Idiots, Losers, and the American Recovery and Reinvestment Act
To commemorate President Obama’s one-month anniversary in office, political pundits and finance “experts” are renaming all Americans at risk of foreclosure “Losers” and “Idiots.” Leading the charge in this effort is CNBC’s Rick Santelli, who in addition to being a former derivatives trader, dabbles in tea party organization. His current plan involves dressing up as a Democrat and throwing Losers into Lake Michigan:
Not to be outdone, the folks at Fox News completed the trifecta of insulting the President, “his” American Recovery and Reinvestment Act, and Idiots everywhere.
While I don’t expect middle-aged TV personalities to be able to relate to young home buyers who inadvertently walked into the mortgage buzz-saw (and might otherwise be mildly respectable, intelligent individuals), where were these prescient experts during the past five years when lenders were falling over themselves to help new homeowners get locked into zero-down, pay-us-when-you-feel-like-it mortgages? Most of these people were not predicting the looming mortgage crisis or warning Americans to keep renting. No, they were busy touting the strength of the U.S. economy and explaining how the NYSE juggernaut would undoubtedly close at 20K by the end of the decade.
You see, it’s easy for SportsCenter to break down what the Yankees did wrong after the final scores are printed, but I don’t believe it’s fair to call fans Idiots just because they showed up for the game. Turning back to the subject at hand, if a person is watching their friends and family get into the housing market and quickly making 20% annual gains in home value, that person would naturally explore whether they could get into their own home. They would turn to mortgage brokers and lenders for help, but unfortunately these financiers’ main focus was making sure they kept up their loan origination numbers and would do and say anything to get their clients into a loan.
So, perhaps those who got into zero-down mortgages and now find themselves on the cusp of foreclosure should be called Idiots. But shouldn’t those same people be able to rely on the advice of financial professionals? And are you automatically a Loser if you believed you could get your own piece of the American Dream of home ownership?
Clearly, certain individuals are not happy that the American Recovery and Reinvestment Act will not help them recoup their investment losses (home values, stocks and otherwise). But labeling others who may receive assistance as Losers and Idiots is myopic, petty, and childish.
And just for good measure, here is White House Press Secretary Robert Gibbs responding to Santelli’s rant:
…ooooooh, burned!
- Matt
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No, you cannot blame people for taking advantage of all-time low rates to get in on the housing boom, but at some point common sense has to come in to play. Which mortgages are the one’s going bad, the 30yr fixed? not so much. Its the ARMs that were originated at record low rates that people are mostly defaulting on. people trying to get the lowest possible rate to get the lowest possible payment to get into a house they cannot afford. How much sense does it make to get an ARM when the fed funds rate is at 1%? Hey, rates are the lowest they’ve ever been but i think i’ll try my luck 1,3,5 years from now? This makes no sense. If you are going to make the argument that people are getting them as investments and werent planning on staying in them for the three year (or whatever)fixed period then thats just a bad investment. I would love to be recouped the money i’ve lost in the stock market over the past six months but i just dont see that happeneing. People that are first time home buyers should be staying in homes for at least three years to avoid the short term property gains taxes anyways. I would guess that the majority of people that defaulted on ARMs either have no common sense, got one in order to purchase a house they could not afford, or as a second/third “investment” property. Those that lost jobs and therefore can no longer afford their payment is a whole different story. I am only referring to those that knowingly got into situations they could not afford. When you sign a mortgage you agree to a payment based on certain scenarios. Just because the value of the house goes down does not mean that you didnt already get approved for the payment that goes with it.