15 January 2008

who gets gubmint protection?

as Tyler Cowen points out over at the NYT:
There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem. As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study. The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006. Applications with misrepresentations were also five times as likely to go into default.
will the lenders who were bilked out of their money get any help from the gubmint? or will unreason prevent them from being seen as victims? i'm not sure i care. maybe they should have done a better job of vetting the applicants. i can say the same for people who overextended themselves, possibly trying to get rich with someone else's money. still, i'd like to see some outcry directed at the assmonkeys who made it more difficult for the rest of us.


  1. I've talked with a number of homeowners, and this "fraudulent" information on many of the loans was put there or encouraged by the loan officers themselves!

    Rather than point at the rapaciously greedy banks and investment groups, lets put the blame on the people doing the borrowing. Sounds a lot like blaming the victim if you ask me.

  2. it's silly to blame anyone until you have facts. who is the victim if neither party committed fraud?

    my loan officer tried to sell me on loans i wasn't comfortable with, but it didn't take much effort for me to understand why or even much more than a "no thank you" for him to drop it.

  3. Well, all lending is a gamble, which is something that a lot of people tend to forget in this fully-insured day and age. Which is funny since insurance is essentially gambling too. That's why I think it's silly for either party to cry about it: "you pays your money and you takes your chances" as the saying goes. If either party fails to accurately asses the risks, then too bad for them.

  4. This situation and story reminds me a lot of what is happening with the Katrina money. I remember some in-depth newspaper report found that there was a chance that a few million dollars were distributed to people making fraudulent claims. It completely ignored the HUNDREDS of millions that various contractors fraudulently misspent. Many, but not all of those individuals making those claims were "brought to justice" so to speak, but not one of those contractors has received so much as a fine.

    It's all about perspective.