Monday, May 18, 2009

So, God Walks into a Bar ....

Rush Limbaugh is known to tell an old joke about God's interaction with the press on the End of the World.

One day, God decides he's had enough with his earthly experiment and decides to destroy the universe and start over. In one final gesture of magnanimity, God calls a press conference to announce his intentions and give believers and non a chance to put their affairs in order. He invites editorial teams from three major news outlets -- The New York Times, USA Today and The Wall St. Journal and gives them exclusives on the biggest story in history. Short & sweet, God tells them he's going to destroy the world in 24-hours and charges them to spread the word about the Apocalypse.

Dutifully, the papers compose their final editions. And on the "End of Days" the papers hit the newsstands, their headlines blaring:

  • USA Today: "GOD: WE'RE GONE!"
  • WSJ: "Mr. God Says World to End Tomorrow" (Subhead: "Markets to Close Early")
  • NYT: "God Says, World to End; Women, Children, Minorities Hardest Hit"

Last Friday, we see this item from the Old Grey Lady, (May 15, 2009) showing that sometimes life imitates art.

Minorities Affected Most as New York Foreclosures Rise

Now, is it just me, but doesn't this go without reason? Were not these the consumers Fannie and Freddie were so adamant to get loans to over the past 5-10-20 years? The article points this out plainly:

And the hardest blows rain down on the backbone of minority neighborhoods:
the black middle class. In
New York City, for example, black households making more than $68,000 a year are almost five times as likely to hold high-interest subprime mortgages as are
whites of similar — or even lower — incomes.

This holds a special poignancy. Just four or five years ago, black
home ownership was rising sharply, after decades in which discriminatory lending
and zoning practices discouraged many blacks from buying. Now, as damage ripples
outward, black families in foreclosure lose savings and credit, neighbors see
the value of their homes decline, and renters are evicted.

So, after years of suffering bad press for NOT giving these (high-risk) consumers loans, and the occasional drive-through blockade or lobby storming/sit-ins by the rent-a-mob "community organizers" of the world, when the banks eventually DO make the loans (risky & all) now they are mean & evil?

This is not coming from a bank flack, either. ( I do not work for a bank; never have. None of my relatives work for banks; matter of fact, I'm not sure that I know anybody who DOES currently work for a bank.) Personally, I do bank at commercial banking institutions and have credit cards, a few of which took hits from the "crises."

All the agreements made were done by me, of my own doing and for which I am responsible. Yes, I received mail from banks and cards; it's also true that I went out into the world and sought information from mortgage lenders. But NOBODY from a bank burst through my front door, sat/shouted/sang/chanted (with media in tow) forcing me to sign anything. The signed commitments or contracts those are the deals I made --it's what I have to live with.

For me now to go back to them and ask them to change the rules, that's asking a big favor don't you think? (Now, the opposite is true--I don't think the banks should be able to change the terms of the deal on me either, but that's different post.)

With all this talk about "responsibility" lately, you'd think somebody would point out that its the consumer who is ultimately responsible for the bed he/she must lay in. If there's any non-personal responsibility to be taken here for the poor, dumb, helpless, high school graduates we've populated this country with it might be with government schools. Those institutions have apparently churned out millions of simpletons who don't know you that you have to eventually pay back the money you charge on a credit card, that can't calculate simple interest or manage to balance a checkbook. BUT they MIGHT know who Elizabeth Cady Stanton is, what the "hockey stick graph" shows or what the Mayan calendar and numbering system is based on.

Which one of those things is going to bring the country and the world into a global economic crisis if not known by everyday "Joe Six-packs"?


Ronald said...

Per our email conversation, I thougth I'd post here the following points I'd picked out from the NYTimes article you are posting about.


“This was not only a problem of regulation on the mortgage front, but also a targeted scourge on minority communities,” said Shaun Donovan, the secretary of Housing and Urban Development, in a speech this year at New York University. Roughly 33 percent of the subprime mortgages given out in New York City in 2007, Mr. Donovan said, went to borrowers with credit scores that should have qualified them for conventional prevailing-rate loans.And a rather dichomtous point to the above (at least to a semi educated person):

All these ills are magnified for black families, whose median net worth is far smaller than that of white families, and far more tied up in housing.Complaining that minorities didn't get loans even though their credit scores were the same or better than "white families" (I'd love to see how they came up with this information) ignores the fact that the authors of the article eludes to in their second quote, which is CREDIT SCORES are NOT the only factor that banks take into account when qualifying prospective lendees. They also include a calculation called "Debt to Income Ratio". The second quote from the article that I posted obviously reveals that these minority families have much higher debt to income ratios, as their net worth is smaller and more of it is tied up in their house. Does the term "house poor" not mean anything to these authors?

To qualify for a regular loan, vs. a "subprime loan", banks may require a certain level of net worth, and that you can display a debt to income ratio that meets their standards.

If you fail at a primary lending institution due to your debt to income ratio, or low level of net worth, it doesn't matter what your credit score is.

MediaObserver said...

good one