Glenn Beck blames housing crisis on 'lending to minorities'.
Two things one could have learned while listening to Glenn Beck this morning (and in the spirit of full disclosure, I disagree with BOTH):
1) We are experiencing a credit crisis because illegal immigrants bought houses using loans that did not check their income, and now they’ve quit paying their mortgages.
2) This all started back in 1992 when the government ‘strong-armed’ Fannie and Freddie to make more loans to ‘minorities’. Minorities, who according to Beck, should not have been allowed to purchase homes in the first place.
First of all, blaming any group of consumers for this mess is ridiculous. To add insult to injury, he actually comes off as quite racist by blaming sub-groups. Not cool, not fair, not accurate.
To clear this up a bit, there were/are loans out there designed for the immigrants of the ‘undocumented’ variety. If someone has a Tax Identification Number, but no SSN, they can still buy a home. They just have to put 30-50% down and pay higher rates. Sound attractive to you? Didn’t think so. They put big money into these houses, and have seen their equity go out the window. They thought they were buying the American Dream, and they lost big. As did the majority of Americans. Not sure why he chooses to blame this group, easy targets I suppose.
Toward his second ‘thought’, lending standards did not loosen up just to invite ‘minorities’ into the game. They loosened to let people with POOR CREDIT into the game. Again, a tad racist here- is that necessary? The private enterprises wanted a way to compete with safe, FHA loans that already helped people with low credit scores and little savings buy homes. Instead of loan officers putting them in fixed, low-rate FHA mortgages, they instead said ‘Hey, we can do a 2 year fixed at 7.25%. Make your payments and come back to me in two years to refinance!’. This accomplished two things. One, it kept a good source of business active for many an unscrupulous company. And two, it meant that those idiotic Wall Street guys who bought Mortgage Backed Securities would have a steady flow of action as well. All these ‘new and innovative’ loan programs were designed with a ‘churn and burn’ and ‘keep it flowing’ mentality in mind. Nevermind the fact that it was unsustainable!
Well, we all know what happened here. People went back to refi out of these loans, and couldn’t do it. Values dropped. Oops, there goes that idea!
I know what happened, I saw it. I will not blame the consumer for ANYTHING, and I certainly will not pin this economic disaster on one or two groups of people.
I had a manager once tell us to LIE to people about their CREDIT SCORES, so we could put them in 2/28 ARM’s (side note, I never did that and left that company shortly thereafter). I worked with brokers who did not HAVE ACCESS to FHA loans, so instead of someone getting 6% on a fixed rate, they were paying 7.25% on an adjustable. They were put into the wrong loans by PEOPLE WHO SHOULD HAVE KNOWN BETTER AND DONE THEIR JOBS!
Glenn Beck is an entertainer, and I know I shouldn’t take him seriously. But at some point, people need to get real here. We cannot blame what happened on ‘those greedy low-income people who bought McMansions!‘ (Beck’s opinion, not mine). They did not lend the money. They did not create the loans. They simply were the pawns used in a game where greedy bankers made money hand over fist while the getting was good. And the getting never stopped. Now that the bankers have stopped making so much money, what do THEY do? They ask for a handout.
What is wrong with this guy? Better yet, what is wrong with people who actually believe that one or two groups of people caused the greatest economic meltdown since the Great Depression? Must be nice to have such a simplistic view.
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