Quote Originally Posted by splansing View Post
At some point, that is where regulators and sound practices are supposed to be the line that we do not cross. The banks do not have to appraise a $150,000 house for the $250,000 that is asked, but they do. If they think you can pay the mortgage, or even if they're just happy to take on the mortgage as an asset they can leverage, whether you pay or not, they'll appraise and approve and off you go. The ratings agencies that evaluate the risks of the loan are supposed to notice when a line cook at the Olive Garden has 3 homes, and his dog has a fourth, and rate the mortgage so harshly that it is useless to the banks, which discourages them from making the loans in the first place.

The systemic flaw that drove it all was the capture of the regulators and the ratings agencies by the banks, and the lack of regulation across Wall Street. Ratings agencies rubber-stamp anything as AAA, so the banks wrap them up and sell them to consumers as AAA, and not only once, but ten, twenty, forty times, the same product, the same asset. That kind of leverage is free money and they threw it at the markets, where they profited enormously. And when the markets were collapsing, they stepped aside and let the tax payers take it on the chin, which we are still doing.

The consumers ought to be smarter. They shouldn't take on loans they cannot afford. But some of them are pretty simple. When a banker tells you this is how the loan works, and you only have to pay $200 per month and you can afford this house, and ain't that grand, and you sign the dotted line and yes it is grand, thank you very much....and then in a few years it's $2,000 per month... Fine, people aren't smart, and they can be blamed for their stupidity. But if we just allow that kind of stupidity to run rampant through a lack of effective controls at every step, and incentivize every player to make as many bad loans as possible, the problem is....what about me? I didn't take on a mortgage I can't afford. I didn't buy 4 homes on ARMs like a dumbass. But the market blew up around me. Costs exploded around me. Corruption of the housing market and all of Wall Street and banking happened, and we ALL have to pay for it, even if we didn't have anything to do with it.

Financially, how can I look at it any way other than, I did what I know to be honest and reasonable and proper in the market, and for my effort, I got fucked. I pay my mortgage, and my taxes pay for Goldman Sachs bonuses, and subsidize the losses that should have ruined them for taking those risks and leveraging themselves past their eyeballs, and prop up a real estate market that remains at roughly the same hyper-inflated bullshit mark it was driven to by that bubble. My tax dollars have postponed a return to an honest marketplace. And when that return does come, who is going to pay for it? Jamie Dimon?

The answer, of course, is that I am going to pay for it, when the value of my house drops by 30% or more, and the equity I have worked to build in an utterly corrupt, dishonest, debt-based market will evaporate, my years of work and being smart and honest and doing my part to support our markets will be rewarded by...another payoff to Dimon and his ilk and a housing market that crumbles around me and wipes out my equity, takes a big bite out of my net worth, and immobilizes me utterly in the marketplace.

You want to blame somebody, you have to blame the whole system. And specifically, the Commodity Futures Modernization Act and the other assorted flurry of deregulation that was paid for by Wall Street and sold by their shills in D.C. the same way they always are, historically. "This time it'll be different! We're so much smarter now! These old fuddy-duddies with their regulations...what is this, the 1940's? Har har! Let's move on into our brave new future! Growth and dollars for us all!!"

If it was new it wouldn't be so sickening. But it's all happened before, plenty of times.
Well said, good points.