A question.

[fancycwabs]

Does the housing crisis strike anyone else as largely fictitious?

I mean, obviously people are losing their homes, and one major lending corporation seems to have suffered a collapse, but aren't the numbers driving the interest-rate increases arbitrary, designed to screw homeowners over based on the inability to refinance as their interest rates grew beyond their ability to pay?

Did Bear Stearns fail because it couldn't walk the fine line of screwing their customers just enough to get them to keep paying mortgages, but still enough to keep the investors from pulling their money out of Bear Stearns and investing it in a company who could screw its customers even better than Bear Stearns could?

After all the COFI hasn't really changed THAT much over the past few years--it certainly hasn't hit percentages I saw (7.5%) when I bought my own house seven years ago.

Are we, as a nation, going to wind up paying a lot of money to bail out real-estate speculators, instead of letting them suffer the consequences of their folly?

Comments

[mosesandcompany.livejournal.com]

The thing is, I can understand - to a certain degree - the argument from the lenders that charge these high interest rates. If consumers with poor credit scores want a loan, the lender has to do something to mitigate his risk. A high interest rate is part of how they go about doing that - they do what they can to try and ensure some sort of return from their loan.

That said, it seems quite evident that substantially more restraint needed to be used in determining who got a loan and who didn't.