Is Is The Banks Fault, Or Our Fault?

Now don't get me wrong, the banks have lended irresonsibly, however i think a lot of blaim can be shouldered by the consumers. The people who went out thinking they deserved that 6 bedroom house and borrwed 5 times their wages to get it. The people who were barely paying for their mortgage, riding on the edge of their earnings and not saving anything. The people who bought a new car, every other year, brand new. The people who have to have the latest everything, spending on plastic, with money they don't have and worrying about it late at night.

The banks are at fault, but if it wern't for peoples constant and stupid need to have the latest thing, things they don't even need then i think this whole problem would have been avoided.

Buy what you need, some things you want and remember your limits. I suppose now people are finally seeing that, so maybe this economic crisis has a good side.

Honestly, I feel like there is blame on both sides. It is the bank's fault for lending x amount sums of money to people who they had to have known couldn't possibly make the note. It is the peoples fault who took out loans on 400,000 thousand dollar homes when they only clear $30,000 a year. It's nothing but pure greed, man. It's really that simple.

Originally posted by ImaginaryReality1984
Now don't get me wrong, the banks have lended irresonsibly, however i think a lot of blaim can be shouldered by the consumers. The people who went out thinking they deserved that 6 bedroom house and borrwed 5 times their wages to get it.

how is this not blaming the victim?

"These broke people couldn't afford the house, why did they take out th loan?"
"He shouldn't have been giving the officer attitude, he deserved to get tased!"
"She was raped because she was dressed all slutty and asking for it!"

Bottom line is that the BANK is the one that does the credit check and must take the responsibility for any unpaid debts. It is THEIR risk to assume. If a bank gave out too many loans, all of which were not going to get paid off... it's due to their lack of discretion - not the borrowers. There are plenty of banks that decided to sit on the sidelines as all this craziness took place.

"if it wern't for peoples constant and stupid need to have the latest thing, things they don't even need then i think this whole problem would have been avoided."

That's not how it was pitched to the borrowers. It seems you are implying that everyone is in debt because they wanted to buy a new PS3 and a new car. Many people ended up getting a house, and then immediately after, the value of their property declined while their payments stayed the same. Then wages go down, prices go up, etc. How is that irresponsible? Please, lets all stop blaming the victims.

Originally posted by scientist
how is this not blaming the victim?

No offense, but that is exactly what is wrong with this society. Everyone's a "victim." You mean to tell me that a person that only makes $40,000 a year doesn't have enough sense to know that he/she can't make the mortgage on a 500,000 dollar home? Malarky. The lendees are just as much to blame for this mess as the lenders are. "Oh, oh, but poor,poor me. I just feel like I am entitled to have that mansion on the hill." Whatever.

[edit on 6-10-2008 by SpeakerofTruth]

The banks were practically shoving it into the consumers faces. Of course they want nice houses for their children to live in. Do you really think they have the willpower to say no when the banks were begging them to take it and all but shoving it into their hands. I know several people bought houses they couldn't afford, but if those houses had been on a 30 yr fixed how many of them would have lost the homes? I would be willing to be a lot less.

It's our materialistic consumer society. We are told that you have to buy the biggest and best of everything. Even though none of it matters in the long run.

People are just doing what they have been conditioned to do and banks had no problem helping unqualified people achieve those goals.

Originally posted by scientist
Bottom line is that the BANK is the one that does the credit check and must take the responsibility for any unpaid debts.

Not where I come from... If I don't pay my debt, that I signed for, I don't care who checked my credit, I am responsible. Don't get me wrong, I believe that the predatory lenders are at fault, but it's the responsibility of the consumer to know what they're signing.

A lot of these mortgages had balloon payments and skyrocketing interest rates and sure, the banks were preying on people. However, consumer beware is the name of this game.

I believe there should be "restrictions" in the form of the bank informing the home-buyer of their payments over the course of their loan. If they saw a sheet with the 30 years of payments and saw that after the first year, their payments were going to double, they very likely wouldn't sign for the loan.

So, who is at fault?

The government for not regulating the banks' practices.
The banks for preying on ignorant people.
The consumer, for not educating themselves about what they signed.

Originally posted by Benevolent Heretic
So, who is at fault?

The government for not regulating the banks' practices.
The banks for preying on ignorant people.
The consumer, for not educating themselves about what they signed.

Well, I don't know about you, but I say all of the above

I think that it's the fault of both,the banks waving the carrot,and people taking it,when I bought my 1st home I remember the trouble I had and I had the 20% for a down payment,now people just need a dumb look on face and some doctored paperwork,but I think the lenders should take most of the blame,all they saw was housing prices going thru the ceiling and thought it was a win win situation,so no mercy for those greedy bastards

Originally posted by SpeakerofTruth

Originally posted by scientist
how is this not blaming the victim?

No offense, but that is exactly what is wrong with this society. Everyone's a "victim." You mean to tell me that a person that only makes $40,000 a year doesn't have enough sense to know that he/she can't make the mortgage on a 500,000 dollar home? Malarky. The lendees are just as much to blame for this mess as the lenders are. "Oh, oh, but poor,poor me. I just feel like I am entitled to have that mansion on the hill."

Whatever.

[edit on 6-10-2008 by SpeakerofTruth]

My friend, you are missing the point. The 'victims' here are the people making $40,000 that went looking for a house. Okay, they figure they can only get into a place of about $140k MAX. Well, amazingly enough the lender (loan shark) comes to them and says, "GREAT NEWS! We can get you into a $400,000 home with this very low rate for 2 years! And guess what, once the rate changes you can simply come back to us and we'll refi for you! How's that sound?"

So, when someone, thinking they are only going to get into a $140k 2 bedroom home (tough to expand a family there) hears they can get the 3 to 5 bedroom house of their dreams now for the same payment then they think that it's a great deal. The banks, on the other hand, shouldn't have allowed for this kind of lending practice since it put everyone in a big hole from the start.

Another one is the 'interest only' mortgage. Where you pay nothing towards your principle in order to keep your payments down. What a bunch of BS that is. Who is responsible for that? The consumer? Not when the bank is pushing it on them.

Is greed involved? Sure. It's human nature to want nice things. Unfortunately it is part of our society.

But you see, it gets worse. The people that just got screwed into these pathetic loans now go and look at getting a nice dependable used car. Oh, but wait! The car lot tells you that it's actually better to go ahead and get a NEW car because the loans are better and the bank is more likely to lend. So, instead of adding about $8k they end up with a $20k to $30k vehicle.

Now to furnish this home. Well, let's hit some garage sales and get some cheap furniture. There's no way we could afford new furniture because we definitely can't get a loan. Oh but WAIT!!! You can get zero interest until 2010! Just pay it off! Now they get $6k worth of furniture.

Who keeps lending the money? The credit is already hampered with all of the debt and yet they keep adding on.

Then the schooling costs. It's ridiculous now. Schools are making profits hands over fists and they keep raising the rates. It's really pathetic. So, in order for someone to get a piece of paper that HOPEFULLY will allow them to make more money to try and get ahead in life now puts them back about $40k to $100k!

Add the interest alone onto all of the above and we are talking a lifetime of struggles.

Yup, it's the victims fault here. The people that weren't taught by their parents or school how to manage their money.

Originally posted by Oldtimer2
I think that it's the fault of both,the banks waving the carrot,and people taking it,when I bought my 1st home I remember the trouble I had and I had the 20% for a down payment,now people just need a dumb look on face and some doctored paperwork,but I think the lenders should take most of the blame,all they saw was housing prices going thru the ceiling and thought it was a win win situation,so no mercy for those greedy bastards

Exactly. It's the lenders (the people prepping the paperwork for the banks) that would fudge numbers (went through it myself) in order to get as MUCH MONEY as possible from the deal. They smelled the blood and went WAY TOO FAR WITH IT.

Yeah, I dont think it is so simple that we can just blame the consumers.

Am I the only one who remembers Bush telling people that they needed to go shop after 9-11 to show the terrorists that we were not afraid?

www.washingtonpost.com...

To understand this link between today's financial crisis and Bush's wider national security decisions, we need to go back to 9/11 itself. From the very outset, the president described the "war on terror" as a vast undertaking of paramount importance. But he simultaneously urged Americans to carry on as if there were no war. "Get down to Disney World in Florida," he urged just over two weeks after 9/11. "Take your families and enjoy life, the way we want it to be enjoyed."

Maybe my TV is different from many peoples, but whenever I turn mine on, there are advertisements for home loans, credit cards, consumer products on every couple of minutes.

Maybe those are not expected to have any impact on human behavior? If so, why do the sellers of those products spend some 295 billion dollars a year on it?

www.techcrunch.com...

Joe and Jill Average have an army of people trying to get them to spend more than they can afford to. These people are literally waging a psychological war against them not only at home when they are watching TV, but everywhere they go, all the time.

I think we should get realistic about what sort of impact that is going to have on the average consumer.

Both. Capitalism is a dance and it takes two to tango.

It's too simplistic to say it's one group or the other, as it's not as if you cast all the lenders &c into one group. Some people have lived far more extravagantly than they've needed to, and as a society, we've been encouraged to be as greedy as possible, to surround ourselves in status symbols. However, there's also some people that have needed credit just to get by from week to week, leading very simple lifestyles. I'm not really sure how blame can be laid at their feet as they didn't even get a ticket to the dance and a lot of them are just watching the ball through the windows.

I'm still more inclined to blame the bankers/elitists/&c due to the fact that they have had far more say and control in all of this than the rest of us and have also made money out of the dance than the rest of us. It could be argued that they even decided what dances the rest of us had to dance in the first place. It's not like they've ever listened to our requests for new tunes.

Sadly, it's looking like that even as this dance is coming to an end and whilst the orchestra itself collapses all around us, a lot of them have still found a way to make money from this mess.

Honestly, I'd have no qualms in seeing a lot of the major figures in this shot in the street whilst the mob does a freedom jig around the corpses.

It is OUR fault for listening and believeing the words of the central bankers and the corrupt elected politicians.


We should have all known better....we DID know better....now we will all learn the hard way that these people are not looking out for our best interests.

This collapse will wake up and open the eyes of many doubters and disbelievers.

We have been had.

Originally posted by secretstash
The banks were practically shoving it into the consumers faces. Of course they want nice houses for their children to live in. Do you really think they have the willpower to say no when the banks were begging them to take it and all but shoving it into their hands.

You could apply that arguement to drug abuse and despite having drugs pushed on me i've never done them. The consumers kne what they were earning, they knew that they wouldn't have the ability to save anything for emergencies with the mortgages they were taking and yet they did it anyway. It's their fault, not just the banks.

Check out the community reinvestment act.

it basically encouraged banks to lend to low income and other less than qualified people.

ACORN actually sued banks who were lending based on a standard. Ask Citigroup about this one.

Bankers and Wall Street had to figure how to make loans that are "affordable". Then when people got suckered into the loans, they can satisfy the regulators.."Hey look, see we invest in the communities! Don't sue us please!" Too bad those loans were only stable if the economy and the housing market keeps rising.

The fault goes to

1. The social engineers in the government.
2. People who fail to read their contracts and analyze their financial situation.
3 Wall Street executives (not the corporations as the corporations were left to rot) that use heavy lobbying to stop reforms.
4 Foreigners that bought up Fannie and Freddie backed mortgages due to its perceived safety.

Originally posted by dariousg

Originally posted by SpeakerofTruth

Originally posted by scientist
how is this not blaming the victim?

No offense, but that is exactly what is wrong with this society. Everyone's a "victim." You mean to tell me that a person that only makes $40,000 a year doesn't have enough sense to know that he/she can't make the mortgage on a 500,000 dollar home? Malarky.

My friend, you are missing the point. The 'victims' here are the people making $40,000 that went looking for a house. Okay, they figure they can only get into a place of about $140k MAX. Well, amazingly enough the lender (loan shark) comes to them and says, "GREAT NEWS! We can get you into a $400,000 home with this very low rate for 2 years! And guess what, once the rate changes you can simply come back to us and we'll refi for you! How's that sound?"

exactly! Perhaps it's the fault of people for being gullible, and trusting the banks too much. You know, if you are taken by a con-man on the street, it's illegal. If you are taken by a conman in a bank, it's legit - and it's your fault.

My niece fell into that trap. About 6 years ago she bought an older, modest house with an adjustable rate mortgage. For the first five years it was at a low percentage rate, and her payments were about $800 a month, after 5 years it went adjustable.

Of course at the time the lender said "don't worry about it, interest rates are super low and you can just refinance in 5 years". Five years later the property values went way down, and suddenly she couldn't sell or refinance the house because it was worth less than she paid for it. She was looking at her payments going from $800 to $1200 overnight and that was way more than she could afford.

But when she originally took out that loan it seemed reasonable, no one expected property values to go down, and everyone thought they could just refinance and get a nice long term rate. Her story ended well, her fiancee bought the house from her using his VA loan. But I do understand how it happened and a lot of the people were NOT buying "huge mansions that they could not afford".

reply to post by ImaginaryReality1984


i think that the financial problems theses days are because a lot of people made the wrong actions.
first of all, i consider the principle to spend more than you actually own for completely wrong.
don´t get me wrong, it´s absolutely allright if you lend a small amount of money if you´re sure that you can reimburse it afterwords.
but only in that case you should be able to get money from a bank.
Especially in the united states, which is the country with the most debt, it was very easy to get some money from the bank, they didn´t make sure that you would actually be able to pay the money back ..
That was the beginning of the world financial crisis.
people couldn´t pay the money back, the banks crashed and so on..


So i think that you should blame especially the banks for the situation now, THEY allowed people to take up huge credits, without even checking if they would be able to pay back.

You can´t blame us ( people ), cause the majority of us is STUPID.
most of us live for today and tomorow, for the day after tomorrow nobody seems to be interested. so if we see a something nice, but we can´t afford it in the first place, we pay a visit to the bank ( cause we know they are giving us money anyway ) to pay the tv later on.
then there is a second thing and so on.
At the end, you got an accumulation of loans, that you can not reimburse.


but you can´t change the silliness of the people, so have to change the fundaments of the bank system ( loans )

No doubt about it, both sides played a part. Both sides were greedy and both continue to be greedy.