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Re: “Blame the System


I hate to burst your bubble, but a contract is between two parties and it is understood that risk is to be roughly evenly apportioned. This is the core of contract law. Also, these contract are civil issues. It only becomes criminal if it's fraud--i.e. someone makes knowing misrepresentations.

While the little guy might have practiced some tragically bad financial thinking, it's not criminal--it's civil. At least, it is unless they claimed to be making more money than they were--which the vast majority of them didn't. So, if anyone in the mix is a criminal, it's either the people who made the loans or the people who made the rules.

You hit the nail on the head--this was binge lending. It takes two to tango. The only reason that this is having this impact is because the rules changed and allowed these loans to be sold as low-risk "securities" when they were wildly over-valued.

Should we mark down the values of these properties? Yes. Should we adjust the rules to keep lending from going amok? Yes. Should we kick around these homeowners? No. They were offered something, let into a contract, perhaps let into other refinancing contracts, and--in the end--couldn't uphold their end of a contract. This is business as usual and should be treated as such.

The crime was tying them to the core of value in our economy--banks, pensions, money market funds, etc.. The crime was overvaluing these properties. The crime was building a market that was 100% leveraged, 100% of the time. The tragedy was that there really was no crime. We are living in a country where financial "rape" was effectively LEGAL! This wasn't a crime, this was a mistake--and it was a big one--and it was by our government.

The only way to fix this is to vote in such a way as to affect real change. I don't know how to make that happen--but as a citizen, I *have* to take responsibility for it. No one else will, apparently. Least of all Joe Blow Voter.

Posted by Jayson Vantuyl on 10/10/2008 at 4:33 PM

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