Sharing the blame

After listening to most of today’s Midmorning interview with New York Times economics reporter Edmund Andrews, the biggest question isn’t “how can an economics reporter for the New York Times be so clueless when it comes to assuming a mortgage.” The real question is “how can someone so financially clueless get a gig as an economics reporter for the New York Times?”

Give Kerri Miller credit for being tough on Andrews, who has written a book on how he fell into “a catastrophic binge on overpriced real estate and reckless mortgages. ”

How could it have happened?

“The answer to that question takes you into the financial system and the recklessness that pervaded the financial system over the last few years,” he said.

Well, maybe, but we also learned during a fabulous interview that Andrews never made any calculations on his $400,000 mortgage; a serious dereliction of duty by a homeowner even if the lender never asked for proof he could afford it. He also admitted he let the house become critical in his mind to making his second marriage work. Understandable, perhaps, but unbelievably ignorant.

It wasn’t until well into the hour that Andrews strayed from his insistence — which, for the record, has plenty of validity — that the fault for his problems lay with mortgage-lending practices. “It was a stupid loan that never should’ve been taken and never should have been made,” he said.

The meltdown in the nation’s economy — the meltdown that’s taken hundreds of thousands of jobs from hard-working people — clearly has its foundation in the lending practices of financial institutions. But there’s also plenty of blame for people who couldn’t be bothered “running the numbers” for the biggest purchase of their lives. Andrews is proof of that.

“In spite of people making poor decisions, it never happened in the past… because the mortgage lender wouldn’t have let them,” a Realtor called in to say. Clearly true. But if there’s no one to save us from ourselves, who can we turn to besides… ourselves?

“Human beings make good decisions and bad decisions all the time, but there’s nothing we’ve ever seen before where millions and millions of borrowers went over the cliff at the same time, ” Andrews said. True, perhaps, but Andrews makes it entirely too easy to blame the victim. And that’s the tragedy here. That people who did their due diligence and lost homes because of lender fraud, won’t be able to get past the “how can you be so stupid?” questions that people like Andrews make all too easy to ask.

“There’s no one out there who’s as financially literate as you are,” Miller said near the end of the show.

On that, she couldn’t have been more incorrect.

  • Paul

    Bob is certainly correct in pointing out that we are responsible for your choices and many people made bad mortgage choices. But let’s not forget the totality of bad information and advice being dispensed during the bubble.

    In addition to the mortgage bankers, you the real estate industry pushing sales and failing to encourage people to do the math. You also fraud of people being told they didn’t have to worry about re-setting interest rates because they’d be able to re-finance. You had an entire news media heralding the era of universal home ownership without any critical examination. All these news outlets advertising themselves as the guys who tell you what you need to know and none of them issuing any warnings until almost a year into the recession. There was were no “hey you know interest only loans are a really stupid idea”, or “you know what, no bubble lasts forever” stories.

    And on top of all that you had personal “advisers” of all sort coming out of the woodwork in newslet stories on local TV, and on public radio etc. telling everyone that home buying is how you build wealth, fix your credit, and achieve financial independence. No one bothered to explain the difference between building wealth and acquiring debt- they just told everyone to cash in on their equity. And then when it all started to go south everyone was told to NOT to sell, stick to your strategy etc, instead of being told how and where to protect their investments.

    Finally you have a economically illiterate population. We don’t teach fundamental economics or critical thought and we failed to realize we were following faith based economic policies instead of rational public policy. It wasn’t just borrowers failing to do the math, we also had everyone from Alan Greenspan to your local realtor telling us that a nationwide housing collapse was impossible and losses had been rendered impossible by hedged investing.

    It would also help if we required lenders to provide loan agreements that an average person can read and understand.

    Absolutely we are responsible for ourselves. But look at how many news outlets and advertisers constantly market themselves as accurate and reliable sources of information. Should we not also hold our media accountable for the advice and information they dispense? I mean if the only lesson at the end of the day is to trust no one but yourself, then what to we need news outlets for?

  • BK gullsgate

    Paul’s comments covered all points ignored by the interviewer…who essentially, was ignoring all the varied positions of weakness in the mortgage foreclosure scene…other ‘missteps’ beyond those of bad choices made by one not too credible interviewee. He was not your typical foreclosure ‘victim’, one can assume?

    The interviewer preemptively established her long-jawed position and hacked away. Neither participants came off too well…one with a lot of personal revelations unneccasarily dwelt on; and the interviewer carrying her own attitudinal baggage , coming off smelling like a rogue.

    Can the listener expect a down-and-out hedge fund manager to be next…call it equal time here?”Do due diligence on that one next, eh?