Who do you think is to blame?

cameragirl21 wrote: Obviously, we are in a recession and things are still going to get worse before they get better. But I'm curious--who do you think is most to blame or better said, how much blame do you think goes to the creditors?
For example, when I was in college, I remember getting stopped nearly daily on my way to class by people offering me a credit card and not only were they offering the credit card, they were offering t shirts, watches and other gifts just to apply.
Also, when it came to student loans, all they did was hand you the paperwork to sign...handing promissory notes to teenagers who for the most part have no idea what it is to pay back tens of thousands of dollars.
And how many of the foreclosures happening today are due to banks convincing people they could afford more than they could really afford due to adjustable mortgages?
Idk, I think the creditors bear a substantiall part of the blame, but of course, so do the debtors, but I don't think the blame should be borne by the debtors alone.
Just curious, how much of the blame, if any, do you believe rests or should rest on the shoulders on creditors?

msoulz replied: I think people need to own up to their own mistakes. I think most of the blame is on those who took on too much, had to have this and that which they could not afford, needed the biggest house possible, etc. If we continue to blame others then nothing will change and the whole cycle will repeat again.

Some folks got themselves in trouble due to circumstances beyond their control, e.g. job loss, disability, etc. That happens in any economy.

Now, I do have to say that lenders pray on ignorance. We as consumers have to be educated on our purchases, understand that needs and wants are different, and act accordingly.

One of the best things we can do for our kids is teach them about credit cards and mortgage payments and what kind of job one needs to support a particular lifestyle. DH's folks never discussed finances with the kids, and subsequently, 2 of the 3 got themselves in mounds of debt; one still hasn't seemed to learn her lesson. It's a tough hole to climb out of.

Jen, you ask some though-provoking questions!! And do you remember when they actually sent credit cards in the mail without any application??

My son got a credit card application when he was 2. I had great joy calling the company and telling them that. I still don't get how he ended up on a list.

So, as my last soapbox statement, we need to take responsibility for our mistakes and learn from them instead of blaming everyone else. We'd have far fewer frivilous lawsuits too, but that is another topic ...

luvmykids replied: I think there's plenty of blame to go around, but imho most of it lies with lenders. It's not called predatory lending for nothing, and it became so profitable that many companies would do anything to convince you to take their money. Don't get me wrong, there are plenty of folks who flat out lived beyond their means or were downright irresponsible, but if I had to pick one group to shoulder the majority of it, it would be the lenders who knew people had a bad history or not enough means and gave them the loan anyway.

cameragirl21 replied:
I SO agree, Mon...maybe you have a little bit of liberal in you after all? Don't worry, I won't tell, it will be our little secret, shhhhhh....

luvmykids replied:

jakesmommy08 replied: Like someone else said, we have to be responsible for our own actions....but .........i also blame the lenders!!! About a year and a half ago me and my ex looked into buying a house (thank god i didnt!) and my exs credit was to bad so they wouldnt even consider him. So on my own credit, with my own income (which is only $12,000 a year), they approved me for an $80,000 loan. With a payments of like $600 or $700 mth(high interest i imagine!). I DONT EVEN MAKE THAT MUCH IN A MONTH! Not to mention, if i could make a payment, i wouldnt have NO money left after that! Now at the time my ex was still in the picture so we would have had his income but thats not the point. and like i said, they approved just me! It was crazy!. I even told the company, how can you approve people for a loan that is more then there monthly income? they didnt care, they just wanted people to buy houses. So i totally blame them for our economy!

My2Beauties replied: I honestly don't know where I stand on the issue, I can see it from both sides. However, what does make me so irritated is that I've had 2 credit cards send me letters letting me know they were raising my APR, I have never been late, over the limit, or anything with these cards, how can they raise my interest rate? That pees me off. Now I know they have the right to but it doesn't make it ethical. Most terms are if you're late twice in a 6 month period or over the limit or whatever not just because. Grrrr

DVFlyer replied: The borrowers (consumers) are the ones to blame.

Don't sign for something you can't afford.

What I don't understand is why the big "change" has to occur. Things were going just fine except for the last few years.

coasterqueen replied:
I agree. It is the consumers/borrowers. I think it's preposterous to say that it's the lenders fault. They are just doing what others do. It's up to us to decide. Same with the whole mortgage lending issue. No one twisted their arms to sign a huge mortgage loan they couldn't afford. It's like if someone dangled cocaine in front of you a million times and you said they made you do it because they wouldn't leave you alone. I think when Americans finally take responsibility for their own actions and the government stops helping them out - they may just finally start acting like responsible adults and do the right things in life. We constantly teach our kids "well, just because Johnny jumps off a bridge, doesn't mean you should" type of thing but we don't follow that same logic. It's a wonder why kids are the way they are these days. Are we going to blame all the fast food restaurants for our obesity as well? No one is putting a gun to anyone's head to do anything. Oh and READ THE FINE PRINT before committing to something.

My2Beauties replied: As far as the mortgage lending thing goes I'm going to say this in opposition of you Karen....ok about a year or so before DH actually bought the house we were in now we looked at Dominion Homes. Dominion Homes are now extremely well-known for screwing people over because they have the balloon APR's or whatever they care called that go up after 2 years. As a young couple who had no clue exactly what buying a house entails they tried to pull the wool over our eyes. The Dominion Homes are beautiful by the way but not our cup of tea we decided however, the house we looked cost $180k and the payment was only going to be approximately $800 per month. Now he went over and over how wonderful their interest rates were at only 3.5%...now you can imagine my surprise that I could get $180k home for only $800 per month. The guy was a fast talker and never once did he mention that the APR jumps up after 2-3 years or was variable. Now DH and I being pessimistic anyways thought it sounded to good to be true, so we talked to people and did our research and found out the homes were constructed poorly, people were unhappy with them, etc...but never heard anything really bad about the interest rates going up. In this area they hadn't been around very long I guess for people tos tart complaining about the rates going up. Imagine my surprise years later when they are top story on the news every night when the housing market came crashing down as using irresponsible lending and not directly stating their terms to their buyers. Now the majority of the people living in these homes are young couples first time homebuyers. I can say with utmost certainty that I had no clue that this man was trying to doup us. A ton of these homes have been foreclosed on now. Yes we did our part by doing our research but didn't hear or see anything about their APR going up, we were just completely turned off the poor construction of the homes and the complaints of the homes being only 2-3 years old and things literally falling apart, roofs already needing to be replaced, vinyl siding on the ones with vinyl siding coming off etc... so we looked elsewhere and got real lucky. Now had I seen the paperwork at closing and found that out I'll never know because I don't know how they couldn't explain that to someone without them understanding that their rate would go up immensely but they sure talked a good game let me tell ya. They know what they are doing and they prey on people who don't know everything about the market.

cameragirl21 replied: while I agree the borrowers bear some of the responsibility, there is a lot of predatory lending going around and I don't think the lenders should get one penny in bailout.
Imo, it's time they paid the piper too. There are foreclosures going around all over Miami and I don't believe for one second that each and every one of these people is an irresponsible debtor. I have no problem, however, believing that each and every one of these lenders is a major horse's you know what.

TheOaf66 replied:
Yes Karen:

Pizza Hut made me fat
Anheiser Bush made me an alcoholic
Taco Bell made me stay up late
Walmart made me exploit their workers by shopping there

luvmykids replied: Karen, I agree with you that a certain amount of responsibility lies with people who knew they had no business borrowing, wether it be for homes or vacations or whatever. But I don't see any way to let the lenders off the hook.....honestly, what did they expect? That they'd get repaid when nobody else in that borrowers history did? Or that a family making under $40K a year would somehow hit the lotto and pay their $200K house off? I think both parties are getting what they deserve....irresponsible borrowers can't afford to keep their stuff, and irresponsible lenders are going under for making bad loans.

I agree too with Jenn....not every single person involved was negligent, there are far too many people in financial trouble now that at the start weren't bad loans.

cameragirl21 replied: Idk, if you buy beef that is loaded up with hormones and your kids (and I don't mean the kids of anyone here, just any random person's kids) start to have health problems, are you going to blame yourself for not taking weeks to research the farm and/or slaughterhouse the beef came from to see what they put in it or are you going to blame the company that sells your steak for not disclosing all the details?
I think this goes both ways--we know fast food makes us fat because diets and nutritionists of all sorts have blossomed into a cottage industry telling us that the fast food we lived on in the 80s is the reason we have bad eating habits, health problems, and weight problems today.
I am a kid of the 80s and while my parents, being from another country where everything was made from scratch did not take me to Mickey D's in excess, I had friends who ate there nearly daily and I'm quite certain their parents didn't realize how unhealthy it was...the concept of healthy eating is a fairly new concept that in all reality, took off in the 90s. Back in the 80s, it would have been perfectly conceivable for someone to blame Mickey D's for not revealing that their food is fried in saturated fats and is loaded with calories. But people didn't really know about it back then...just as predatory lending is a fairly new concept, at least to the degree that we have seen it recently.
I take major issue with the student loan crisis too...an education should not drive one to a lifetime of poverty and/or indebtedness.
edited for a typo.

TheOaf66 replied:
well that can't be accurate...it doesn't take a genius to realize hey:

A processed burger
French fries fried in grease
A coke

not the healthiest meal.

I believe it was just individual parents...when people started shifting into the dual workforce and mom wasn't there with an apron on with a ham in the oven, people started eating more fast food because of the ease of it. They knew it wasn't healthy but mom and dad had careers and weren't home to cook.

cameragirl21 replied: how many of us knew in the 80s that these burgers were processed? Or did we even know what processed meant, as far as food is concerned anyway?
And who knew that something fried was SO harmful?
As for coke, I see people give it to their kids all the time, I'm sure they don't intend to fill their kids up with garbage.
Like I said, I think the concept of healthy eating is a fairly recent one and we are taking what we know now and applying to habits we had 20 years ago when most people really didn't know.

TheOaf66 replied: my parents even back then knew that food like that wasn't healthy that is why we got it as a "treat". Even back then it was common sense

My2Beauties replied: Troy I understand what you're saying but I don't think people understood how awful fast food really was until nutritionist started breaking down the ingredients and the methods of cooking them to the public. Heck I learned on pc.com what McD's french fries had on them, some chemical they used to preserve them or something (have to ask Jeanne on that one) and I had no clue, they found it in arsenic or lighter fluid or some crap that is completely poisonous, I've ate McD's fries for years knowing yes they were fatty because they were fried in grease BUT I had no clue they used arsenic chemicals or whatever it was (Jeanne save me here) to preserve them! ICK! Now I think twice when I go there, my kids only eat the apples in their happy meals when we do go. I must say after all the articles I read and stuff posted on here about fast food I've seriously changed my eating habits I had no clue about this stuff except the fact that it was fatty and greasy until a few years ago. Call me stupid I guess.

cameragirl21 replied: I think you're talking about formaldehyde, LeaAnn, it's used to preserve corpses for medical schools, science labs, forensics, and Mickey D's french fries....
And what you said is exactly what I've been saying, we knew in the 80s that it wasn't exactly a healthy meal, or at least our parents did but we didn't really *know*, kwim?

DVFlyer replied: Ok... back on topic.

If you bought a house and didn't understand the terms, it's no one's fault but your own.

The lenders might be guilty for playing you like a sucker, but that hardly makes them accountable for your decision.

Now, if they lied and told you (and the paperwork showed) that you were getting a 30 year 5% fixed mortgage and later you discover that you have a 2/1 ARM with a 5% rate for the first 2 years and then it balloons to 15%, that's fraud.

But I have not heard of too many cases of fraud..... greed (by the buyers) but not fraud by the lenders.

TrulyBlessed replied: I think everyone is at fault for the recession. I blame the creditors for giving out loans to people knowing that they could barely pay them back, but wanting to put them in this situation to charge higher interest and late fees. I blame the people for buying houses they know they could not afford and pushing the limit. I blame car companies for outsourcing jobs, not realizing that the workers they laid off were the ones buying the cars in the first place. Also, look at all the bad politics in the government, especially Detroit! There is so much corruption, it is sickening.

I got laid off two years ago, we lost our car, we were so far in debt, we have had to sacrifice a lot in the last two years, but I blame us because we should have managed our money better. When I get a job again, we are only going to live off one income and save mine. We have learned to manage our money a lot better. I know longer need to keep up with the "Jones" and have all the materilism. The last 2 years with my kids has been a huge blessing.

My2Beauties replied:
Exactly. My parents knew it was wasn't the healthiest meal but they had no clue the fries were preserved with formaldehyde. I mean Troy is right it doesn't take a genius to know it isn't that healthy, I didn't get it often because we were poor as crap and we ate what we had in our kitchen which is probably a good thing when I look back on it, but back then we didn't know "everything" that was in the processed foods we do eat.

TrulyBlessed replied: On a side note - the lenders are still not changing. My 20 year old sister is looking for a home right now. She has no credit and has only worked at Kroger's for a year. She only brings home $800.00 a month and they are still willing to give her a loan for $100,000.00. She doesn't make enough to even make the mortgage payment. Why would they give a loan for that amount? It baffles me.

My2Beauties replied:
Right. You are correct, they are sneaky but like I said in my above post had I got to the closing table I'd look at my paperwork and you'd have to notice that your rate is going to fluctuate if you look at everything. That being said, ok I know I'm gonna catch flack for this but here goes.....a LOT of times people with poor/bad credit are also very uneducated and of the lower class, so the lenders were essentially selling them a dream knowing they couldn't afford it. People in those situations might not necessarily have understood what they were reading/signing. Now that being said, you sign what you sign and once you sign you are held liable....however, like I said before that is not ethical and it's wrong on the lender's part in every sense of the word. Some people literally have no clue what they are signing. Yes that's partially their fault for not researching but let's face it the lenders KNOW what they are doing guys, they KNOW. Ok throw tomatoes now

DVFlyer replied: The lenders know what they are doing... but that doesn't mean they are to blame.

They are salespeople.... Unless they blatantly lie, they are doing what they are paid to do... get loans signed. Just like car sales people, door-to-door vacuum salespeople etc. It doesn't make what they do "right" (depending on who you are), but I would stop short of blaming them.

Buyer beware.

luvmykids replied:
I agree with this to an extent, which is why I do think consumerism is partly to blame, but I still want to know what on earth made these lenders think they'd get their money back from people with histories of NOT repaying loans or paying late, and making far below the income it takes to actually make those mortgage payments?

coasterqueen replied: ARGGH!! I had this whole long reply typed out and the computer crashed. Anyways....

As far as the food discussion.......I am going to refrain. I guess the food pyramid is a new thing they teach in school. I thought it was O L D. Second, can we also talk about how we didn't know smoking was bad for us either until the whole Phillip Morris stuff that's gone on the past few years???? Ok, so I didn't refrain.

Lea Ann as far as Dominion Homes - if it was fraud like DvFlyer suggested then it was, but I"m not seeing fraud happening either. Just people who thought they could have more than they handle. If you don't read the fine print, even if someone tells you differently, that's a personal fault, not a lenders fault.

I never was for the bailout so the comments on that do not concern me. Consumers aren't the only one to blame. We shouldn't be bailing them out either. NO ONE should have been bailed out. There are so many stories daily of people trying to help themselves to save their homes - they aren't turning to the government. That's how it should be.

I could say so much more, but as long as people won't take the blame for their own actions and always use the "BUT.....but......but" I could talk until I'm blue in the face and it wouldn't matter.

TheOaf66 replied:
see I was referring only to the comment about fast food causing obesity...not the poisons they were putting in.

cameragirl21 replied:
the food pyramid lists meat and potatoes as a vegetable...nowhere does it say that the meat can't be a big mac and that the potatoes can't be in the form of french fries, as far as I know anyway.
And diet coke has no calories so people don't think of it as fattening...it sure is unhealthy, though.
And btw, tests were done ad nauseum that killed untold amounts of mice to determine if saccharin and aspartame are carcinogenic and the tests came out inconclusive...so the answer is, no one knows for sure. How much do you wanna bet that if it's ever discovered that even one person developed cancer that can be blamed without a doubt or without much doubt on either of these two substances that lawsuits are going to crop up all over the country?
What you don't know CAN hurt you and what they don't tell you CAN and WILL hurt them.
I don't believe that personal responsibility should be thrown out the window but I believe social responsibility takes precedence, in other words, we all should know better but business is regulated in a way that individuals aren't so businesses should know better more so than the individual.
As for smoking, despite the commercials, tobacco companies are still getting sued for people's smoking related ailments and will continue to be for as long as they sell a product that causes serious harm to people. And that's as it should be...you put a danger on the market, it doesn't matter if you tell people it's dangerous, it will and should blow up in your face. The solution? Don't sell what you know will kill people.
Idk, if I tell you my product will kill you, I don't think it absolves me from any guilt or liability when it does kill you.
And you does not refer to anyone here specifically and I does not refer specifically to me either as I would never put a product on the market that kills people.

coasterqueen replied:
Again, not going the food route here. I just can't.

Jennifer, if you feel that way about the smoking issue - your government has failed you then. Because IMO the government is ALLOWING companies to sell things that will kill you. Yeah, it might have been a republican government, but I don't see a democratic one trying to get rid of it either - nor did the president have any problem with it when he lived and resided in our state as a senator. He wanted the revenue, just like everyone else.

Hmm....let's see....I guess we should sue the heck out of alcohol makers too......even though in small quantities it's safe, hmmm, almost healthy, but for all those people who are alcoholics the alcoholic makers are killing them therefore LET'S SUE THEM IT"S THEIR FAULT!!!!!

cameragirl21 replied: Karen, I don't think the govt should shut down the tobacco industry because all it would do is create a lucrative black market.
If you smoke, you do so at your own risk as you know it's bad for you BUT if you sell cigs, you do so at your own risk because you know that they kill people and that there is no shortage of lawyers who will encourage people to sue you before they die of lung cancer.
It's a double edged sword and both sides have to expect to bleed.

DVFlyer replied:
Most people who bought homes did so through brokers... not direct lenders.

These brokers' only interest (ha... a pun) was to get loans where they could charge a fee. They could care less if they were serviceable or not. That was up to the underwriters.

Then, these loans were sold in huge bundles to banks/ lenders (brokers make money twice). They agree to take the bulk loans knowing a certain amount will default.

I don't think they saw this coming (some did, I'm sure) but IMO, they deserve to get slammed with all of these bad loans. They knew the rising housing prices would get to the point where people would start to default, but they continued to buy these loans.

The thing I don't understand is how it got so bad so quick. These banks had YEARS of successful lending with acceptable defaults. How is it that they made money all those years and yet a few bad years destroyed their companies?.... greed is the only thing I can think of.

This is from my limited understanding of Economics.

jcc64 replied: I think there's plenty of blame to go around. Why limit it?
Let's start with the consumer--the proverbial "little guy." We are all responsible for living within our means, though lots of people either never learned that lesson, or were coerced into thinking you could get something with nothing. Though this is probably very politically incorrect to say so, not every consumer is a rocket scientist, and unfortunately, there are many unscrupulous lenders, brokers, bankers, etc..waiting in the wings to sucker gullible people into self-destructive scenarios, knowing full well that their institutions wouldn't own the loans long enough to suffer the consequences of lending to a risky consumer. They knowingly made bad loans with the intention of making a very quick buck before passing it along to the next lender, which is what destabilized the whole system--it was all a house of cards. It was deliberate and calculating, and I don't know how you can equate the behavior of an uninformed consumer with that.
In my mind, the question is the scope of the irresponsible behavior. Individual borrowers had an impact, but not to the degree that large institutional lenders and banks did and do. I'd like someone to answer for me how a consumer is supposed to be responsible for "reading the fine print" when the fine print keeps changing at the will of the lender? Why does a credit card company get to raise APRs from an affordable 5 % to an insurmountable 30% because a borrower was a few days late paying a dentist bill that had absolutely NOTHING to do with the credit card debt???
I avoided this thread for awhile, because it all gets me so pissed off. How and why everyone is so eager to pile on poor people rather than the greedy pigs on Wall St is beyond me. Yes personal responsibility is important, but why does this hostile, punishing attitude not also apply to corporate responsibility? Can they do no wrong? If I didn't know any better, I'd swear this board was filled with Wall St. executives.
I'll never get it.

boyohboyohboy replied: My neighbors are the perfect example of people who were not taken advantage of but of people who really feel no moral obligation to pay for what they buy.

They wanted a large 4 bedroom home, and wanted all the fixings to go in it, but the husband was constantly laid off, she worked only part time..they had $60,000 in credit card debt..they had to file for chapter 11. So even after going thru all that, leaving everything behind..the now rent next door to us, and the wife shops daily, she cant leave without buying something, and sitting home makes her stir crazy..so she has figured out that if she calls the store credit cards she had previously and just says she lost her cards, they send her more in the mail, and bingo she is back to spending..
they are right back where they started...
they dont care what they spend and if they can afford to pay it back, they live in the moment..I think there are a lot of people out there that spend and spend and dont make a real effort to pay it back, the moral obligation to pay back borrowed money seems to have gotten lost..

Isnt it always the story that there are people out their ready to take advantage of any situation if it presents itself..so if there are people out their that dont care about debt and borrowing money, then there are people ready to give them the large house morgages and make them think they can do it, and its the best for them..and even if they know deep down its not a payment they can make, the do it anyway, you can always file bankrupcy right!

coasterqueen replied: We also have to remember the government's HUGE role in the mortgage crisis. They forced the lenders to give loans to people they knew couldn't afford it. And it's not a "Bush" thing, either. Clinton warned the democratic government when he was in office that Fannie Mae and Freddie Mac were getting too powerful and it was going to implode and that the government was doing something they should have never done. Alas, it would never be the government's fault, though, especially not blaming the democratic party.

jcc64 replied:

And certainly not the fault of the banking industry, either. They are always the epitome of scrupulousness and civic responsibility.
In a capitalist society, money begets power and influence. It's a very basic equation: the more money you have, the more power and influence you can exert. So while there are certainly many irresponsible borrowers out there, more than happy to follow Bush's declaration that the best way to support this country is to spend, spend, spend, (whether you have it or not), let's not lose sight of the bigger picture. Yes, lots of people defaulted on their debts and obligations, but why is everyone so quick to hold the feet of their free-spending neighbors to the fire, but not those of institutional investors in collusion with the banking, oil, pharmaceutical, fill-in-the-rest industries who don't give a crap about the large scale damage done to our country's long and short term economic well-being?? If it's wrong to redecorate your house on a credit card, why isn't it more wrong to knowingly sell the profits from faulty loans on to another investor/bank?
It's all been one massive, deregulated shell game, and if the gov't shares responsibility, it's for allowing deregulation and subsequent runaway greed (on every level) to bring us all down.
When obscene profits are at stake, you can never trust the market to take care of itself or do the right thing by the rest of us. And now, as a result, everything I've been saving over my entire working life is basically gone, through no fault of my own.

DVFlyer replied:
I'm not sure they made "bad loans". I think they made loans people could (barely) afford *today*. Now, when that ARM came due, that was a different story.

Most people I know who are in or have already gotten in trouble, or about to get into trouble can afford their house *today*. It's when their loan resets that they are screwed.

Some of this is because the housing market tanked, and their homes they were "sure" were going to be worth more when the short term loan came due and they could refinance to get a better loan is now worth half what they paid.

They bought houses they couldn't afford with creative loans offered by the loan companies. These same people are the types who used Cash-Out refinancing to pull equity out of their homes when the times were good to buy boats, RV's, new cars, motorcycles etc.... and now are in the position where they can't afford what they own.

So they choose to walk away from their house driving down the street in the RV towing the boat while their giant SUV is towing the motorcycles and watercraft they *had* to have. The bank gets to deal with the bad loan and the consumer keeps their "stuff".

The fine print is not so hard to understand when it comes to 30 year fixed at "x%". It only becomes complex when the consumer needs a different loan to afford the larger more expensive house rather than settling for a house with payments they can afford using a standard loan.

No, I'm not a banking executive, and yes, the loan system held out the carrot but I still blame the consumer.

coasterqueen replied:
ITA and it's not just the fine print. We have refinanced our home numerous times to take advantage of the interest rates over the last 9 years and every single time we were explained our loan in great detail page by page. You know those ones you have to sign every single freaking page before you close? Are you telling me people didn't know what they were getting into after that lengthy process? Or maybe it's just my bank that does it that way.

(you as in generalizing...not you, DvFlyer. )

cameragirl21 replied: Idk, Karen, one major point of interest here is that they targeted Spanish speaking people who didn't understand what they were signing but were eager to own a home...those same people whose Cuban education consisting of cutting fields with scythes and the same ones who came here on rafters.
Blame them for knowingly signing what they couldn't understand but all they saw was that they were going to own a home.
I speak from experience when I say that when you're born in a third world country, especially one that's a commie hellhole, you come to expect certain things of a civilized society.
They were targeted and convinced they could afford a home they never truly owned because the banks got creative with the "financing" and yep, I sure do blame the banks who wanted to make a buck off of other people's simple lack of knoweldge and/or understanding.
While I agree that some people just lived beyond their means and here in Miami, the price of homes just skyrocketted and got out of control and salaries didn't rise with it but I also think that the banking and lending industries took advantage.
Of course we live in a capitalist society where everyone is defined by their "toys" and most of us would have it no other way but I have to wonder why no one teaches society what the price of this materialisitic rat race truly is. I put everything and I do mean everything on plastic but I pay it off in full every month and don't carry a balance, ever. But this is only because my mom taught me from a very young age that credit cards are not free money and if it weren't for my mom's little economics lesson, I have no doubt, none whatsoever that I'd be buried in credit card debt. When credit card companies go to college campuses and beg students who don't have jobs and have zero parental control to take credit cards, what the @#$#@$ do they expect to happen?! The day credit card companies start teaching people what a credit card truly is, much the same way big tobacco is at least admitting the price of using their product is the day I have one shred of sympathy for them for all the people who wrote off credit card debt in bankruptcy or simply defaulted and walked away. You take advantage of people long enough and you bet it's going to blow up in your face. Couldn't happen to more deserving people/industries if you ask me.
edited for a typo.

DVFlyer replied: You make $20,000/ year and want to buy a $300,000 house...

The loan guy says, "hey, we have a loan that will get you into that house. Your payment is going to be $800/ month for the first two years. "

"But what happens after that ?"

"Well, your house will probably be worth more and you'll probably be making more money then so you can refinance".

"Great... where do I sign?"


Do you think the person making $20,000 really thought they could afford that house just because loan person talked them into it?

Not me.

My2Beauties replied: I think we have to remember though DV this isn't how these conversations necessarily go. Look, I worked for a very large credit card company whom I won't name any names but they are very well known for giving low income, poor credit, persons credit lines and charging them exorbitant (sp?) fees to open up the card. Now, I was inthe collections department of said credit card company and I hope no one takes this the wrong way but the majority of the people that I talked to were very uneducated, to the point where some of them mentioned to me they could not even read or do not speak english whatsoever. Some of them didn't even have jobs. Ok so why would a credit card company send a credit card to a person with no means of income and expect them to pay it back? I really want to know the answer to this, I really do. They know what they are doing.

coasterqueen replied:
So the cc company knows ahead of time who they are mailing it too? That a said individual is uneducated, can't read, etc? It's not all mass mailing???? I'm confused. Just because you receive information in the mail on something doesn't mean you should buy it. They must be able to read if they actually sign up for the credit card or else how would they know what they are doing.....that's just an excuse to me.

They should charge exorbant fees if they know the person can't pay the money back, it's their only way to recoup some of the loss.

DVFlyer replied: Talking with my loan officer friend, he told me, generally speaking, that is how the conversation typically takes place. He puts them in a loan to get the payment they want/ can afford "today".

They still know they can't afford the house when the loan resets.

The credit card companies only care about minimum payments. Most people can pay the minimum payments. After that, they know a certain percentage of their loans- because that is all it really is- a revolving loan- will not pay it back and default. It's the cost of doing business which they will write off at the end of the year.

Credit card companies would not stay in business if the majority of the people they lent cards to didn't have jobs or no way to make payments. This could only mean then, that the majority of the people are paying.

The bigger question (for me) is why is someone who has no job or no way to afford the payment agreeing to take on a credit card?

Just because I hold out a carat doesn't mean you have to take it.

jcc64 replied: First of all, my ds was offered a credit card from a telemarker, which he accepted because he happened to be the person answering the phone at that moment, and BECAUSE HE WAS 8, and didn't understand that he wasn't in a position to do so. Are you telling me that the person on the other end of the phone couldn't tell that he/she was speaking TO A CHILD? When the cc arrived in the mail, after just a few questions, I ascertained what had happened, got on the phone, and basically blew a gasket with the person on the other end. Is the fact that my child was involuntarily solicited and offered a credit card my responsibility, or should we not be looking at the extraordinarily unscrupulous and asinine business practices of the bank that approved an 8 yr old child for a credit card WITHOUT A PARENT'S CONSENT? How exactly is this the borrower's fault??
I'm thinking as I type that anything I say is kind of a waste of time because people are predisposed to believing what they want to believe. My dh works for a small, socially conscious investment company, and he is at ground zero of all that has gone on with the economy (and I have the gaping holes in my bank account to prove it). Consumer defaults are a very, very small part of what caused the collapse--it's a complex, convoluted explanation that I suspect few people are inclined to listen to. The condensed version is that banks and institutional investors willingly and knowingly passed bad loans (and yes, they knew all along of the high probability of defaults) from one company to another in an effort to make a quick buck, and through the miracles of deregulation, when the fortunes of some of the banking behemoths that got "too big to fail" went into a free fall, along with those of the parasitic insurance companies like AIG, the economy began to buckle. So while it makes people feel morally superior to blame all the irresponsible, poor, uneducated people who were too lazy to read the fine print for the collapse of our entire economy, they're kidding themselves in a major way. And until we reign in the corporate gluttony and demand (in the form of regulation) more responsible behavior from those institutions and individuals in the position to do the MOST harm to our way of life, it's going to continue.
I've been as personally responsible as I possibly could have been every step of the way, dutifully contributing to my IRAs and college savings plans every month (even after I lost my job), and now there's basically nothing left because the high fliers of Wall St. played loose and fast with the system. That's who we should be pissed at, not the guy down the street who bit off more than he could chew. That's of very little consequence to my own personal (mis)fortune.

MommyToAshley replied: I agree there is plenty of blame to go around-- the homeowners who bought houses they couldn't afford AND the banks that made bad loans. I was against any of the bailouts from the very beginning. I thought the banks and credit companies should be held accountable for their actions just like consumers that bought beyond their means and put themselves in debt. The people I feel bad for are the hardworking individuals that lost their jobs through no fault of their own and now are at risk of losing their homes because a tanking economy that started with the housing crisis.

coasterqueen replied:
Well see Jeanne, I'm not sure you DO understand the whole situation fully, then, because AIG being the parasitic company that it is....it wasn't the insurance side of the company that failed. It was their broker side, which had N O T H I N G to do with insurance whatsoever. So if you choose to bad mouth a company for things they have done, please make sure you label the company properly. I work in the insurance industry and while I don't agree with A LOT of what the industry does, I do know first hand that AIG's problems weren't related to the insurance side. It is the consumers and media who choose to label AIG as the bad insurance company who failed. Making insurance have an even worse name than it already has.

Your husband may be at ground zero, but there are hundreds/thousands at "ground zero" of this whole mess and I don't believe none of them know 100% what has happened enough to place blame just on one person/company, etc. Like I said before, I blame the consumer, but I do not think banks, cc companies, etc are not at fault at all in this. It takes two to tango, make this economy fall.

eta: I reread this and it sounded a bit snotty, but Jeanne..you know I luv ya and I don't mean it that way. I'm typing fast so I can make a lunch appt and I get all hyped up about this, you know BUT I will say u are misinformed about AIG.

jcc64 replied: I really should have followed my initial instincts to refrain from this whole discussion.
I'm taking a break for awhile.

cameragirl21 replied: I don't think this is about any one company, like AIG, for instance. It's a question of who is really to blame--the one handing out credit cards to those who have no jobs and have no way to make the payments or those who smile and accept a credit card, not entirely knowing what they're getting.
I will say this, and I am speaking from first hand experience here--there are a lot of companies and entities that engage in really unscrupulous behaviors, breaking laws left and right because they a. got away with it for years or even decades and b. because consumers often don't know any better because they're not well versed in the laws and what their rights truly are.
This to me is a huge problem, it's no different, imo, from taking advantage of the elderly or taking candy from a child...consumers, whether they're college kids or grownups have certain rights and no one should be allowed to operate as if they are above the law and WAY too many companies and entities out there do just that.
And that, btw, is what I call social responsibility, or lack thereof.
And another thing--there is no reason for anyone to feel like they can't participate in this discussion just because they're outnumbered, everyone's opinion counts.

coasterqueen replied:
Jeanne......pm me. I hope you didn't take offense to what I said. You and I have talked numerous times off the board about things like this and knew where each other was coming from.

Hillbilly Housewife replied: I can`t say I blame either or. If I have a product, that I can sell to people, will conditions, and I give them all the conditions and they still agree to buy my product… I`ve done my part. It`s not MY problem if they can’t keep up with the terms and conditions that I gave them, and I’d be in full rights to collect.

It’s one thing for someone to have been screwed by the system by no fault of their own, having been fully educated about the subject and complying to the rules and regulations, terms and conditions, and still get screwed… but it’s another completely to be so ignorant as to apply for credit that you know you can’t pay back. If you sign that dotted line, knowing you can’t afford anything except the minimum payment.. that’s your stupidity, and your problem, and good for the company for collecting what you owe. (you is general, I’m not pointing the finger at anyone.)

If you can’t afford your lifestyle with the money that you have, then change your lifestyle, don’t apply for money you can’t pay back and then complain when the creditors come knocking at your door. That’s nobody’s fault but your own.

Sure, creditors could be a little more strict as to who they lend their money to… but really, they’re lending money that doesn’t even exist, so what do they care? They base their entire business on Expected Income, not on actual liquid assets. They make their money by the interest fees they charge. Which is an entirely ridiculous idea to begin with, of course, but it seems to work… and now, the credit companies are billions of dollars in debt, billions of dollars that they didn’t even have to begin with… in turn, reducing millions of people that don’t have spare cash lying around into even poorer people, because they’re simply keeping their end of the contract.

I think certainly both are to blame – the creditors for being so stupid as to lend out money that doesn’t exist to peiople who don’t have the money to pay it back… and the consumers for being as stupid as to live beyond their means and have tons of debt that they applied for, knowing they can’t pay back.

Again – let me just say that this is in general, there are always exceptions, there are always situations where circumstances arise and you need that exttra helping hand temporarily during a job loss, death, some other disaster.. but seriously… if you can’t afford it, don’t have it! I think the general population is a very greedy population, and has a general attitude of feeling like they`re owed something, just because. If people took charge of their own life, and reorganized their priorites better, like a new 600$ tv when you only make 2000$ a month, which isn`t the smartest purchase to make when you have 1800$ worth of bills, wouldn`t be so much of a nessecity as opposed to good food, good clothes, and a good education.

I know I’d personally rather suck it up and spend 100$ a month on city transport services than 150$ a month on a car, 150$ a month on the insurance, and 150$ - 250$ a month on gas, just to save myself half an hour to an hour of travel time. I have a heck of a lot of better things to spend that extra 350$ - 450$ a month than the convenience of looking good.

It really infuriates me how many people have that “poor me” attitude when it comes to money and debt. If you weren’t so greedy, you wouldn’t be so poor.If you’re so poor, stop buying extra clothes and live with what you have. Trade in that extra car for a bike. Cut or downgrade your internet, your cable, one of your 3 cell phones. It makes me sick to see, especially women, complain that they don`t have extra money, but they go to the hair salon and nail salon every month. If you’re so freakin broke, stop spending your money.. or rather.. your creditor’s money.. and suck it up princess, because you made your bed. Lie in it.

Off my soapbox. This topic REALLY infuriates me.

redchief replied: There was a time when I would have thrown head down into this discussion, but there are three reasons why I haven't.

1. First the government, through deregulation in the '80's then more in the '90's, then in the early '00's recognized the monster they created and didn't do a blessed thing about it, are partly to blame for this economic nightmare. They allowed it and the reason I haven't put this down before is that BOTH parties share equal blame. But hey, everyone was getting credit and people were spending money so the economy bear was roaring. The government didn't acknowledge, though they knew, that the bear was roaring because it was consuming empty calories.

2. Private financiers are to blame. They KNEW they were loaning money to people that couldn't afford it. They KNEW they were extending credit to people who couldn't hope to pay it back. They feared the government (yes, feared) would re-regulate their industries if they didn't loan money where they thought the government wanted them to. That in itself is irresponsible, but what's worse is they knew what was going to happen but rode the sled all the way into the abyss anyway. They were protected, so who cared if the "little guys" lost their shirts.

3. Every single person who didn't budget according to what they could afford, instead speculating on the future being better, proved themselves to be shortsighted. Their thought process was flawed in that they assumed that they would always be worth more than they were yesterday. We all like to think that, but it's poor economic planning. Values change, including the value of an hour's labor. In good times, that value will naturally increase. In bad, and this isn't always due to economic factors, the value decreases. In my own case, I lost about $20,000.00 a year in value from year to the next. It hurt, but I'd planned for it. It's still hurting, but I'm managing, but at least I don't worry about my mortgage payment increasing.

So, the government does need to regulate private finance to make sure this doesn't happen again. But it will, because government is extremely short-sighted, and that's our fault too. We forget that we demand that our representatives take certain actions on our behalf. Collectively, we make the government do what we want it to do, so regulations will go into effect, until such time as it once again becomes inconvenient for those regulations once again.

Private finance needs to be regulated to prevent the feeding frenzy that occurred during the '80's and '90's, but they need to ensure their own investor's trust by only lending money to people who can pay it back. They must not forget that they may be big banking, but they're using "the little guys'" money to increase their bottom lines. We as investors must insist that our banking and financial institutions use our money wisely.

Finally, the little guy needs to live within his/her means. Everyone should graduate high school knowing how to make a simple budget. When the ink on the budget gets red, it's not time to look for a handout... it's time to cut spending. I know, some will say that there are people out there who live at the poverty level and they CAN'T cut spending. That's true, but those people are not who caused the collapse of the financial system.

There's plenty of blame to go around.

Crystalina replied: not touching this.

Celestrina replied: I'm a firm believer in the saying "let the buyer beware". One has to know what they can afford and be careful not to live past their own means, regardless of the state of the economy. People will always try to take advantage of others, loan companies are no different. One of the reasons it is called "predatory lending" is because they prey on people's ignorance and greed.

The lenders do hold some blame, but all too often people are too eager to point the finger at someone else when they have made a poor judgement.

If the company has broken any laws, that is another story. Like the company that approved a card to jcc64's 8-year-old son, the only one that can be held accountable is the credit company.