Ever since the beginning of the mortgage and financial disaster there have been those who have tried to pin the blame on homeowners.
Their arguments usually go something like this: “see, if people weren’t living beyond thier means and buying a $700,000 home they knew they couldn’t afford this whole mortgage disaster would have never happened!”. Those who subscribe to that particular way of thinking are SEVERELY misinformed about just what happened to get us where we are now.
To do away with this argument quickly, if you go into a bank right now (credit crisis notwithstanding) and say “i want a loan for a million dollars” you’ll be subjected to mounds of paperwork, reference checks and background/credit checks to determine your ability to repay. This is as it should be. If you are deemed credit worthy you get it, if you’re not creditworthy, you don’t.
The fact that people got money for “homes they knew they couldn’t afford” says a little something about those persons (most of whom were conned into believing they could repay the loans by predatory lenders) but it actually says EVERYTHING about those lenders who APPROVED thier loan applications in the first place! Putting it all (or even mostly) on homeowners completely ignores predatory lenders, greedy executives, credit default swaps that made giving “bad loans” profitable, derivative trading, and relaxed banking laws that are the true source of the current situation.
To further drive home the point, below is a link to the official statement on the crisis released by the White House and given by the Group of Twenty (G20), the body comprised of finance ministers and central bank governors from 20 of the world’s largest economies and the European Union. The document actually has a section entitled, “Root Causes of the Current Crisis”.
To cut to the chase, the G20 lays the fault of the crisis at the feet of “market participants” (Countrywide, AIG, Merrill Lynch, Bear Stearns etc.), “insufficiently coordinated policies”, a failure to exercise “due diligence” and “unsound risk management practices”. They also point to the role of “opaque financial products”, “excessive leverage” and “inadequate appreciation risks”. The G20 declaration also singles out “policy makers”, “regulators” and “supervisors” for thier irresponsibility.
Notice who was never mentioned……………………….HOMEOWNERS!!!!!!!!!!
Link: Declaration of the Summit on Financial Markets and the World Economy
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