And this undermines the “the bank shouldn’t have made the loan in the first place” argument how, exactly? Most of this fraud could have been discovered, and loans denied, with even the most basic level of due diligence on behalf of the lender.

In any case, I’m not really impressed with the 70% figure, because it only looks at mortgages through 2006. The bubble didn’t even begin to burst until 2007.

“Reaching an agreement,” in this case, is technically logically defensible, but it is connotatively a misrepresentation of the event in question.

[Some comma misplacement corrected]

Because for better or for worse, I’d venture to say 99.9% of the general population is nowhere near as cynical as you are.

Tell you what, walk into any lender and ask him what the rate is on loans. S/he’ll likely say something like 5.8%. Now ask for the formula for exactly how they calculated that figure, so you know, they don’t raise the price on the loan from the time you are preapproved until the time you actually find a house to buy. The 30 year fixed (at least used to) tracks the 10 year T-bill, but tell me what you get back from your lender, I’m sure they won’t willingly reveal the secret formula that they use, because that would let you objectively compare lenders.

Then there are the surprises that always show up as closing costs. Federal law requires lenders to make a good faith effort to provide accurate figures three days in advance. My closing costs were within a few hundred of predicted, (guess which way), but I put my foot down. My agent may have been some help, he was eager to get rid of me because we had been looking for over 18 months. He wanted his check too.

I suspect that many no-so-savvy people get screwed on both an “untimely” up tick in their mortgage rate and taken to the cleaners on closing costs. There’s also the “prepayment penalty” mischief that keeps people from getting out of a bad loan by refinancing.

I read a stack of books half as high as myself before buying the biggest purchase of my lifetime (and no, it’s not the house, the biggest purchase is that 30 year fixed)

(Of course, if we had anything like sane regulation of banking and lending, at a minimum, the lenders would have been required to approve borrowers based on whether or not they could afford to make the highest payment possible under the terms of the loan, not based on the payments during the teaser rate. But I digress…)

Wow, we are way off topic, but the first regulation I would enforce is requiring lenders to list there loans in a manner that allowed investors to accurately gauge the value of the company,instead of letting them pull an Enron and hide bad debt with creative accounting. That isn’t exactly standard Libertarian dogma, but I differ in that I believe that goverment created entity such as a corporation doesn’t have rights and ought not be allowed to lie.

Do that, and the lenders won’t stray much from the classic 20% down payments, 36% DTI and a 30 year fixed mortgage.

There is no way Bear Sterns went from “Everything looks rosy” to bankrupt and taken over in 3 days. They pulled an Enron for as long as they could.

I don’t know exactly what Ben and the Fed (Federal Reserve, as in not Federal and no Reserves) is trying to do, but it seems that by whipping up some inflation, they’re trying to get everyone a boost up to that magic 36% debt-to-income ratio (prices for everything go up, so employees demand higher wages, etc…)

With (from what I hear) 10% of homeowners upside down on their loans, I’m not sure we should keep calling this a “subprime meltdown”.

They’re the ones operating from the position of power (”you need money, I have it”), and they knew that what they were selling was against the best interests of the person they were selling it to, but they sold it anyway.

A notable percentage of defaulted loans included incorrect statements that may have been fraudulent, up to 70% in a BasePoint Analytics study. Most of those included (probably statutory) fraudulent statements of income.

I suppose it’s possible that the people selling these damned things either knew about it or could have been the ones making the potentially fraudulent statements, but unless they were planning to retire in a year or two (at which point they’d be open to prosecution by three or four different groups). That said, while it’s possible, it seems a far bit less likely than the alternative.

As to Xrlq’s example of someone signing a contract without reading it, it is only in the legal sense of the term that one can fairly say that the signer “agreed” to its terms.

As to the subprime thing, I don’t hold the people who took out the loans blameless, but I assign at least an equal part of the blame to the lenders, and probably a substantially larger share. They’re the ones operating from the position of power (“you need money, I have it”), and they knew that what they were selling was against the best interests of the person they were selling it to, but they sold it anyway. The hell of it is, at least in the case of the subprime mortgage thing, those most responsible knew what they were doing was unsustainable and sold the loans off to other companies/suckers. So even with all the foreclosures and whatnot, the worst offenders will have made out like fat rats, and won’t suffer in the slightest.

But again, as I mentioned in my original post, there’s absolutely nothing wrong with that, in small-government libertarian fantasy land. That’s just the American way. Rip off as many people as you can, and get it while the gettin’s good! And if the government tries to stop you from ripping people off, then they’re just dirty commies trying to infringe upon your fundamental and guaranteed freedom to rip off people dumb enough to fall for your bullshit.

(Of course, if we had anything like sane regulation of banking and lending, at a minimum, the lenders would have been required to approve borrowers based on whether or not they could afford to make the highest payment possible under the terms of the loan, not based on the payments during the teaser rate. But I digress…)

Meanwhile, after all this hubbub and digression, my original point — that no matter how stupid or wrong you might think the incidents SayUncle and Tam were complaining about are, they’re nowhere fucking close to “Communism” — still stands.

NOTE: By responding to this comment in any fashion, the responder agrees that I’m right on all points of detail.

There’s my big sign. Take it or leave it.

Tam:
Why is it that everyone thinks [yada yada yada]

Because for better or for worse, I’d venture to say 99.9% of the general population is nowhere near as cynical as you are.

Oh yeah. “Predatory Lending.” That’s another term that drives me up a wall, like “Gouging”.

These are made up terms. Either you’re at the table to skin the other fellow, or you’re a sucker.

Sure the game is rigged. But don’t let that stop you. If you don’t play, you can’t win.

People were being advised, by people who operate (by nature of their profession) as authorities in financial matters to enter agreements against their own best interest.

Why is it that everyone thinks the man trying to sell them a $500 TV is a scummy ripoff artist, and the man trying to sell them a $5000 used car is a scummy ripoff artist, but the person trying to sell them a $500,000 mortgage is a financial professional and their bestest buddy?

People were being advised, by people who operate (by nature of their profession) as authorities in financial matters to enter agreements against their own best interest. They were purposely given bad advice by interested parties, which created a collusive dynamic.

Further, the lenders entered the agreements voluntarily as well. Half of the scandal in these types of situations lies in the fact that there’s a disparity of risk involved. The government isn’t going to bail you out after you write check you can’t cash – but, they’ll bail out a lender who signs the same contract and is unable to collect.

the subprime fiasco wasn’t the same thing.

Yeah it is. their signatures were affixed to checks their asses couldn’t cash.

But we’re talking about an attorney general threatening people to get them to do so.

You paid for an item that cost $4.49 with a credit card – I may be a Commie, but, that, sir, makes you an asshole – I hate people who do that…

Yeah, at the end of the day, these people made a dumb decision. But, I wouldn’t say that the customers were trying to enforce a Commie revolution because they asked for a refund anymore than I would say that the business capitulating makes them a participant and, de facto, supporter therein.

Now, I’m assuming your comments about this event relating to communism was just some flame-baiting jest; and, I guess it worked to a degree.

But, hey, what do I know, the LL crew would probably vote me as token crazier than KTK guy…

BTW, Tam, the subprime fiasco wasn’t the same thing.

I thought KTK was supposed to be the token crazy guy.

(Yes, they invented the phrase “Speak truth to power”. It has something to do with God.)

And since they’re pacifists, they’ve obviously given peace a chance.

Oh, I get it. So if I sign a contract, negotiated or otherwise, without really paying attention to what I’m signing, I never really “agreed” to it and therefore have a right to re-negotiate the terms later if they turn out not to be in my favor.

Exactly. That’s what’s up with the whole current subprime thing, for example. At the risk of putting words in his mouth, I’ll bet that’s tgirsch’s opinion.

Ok, lets assume I have a car for sale and list it at $20K over value and someone decides to buy it “without really thinking” Once they’ve paid me and I’ve given them the car it’s a done deal, so long as I wasn’t intentionally misleading about the condition of the car.

I don’t know what world you live in where people can pay a clearly advertized price for a product and then demand a refund because they “weren’t paying attention and didn’t notice the price.” If a product is clearly advertised and you’re willing to pay the advertised price that is an agreement in every sense of the word.

You have every right to take your business elsewhere, in which case the business owner makes no money and has to lower the price to attract customers. He, as the business owner also has every right to charge what he wants for HIS product. If stupid people are too dumb to notice the HUGE SIGN WITH PRICES ON IT, that’s there problem not his.

Doing something without really thinking about it is not the same thing as “agreeing,” at least not as I’ve ever heard the term used. Stupid? Maybe. Agreement? Not really.

Oh, I get it. So if I sign a contract, negotiated or otherwise, without really paying attention to what I’m signing, I never really “agreed” to it and therefore have a right to re-negotiate the terms later if they turn out not to be in my favor. If those are the rules, doing something without really thinking about it doesn’t seem stupid at all; in fact, it sounds like a shrewd move.

If that’s true, then can anything ever be said to be the product of an agreement? It seems that any agreement could be repudiated at a later time if it became too burdensome for one party merely by saying he or she did not REALLY think about it enough before appearing to agree.

An agreement? Yes. Stupid? Yes. It’s called a stupid agreement. Agreements can be both stupid and valid. Had they not agreed (stupidly, without considering other relevant information than what they usually buy), they would not have gas in their vehicle. While some may like first degree price discriminiation (price as negotiated by each individual customer), for most firms the implementation of such a system is so vastly inefficient you will not often see it. Take it or leave it (price non-discrimination, or some cases, third degree price discrimination) is the most efficient you’ll probably get, so take it or leave it.

You do have your moments…

Only by a strained definition of “agreement,” never mind the level of involvement in “reaching an agreement.” But whatever.

In any case, knowing what I know about people in the aggregate, I’m guessing they went to the gas station because that’s the gas station they usually or always go to, and most of them probably didn’t even pay much attention to what the price was. Doing something without really thinking about it is not the same thing as “agreeing,” at least not as I’ve ever heard the term used. Stupid? Maybe. Agreement? Not really.

I’d never call someone I like a hippie and mean it.

…whereas I would and do quite frequently. I’m a big meanie that way.

Now I’m a hippie?

Tongue was firmly in cheek for most of that, dude. I’d never call someone I like a hippie and mean it.

And it is an agreement. I announce via signage that my product is for sale for $x, when you bring it to the counter and offer to pay, you have agreed to a price.

At the end of the day, that makes it stupid, not Communist. Well, that’s if one accepts any meaningful definition of “Communist,” as opposed to the libertarian definition of “anyone who doesn’t shit their pants in rage at every dumb thing government does, the way I do.”