the future.

moo ... nice post. and the greed and blame go all the way up the chain of command. i could never understand the crab in the bucket mentality. while their decisions were often somewhat stupid and greedy, the blame often gets heaped on the least sophisticated instrument in the orchestra and the one that gained the least. industry replicated that poor decision millions of times and then decided to leverage it. seems a little ridiculous to me especially in the face of documented evidence of predatory lending tactics which to me severely outweighs the head-in-the-sand greed.

All of the blame going around is absolute nonense. Homeowners who signed the dotted line did so of their own free will. Those who abdicated financial responsibility have only themselves to blame, period! I mean, are some people who posted comments suggesting that the state or federal Gov't take over some role in deciding who has the smarts to take out a mortgage, car loan, personal finance loan, credit card etc, and those who do not? Imagine, homeowners having to take exams before they apply for any mortgage or other financial products.
Lets leave consumers have free choice and avoid the "nanny" state.

10-15 years ago you could spend 28% of your gross income on PITI. Principle interest taxes and insurance with no more than 36% debt. That was the formula. Real-estate prices went up in line with income growth. These were raised to 50% sop surprise surprise, the same income could now "afford" 2x as much so values doubled. The banks, investment companies, mortgage originators, appraisers and real-estate agents were all corrupt. Many buyers were stupid but most fell into what they were fed by the professionals, real-estate always goes up and buy now or you will never be able to afford to.

When 3.4 Trillion in government mandated subprime loans collapse all at once, so goes our financial system. That collapse has caused all home prices to decline. It also means that the subprime experiment has caused all investors to doubt America's honesty (AAA rating this toxic debt) and logic (loans to people who cannot repay - thus destroying their credit and lives with eviction).

When NPR asked a EU banking leader why the EU banking system is not having the same subprime mortgage problems we are he replied "our governments do not force us to make subprime loans that will never be repaid."

Barney Frank should be in Jail. Looks like Chris Dodd will be... and why aren't the congressional hearings focused on the subprime meltdown where this all began?

The Village Voice blames Democrat Andrew Cuomo for this diaster. The Boston Globe blames Democrat Barney Frank. Pelosi and Reid say they knew nothing about it. And in the middle of the subprime financial meltdown, John McCain announced that he would appoint Democrat Andrew Cuomo his SEC Chairman. Washington DC has become a reality TV version of "One Flew over the Cuckoo's Nest."

If they fixed foced subprime mortgages 10 years ago... we would not have a crisis today.

There's a lot of blame to go around. But much as its fair to blame most real estate agents for poor advice, and not understanding there own field, its unfair to blame them for stupid decisions that were ultimately the buyers fault (barring a few over-reported extraordinary cases)

Mind I'm not defending reporters or Bankers here either - the latter enabled and the former cheerleaded as buyers jumped over the cliff.

Folks... you are missing the point. Our financial crisis was started in the mid 90s with the GOVERNMENT MANDATED expansion of 3.4 TRILLION in bad loans. Those loans are now worthless.

Because of these forced bad loans, our credibility is shot worldwide. We pushed bad loans as AAA to make the insanity of subprime mortgages work.

The government officials behind the subprime fiasco, Fannie and Freddie.. should be in jail. All criminals.

Barney Frank is the worst offender... in charge of the mess he made... and newly re-elected. TOTAL INSANITY !!!

The 'Bankers" are to blame for this mess. The reason those questionable consumers signed on the bottom line was that they saw for thier first time a chance at the American dream. In the past the bankers traditionally always considered your credit rating, your monthly income, your job verification and sometimes collateral, which are all very basic money lending criteria. Yet, they (Bankers) broke all the rules, no credit, bad credit, no job verification etc.
The mortgage and Real Estate Brokers then went into a shark feeding frenzy - could you blame them - to fuel this mess. The mortgages were then sold, another story.

I agree with posts 4 & 5, but would add deregulation to the blame pile, as well as our collective greed as a country. I work in the industry, and have seen a huge change. The loss of smaller institutions is sad. You wonder how many ethical leaders simply threw in the towel rather than compete with those whose ethics and tactics don't meet standards necessary for our industry. And the public- so quick to point out the failings of the less sophisticated borrower, but oblivious to the fact that their own greed contributes to this mess. How many have opted to save or earn a few basis points doing business with the beasts rather than support their local institutions? We've profited from their tactics, and now we'll pay.

Where were the realtors when these gullible people were buying houses they could not afford or when they were entering into ARMs? Probably just calculating their huge chunk of the overpriced home that they will get in commission. There must have been a serious lack of oversight on the part of most realtors too.

Don't forget members of Congress like Barney Frank,Chuck Schumer and Christopher Dodd who pressured lending institutions into relaxing their lending standards while resisting more restrictive regulation of Freddie Mac and Fannie Mae. The subprime mortgage disaster has many fathers but let's remember that this problem began in Washington.

I don't care what transpires between two parties who enter a contract- that's between themselves and no one else. However, if the roof caves in on them both, or either, I don't expect to become involved or have to pick up the pieces. The bankers gave them bad loans - then it's the bankers' problem. Why should I bail out the irresponsible banks? But now, prudent folks who had nothing to do with the financial debacle are caught up in it. And don't use the word "us". I had nothing to do with the banks' and borrowers' screw-ups.

still waiting, I think you're right. By now, people must know I have precious little sympathy for home debtors who agreed to borrow sums they could never repay. And I don't think any of them should walk away scot free.

However, it is remarkable how well Americans have been trained never to resent their rich masters, but instead to blame those with the least power. Reminds me of the brouhaha over the proposed Detroit bailout. Sure, the automakers have been digging their own graves. But so has Wall Street. Did Citi have to go to Washington hat in hand with a "plan" before it got its billions in bailout money? Of course not. Because banks don't employ any factory workers. While vastly overpaid bankers who perform no useful function have destroyed the American economy and wrecked the global financial system, it's the factory workers who we really hate.

"Speak!" says the ruling class. "Arf!" says the public.

Realtors have no more affect on the price of homes than car salesmen have on the price of cars. The negotiating that occurs for each sale is rarely more than 10% less than the asking price. Asking prices are determined by larger social forces, not the middle men.

I can't , no I can believe the dribble. A mortgage, is a contract between TWO parties. Due diligence is required by both. That is how the law looks at it. That is how it is.

Those ignorant of the "Shadow" banking system which put us here, should spend more time learning before the mouth time; burping.

#17 is absolutely true. But what recent events point out is that the quality of advice given by most realtors is really not nearly as good as the industry claims.

Usual caveat - I've known many excellent realtors. And Boston actually has way more than its fair share. But they are still the distinct minority of the realtors I have met.

Marcus,

I think many working people *do* resent their "rich masters" but they work so hard at more than one job that they are too tired and disillusioned at the end of the day to do much about it.

I would say the public spoke clearly this past November 4th because they are tired of "working for the man" and sending *his* kids to college while their own kids college money (if there is any) is being used to bailout the "man's" big banking mistakes.

I have purchased many properties throughtout my life. I would avoid having a realtor involved in a transaction if at all possible. Buy direct, why pay a 5-6% load for usless chatter. I used a realtor only once, the property was in another country so I had to, and he was great because he let me direct with the seller (he was stoned half the time). I told the realtor he would absoultely get his fee, but I wanted him out of the transaction so I could deal direct with the seller. The deal went through quite smoothely, and all parties were happy with the outcome.