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Agree. Banks, credit agencies, and the whole sell side, selling bad debt in bad faith to organizations like pension funds, carry the brunt of the responsibilit
by dcposch 11y ago
Agree.
Banks, credit agencies, and the whole sell side, selling bad debt in bad faith to organizations like pension funds, carry the brunt of the responsibility.
At the same time, the millions of poor and lower middle class people who took out loans way beyond their means -- and then defaulted on them -- aren't blameless victims, either.
Say I'm a shift manager at a grocery story, but I want to buy an $700,000 McMansion. So the bank offers me a Negative Amortization Loan. (Those were fairly common in the few years before 2008.)
The page clearly says that the loan will never be repayed if I make the minimum payment--the principal will grow every month. It clearly states the minimum monthly payment, a bit over half my paycheck.
It's amoral and greedy for the bank to make that offer. At the same time, it's irresponsible and greedy for me to take it.
- haberman 11y agoTaking out a loan you can't really afford is taking a risky and ill advised gamble, but at least it's a gamble where you have skin in the game. If you default on your mortgage you will lose the house and suffer long term harm to your credit and your ability to get future loans. What is evil about the bankers' gamble is that when things go bad, they get bailed out and get to keep everything. They have nothing on the line.
- ikeboy 11y agoYou're writing this on an article about how GS paid billions to settle a claim. How is that "nothing on the line"?
- haberman 11y agoThe claim was for fraud. The fact that GS defrauded investors is its own independent transgression, separate from the risky bets that the government de facto insured them from. If I default on my mortgage and commit fraud, I don't have the luxury of saying "the fraud sentence is enough, can't I at least keep my house?"
- ikeboy 11y agoWho defaulted to whom here?
- bicknergseng 11y agoThose billions are relative to the amount of money they made though. A crappy analogy is a bank robber who steals a million dollars from 10 banks, gets caught at the last, and has to pay back 2 million dollars.
- ikeboy 11y agoIt's almost a year's worth of profit. Do you have reason to believe that their income obtained by fraud is significantly more than the fines they paid? Goldman has plenty of other businesses.
- drumdance 11y agoThey also received $12.9 billion from the government as part of the AIG bailout, more than any other entity.