6 responses so far ↓

• 1 Bill Bost // Mar 21, 2009 at 9:21 am

  I beg to differ. Many defaulting homeowners, I would venture to say most defaulting homeowners, are affected by the economy. Most desire to pay their mortgages. Most had the unbelievable expectation that bankers knew what they were doing. I don’t see alot of Main Street homeowners on C-Span explaining their compensation packages or ASKING THE GOVERNMENT TO FUND THEIR BUSINESSES!!! Consumers spent too much and borrowed too much, but we are big boys – we will stop spending and pay off our debt and learn our lessons. Most of us are in a bind, but not one that requires a few billion dollars of taxpayer money to fix.

  Consumers are angry, not because of bonuses, but because they have been betrayed by a bunch of selfish and arrogant guys (and girls) who never thought through the potential consequences of their actions or thought about the people that were affected. Why else would a lender make a subprime mortgage loan to an inexperienced, financially-strapped borrower?!

  And consumers are scared. Anger often accompanies fear. These are times like none of us have ever experienced. Renowned businessmen don’t know the answers (e.g., Berkshire Hathaway). Government officials in charge of solving the crisis are fumbling. Politicians – well we never really trusted them. Financial advisors are cheaters. Bankers, including government lenders, are only lending to the people who don’t need the money. The press is going out of business, or has become increasingly partisan; information changes depending on which channel we watch. The only place to turn, it seems, is to God, but we can’t talk about that at school, at work, or in polite company without offending somebody.

  Who will tell us the truth? Whose advice do we follow? Americans are accustomed to having a plan and a path to follow. We are lost and we don’t like it. The AIG bonuses are a focal point for this discomfort and disgust. It is not the last, and it shouldn’t be, as long as people like Victor Hong fail to place responsibility for this problem where it lies—with the folks that should know better.

• 2 Ira Artman // Mar 21, 2009 at 1:13 pm

  re:
  Who will tell us the truth? Whose advice do we follow? Americans are accustomed to having a plan and a path to follow. We are lost and we don’t like it.

  I – for one – have never expected that anyone will “tell us the truth”, nor have ever been accustomed to “havings a plan & a path to follow.”

  I don’t see any reason, for that matter, to start now. If you can’t make your mind up for yourself, then perhaps you need to be a touch more introspective.

  Good luck. We’re not in Kansas anymore. – Ira

• 3 Victor Hong // Mar 21, 2009 at 2:10 pm

  If adults, the borrowers should be responsible for themselves. They voluntarily sought their mortgage loans and bought their houses, and were always free to shop for better terms. If they did not understand or accept the terms, they should not have agreed contractually to them. Notably, these same defaulting borrowers insist on blaming bankers, investors, journalists, politicians, brokers, and others for their losses now, but never accordingly offered beforehand to share any anticipated home appreciation gains with these same parties.

• 4 Victor Hong // Mar 21, 2009 at 2:42 pm

  Who tells the truth?

  The rating agencies openly disclosed the expected default losses and default correlation underlying credit ratings, from “AAA” through non-rated deal tranches. So far, nobody has shown deliberate, systematic lying from them.

  Bankers openly disclosed the specific loan collateral and cashflow structures of the deals which they sold. Just look in prospectuses, monthly trustee/servicer reports, and Intex/Bloomberg/Trepp models. So far, nobody has shown deliberate, systematic lying from them.

  The underlying borrowers, however, systematically and deliberately lied. The lies regarded income levels, downpayment sources (other loans instead of true cash equity), property type (investment or vacation instead of primary residence), and property appraisals (signing off on inflated appraisals which they commissioned). Think of NINJA loans. So, these borrowers blame others for lying to them, when they themselves were foremost in lying to everyone else and to themselves.

• 5 Victor Hong is Wrong - Legislation and Regulation Comergence Community // Mar 23, 2009 at 6:27 am

  [...] Bearing torches, pitchforks, and pikes, the populace has lost sight of the root cause of our economic crash:  individuals consuming beyond their means, borrowing to finance such, and then refusing to pay their resultant debts. At the very foundation of the distressed RMBS, ABS, and CDO investments rotting in bank portfolios are defaulting homeowners, not banker bonuses. See how little Bear Stearns, Lehman Brothers, and WAMU paid as bonuses in 2008.  See Victor Hong Short Takes: Mob Rule & Introducing TARF! [...]

• 6 admin // Mar 23, 2009 at 7:18 am

  Comment 5 inaccurately states that Victor wrote an editorial in the Wall Street Journal. Instead, Victor was commenting about the article.

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