From an article by Matt Taibbi in The Rolling Stone kindly shared with us by reader Stringer Bell:
Anyway, there’s is a massive gap between making a bad decision with one’s personal finances and committing criminal fraud in billion-dollar amounts. Morally, the two acts are not even in the same universe.
Homeowners who took on those bad loans did so for a variety of reasons. Some were coaxed into adjustable-rate loans when they qualified for fixed-rate loans, for the simple reason that the ARM loan garnered a bigger commission for the seller. Others were told by their brokers that if interest rates went up, or they couldn’t make their payments, they could just sell their homes, or come back to the same broker for a refinance.
This is precisely the part of the Liberal argument that I can’t get behind. “They were coaxed, they were told, oh, poor little victims”. I find this idea that if a broker tells one something, one simply can’t exercise any judgment and resist to be absolutely insulting.
If at least this whole borrowing craze were in the past, then I’d say “who cares about apportioning blame? Let’s just make sure bank regulations are put back in place and move on.” But the problem is that it isn’t nearly over. The insanity continues and it’s as strong as ever. Zero-downpayment mortgages are being handed out next door right this moment. And the only way I’m seeing that the borrowing obsession can be curbed is by making heavy borrowing socially unacceptable. When it becomes shameful to be in debt (rather than NOT to be in debt, as it is right now), we will have a hope of changing things.
For now, people don’t even think of mortgages as debt. They talk about a house on which they haven’t paid a dime as “their house.” I have now stopped discussing my living arrangements with people altogether because I’m sick and tired of being treated like an idiot because I don’t want to take out a huge loan to pretend that I “bought” a house and prefer to rent. Even a manicurist I visited recently (a complete stranger, mind you) literally scoffed in my face when in answer to her question I responded that I rent.
I’ve now repeated the sentence “I’m not imposing this on anybody, I’m not criticizing anybody, I just don’t believe in borrowing” so many times that my jaw hurts. I’ve even considered lying to people and telling them that it’s some sort of a cultural thing not to borrow huge amounts from banks because I’m so tired of being labeled an idiot for simply wanting to live a debt-free life.
Mind you, I’m not being pressured to go into an insanely huge debt by brokers or bankers. I don’t meet any brokers and bankers and I have no idea where all those folks Taibbi says were bamboozled by them managed to encounter them socially. (Might they have gone to visit the brokers and the bankers of their own free will? Hmm…) I’m being hounded (sometimes to the point of feeling bullied) about not wanting to borrow by friends, relatives, and colleagues. And if you think it’s easy to be pressured about this on a regular basis by your boss and by people who will be on your tenure committee, think again. I can repeat until I’m blue in the face that I’m committed to my university. People don’t believe me, though, because I haven’t offered them the ultimate proof of “being serious about this job” by getting into a huge debt to “buy” a house in the area.
How is it normal that a person who takes out a loan that is 10 times bigger than their yearly income is considered more reliable and stable than a person who doesn’t want to be in debt? Such people don’t get grilled on their choices by everybody they know the way I get grilled on mine. A high-ranking administrator does not ask a happy borrower, “But you are planning to pay down this debt soon, right?”, while he does ask me, “But you are planning to buy (obviously meaning “take on a huge mortgage”) soon, right? Maybe next year?”
Say what you will, folks, this is just wrong. The idea that the only normal response to getting a good job and a respectable, more or less stable income is immediately to go into debt is hugely mistaken and extremely dangerous. And until this mentality changes, I don’t think that even the best bank regulations in the universe will put our economy on the right track.