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Posted By: Greg Ecklund

Adam,
I hope you're not lumping me in with the "blame the borrower" types - I have read that article on WaMu already and the whole operation that they were running was despicable. I'm simply trying to point out that borrowers do have some share of the blame - if I had to assign a number I would put it at around 15-20%, with banks getting the lions share of the rest. This isn't a situation where the blame lies 100% in one camp - that was my larger point.

David,
I agree with the basic points of your last post - the problem in the whole system was that of incentive. The incentive for the banks and mortgage brokers was to churn out mortgages like a factory churning out flat screen TV's - nobody cared about the creditworthiness of the borrower as long as the loans could be packaged and resold.

Wall Street banks no doubt deserve the bulk of the blame, and from the pay packages for executives to the issuance of mortgage backed securities that they knew were backed by junk mortgages, their behavior over the last 10-15 years has been unconscionable. I am certainly of the opinion that the heads of investment banks like Merrill Lynch, the seedier banks like WaMu, and the ratings agencies should all have their assets seized and be hauled off to jail. I consider myself fairly conservative so that statement will probably be considered blasphemy by my "free market" friends, but many of those people were crooks, plain and simple. They knew that the products they were selling were crap - they simply hoped not to be the one caught with the hot potato when it finally burned people.

The core of the problem is that Wall Street became an Ivy League boys club that lacked any kind of ethical core...an extension of the campus fraternities. Goldman Sachs, Merrill Lynch, etc, seemed to be out to prove that not all whores wear fishnet stockings and too much makeup...some wear suits and try to sell you mortgage backed securities.

As you can gather I'm no apologist for the banks...I simply don't think we should let the consumer off the hook for their share of the blame. I have a close friend who is facing foreclosure - he seemed to think that he had a right to a house, a Mercedes, and a huge TV with an expensive sound system. Now he is paying the price for living the high life and beyond his means. I'm sure his case isn't an isolated incident, and although I wish he wasn't in that situation, he didn't get screwed by anybody...he simply lived beyond his means and was content in his belief that the value of his home would go up forever...until one day it didn't.