Am I the only one who finds it striking that when giant banks talk about the mortgage crisis, they use words like “toxic”? But, when people speak of the those who fell for the scam, the people who signed up for loans they shouldn’t have, they’re described as idiots who should have read their contracts.
Well, which is it? Were the fast-talking bankers scam artists, preying on people with little financial knowledge — or are the people at the bottom to shoulder the blame for the Great Recession because they didn’t do what no one does: Read lengthy legal documents before signing them?
Since the word”toxic” is showing up in the news again in relation to more lawsuits aimed at Charlotte’s darling, Bank of America, I’m going to continue to lean toward the theory that it was the bankers and their “toxic” money making schemes that set the economy on fire, not the people at the bottom stretching for the American Dream. You?
From The Washington Post about Allstate’s decision to sue Countrywide, the bank BofA purchased right before the economy imploded:
Charlotte-based Bank of America, the nation’s largest bank, said in an e-mail, “We are still reviewing the complaint, but this unfortunately appears to be a situation where a sophisticated investor is looking for someone to blame for a downturn in the economy and losses on an investment it made.”
Read more here.
Let the finger pointing continue.
Rhiannon “Rhi” Bowman is an independent journalist who contributes snarky commentary on Creative Loafing’s CLog blog four days a week in addition to writing for several other local media organizations. To learn more, click the links or follow Rhi on Twitter.
This article appears in Dec 28, 2010 – Jan 3, 2011.
If you ask yourself what role moral hazard and interest rate manipulation played in fueling the housing bubble you’ll find yourself closer to the point.
There is plenty of blame to go around.
Since the Reagan Administration the entire country has been living in a house of cards.
People don’t buy the house they need, they buy the largest house they can get financed. People don’t buy a practical car, they buy the largest and most luxurious car they can get financed. How many of your electronic gadgets were purchased with cash? How many credit cards do you have? How many of them have a zero balance at the end of each month vs how many are nearly maxed out? How many car loans do you have? How much a month do you spend on your cell phone? Do you actually watch the 300 TV channels that you subscribe to every month?
That same level of financial irresponsibility is practiced by businesses large and small and by governments large and small.
When you are living in that house of cards, it doesn’t take much wind to blow it down.
…and then gasoline prices quadrupled over a period of 6 months.
The same thing happened in the early ’70s, for the same reason, but that time we weren’t in hock as deeply. We fell almost as hard, but we recovered faster.
…and we learned absolutely nothing from it.