Scapegoat?

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dclary

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Allen Greenspan, the man whose monetary policy-making was one of the single-most important forces in helping prevent the recession/depression that the the dot-com bubble-burst should have created, today admitted that even as he made it easier and easier for people to attain more credit than they ought to have considered getting, he KNEW that abuses of the credit policies were going on.

He says now that he didn't think it was going to be a problem until 2005.

Um, dude... 2005 was TWO FUCKING YEARS AGO.

How many people in the last 2 years got sucked into loans they couldn't afford in the last two years? Even if we forgive you for the ones who got in trouble before that -- before you thought maybe something should be said.

You were the most important voice on the planet, when it came to US money, money supply, and anything at all regarding our financial state.

Maybe scapegoat isn't the right word for Greenspan. Asshole comes to mind. Coward. Bastard.

Not scapegoat.

From Drudge (his flash page, so the link's not perma)
http://drudgereport.com/flash1.htm

GREENSPAN SAYS HE KNEW ABOUT ABUSES IN SUBPRIME LENDING BUT FAILED TO FORSEE THEIR PARALYZING MARKET EFFECTS UNTIL LATE 2005
Thu Sept 13 2007 12:30:11 ET

Former Federal Reserve Chairman Alan Greenspan admits he "didn't really get it" that the subprime lending trend was significant enough to hurt the economy until very late 2005, but still defends his lowering of interest rates from 2001 until 2004 that critics say caused the crisis in the first place. Greenspan, who led the U.S. Federal Reserve Bank through 18 years and four presidents, speaks to Lesley Stahl in his first major interview, to be broadcast on 60 MINUTES Sunday, Sept. 16 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

Greenspan says he knew about the questionable subprime lending tactics that gave loans to homebuyers and investors with low adjustable interest rates that could rise precipitously, but not the severe economic consequences they posed. "While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he tells Stahl. "I really didn't get it until very late in 2005 and 2006."
 

InfinityGoddess

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Well, I expect nothing less from an ARI hack like Greenspan. Figures. And as much as I'm equally as wary of Drudge, I have to applaud him on this one.
 
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Meerkat

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Perhaps the ultimate responsibility lies with folks who apply for loans they know are beyond their means. Perhaps we need to grow up, take responsibility for our own actions, and live within our means. There have always been lenders standing by, it is not a new phenomenon. What is new is the depth into which folks are willing to dive unchecked.
 

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Perhaps the ultimate responsibility lies with folks who apply for loans they know are beyond their means. Perhaps we need to grow up, take responsibility for our own actions, and live within our means. There have always been lenders standing by, it is not a new phenomenon. What is new is the depth into which folks are willing to dive unchecked.

Or perhaps the lenders in question should warn consumers about the pitfalls of taking out loans in the first place, so that consumers shouldn't have to either a) find out for themselves or b) find out the hard way?

Honestly, most people are not financial experts. I know that I personally stay as far away from numbers as I possibly can.
 

MattW

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Or perhaps the lenders in question should warn consumers about the pitfalls of taking out loans in the first place, so that consumers shouldn't have to either a) find out for themselves or b) find out the hard way?

Honestly, most people are not financial experts. I know that I personally stay as far away from numbers as I possibly can.
So when you make a financial decision, do you educate yourself or do you blame someone else for your uninformed decision?
 

dclary

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So when you make a financial decision, do you educate yourself or do you blame someone else for your uninformed decision?

I do both, actually.

I educate myself as much as possible as any transaction requiring 80 pages of legal documentation could allow a layman.

And then, if I get fucked, I blame the guy who hoodwinked me into missing section B, paragraph 1, subclause C.
 

InfinityGoddess

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So when you make a financial decision, do you educate yourself or do you blame someone else for your uninformed decision?

Normally, I educate myself because I have to, especially now. But it shouldn't have to be that way all of the time.

In some ways, I'm one of the lucky ones when it comes to loans in general. I only owe $5,000 to Sallie Mae. My Rutgers loans will be paid off by the State of New Jersey.
 
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III

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Or perhaps the lenders in question should warn consumers about the pitfalls of taking out loans in the first place, so that consumers shouldn't have to either a) find out for themselves or b) find out the hard way?

Honestly, most people are not financial experts. I know that I personally stay as far away from numbers as I possibly can.

Yeah, but you don't get a $200k house loan without any credit history. People start off with a credit card or a car loan, so they understand the concept of making payments and paying interest. Those same folks are innundated with other credit card offers and will be for the rest of their lives. By the time you apply for a home loan and the loan officer SHOWS you exactly what your payments WILL be and WILL POTENTIALLY be, they shouldn't have to put you through a "Loans 101" class.

If any lesson needs to be learned it's that "nothing is free". If you're getting a great deal then there's usually a bigger risk involved. That's true of any financial situation. Risk = Rewards, regardless of scale. That's the message to spread.
 

III

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I do both, actually.

But that's part of your charm ;)

ETA: And I think Greenspan rocked!

Normally, I educate myself because I have to, especially now. But it shouldn't have to be that way all of the time.

That's life. Ignorance of the law is no excuse. Ignorance of consequences, whether it be related to money, health, or relationships doesn't mitigate the results. We all have to learn our lessons or live with the consequences. But here's the good part - as intimidating as it looks when you're 20, if you put in the effort you'll find yourself with a great breadth of knowledge by your 30's and you can help others who are a step behind you.
 

InfinityGoddess

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Yeah, but you don't get a $200k house loan without any credit history. People start off with a credit card or a car loan, so they understand the concept of making payments and paying interest. Those same folks are innundated with other credit card offers and will be for the rest of their lives. By the time you apply for a home loan and the loan officer SHOWS you exactly what your payments WILL be and WILL POTENTIALLY be, they shouldn't have to put you through a "Loans 101" class.

If any lesson needs to be learned it's that "nothing is free". If you're getting a great deal then there's usually a bigger risk involved. That's true of any financial situation. Risk = Rewards, regardless of scale. That's the message to spread.


Heheh. I'll probably never have to worry about all of that since it's more likely that I'll rent (all the good GD jobs are in the cities) and not need a car (I use public transit to go places). Sort of torn on credit cards, though.

True, there is a risk, but I think that bankers should at least put the warning on, just to be sure that the customers know what they're doing. At least.
 

III

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Heheh. I'll probably never have to worry about all of that since it's more likely that I'll rent (all the good GD jobs are in the cities) and not need a car (I use public transit to go places). Sort of torn on credit cards, though.

True, there is a risk, but I think that bankers should at least put the warning on, just to be sure that the customers know what they're doing. At least.

I'm not trying to be patronizing, but I think that's the part of the picture you're missing because you haven't experienced it yet. Getting a mortgage is a HUGE, long event. Just signing the papers takes several hours, and that's not including the whole process of getting approved. By the time you get through it, you've gotten more of an education than you wanted and hundreds of papers you can refer to.

On Credit Cards - get one or two and use them occasionally to build up some credit history and pay them off each month. They're handy for buying stuff online or for emergencies, too. ;)
 

Magdalen

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Caveat Emptor seems apt here. Who didn't know that their ARMs would rise? What really makes me mad is the way people took the concept of "home ownership" and twisted it into some kind of game by buying homes that they intended to turn-around within a couple of years for profit. Very destabilizing for neighborhoods. I'm really more concerned about the interest rates that major retailers are allowed to charge, which are edging ever closer to 30%. Talk about usury!! So obviously, the rates will go down a notch next week. Hope it is a full .5%!! And I'm with Meerkat on the grow up and take responsibility for one's appetites, although I know that many people are caught short because the company they worked for has downsized, failed, etc. As for Allen, I've always thought he was an asshole, similar to a parent who gives their child too much pop and candy and then wonders why the kid's teeth are rotting. Twenty-five+ years of "Reaganomics" has not improved my life, but I'm sure there are many who have fared well, i.e. peek-a-boo, I CEO you.
 

Cranky

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I would say something witty and intelligent here, but III beat me to it. :)
 

InfinityGoddess

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On Credit Cards - get one or two and use them occasionally to build up some credit history and pay them off each month. They're handy for buying stuff online or for emergencies, too. ;)

I'll prolly end up getting only one through Working Assets. For now my Visa check card will suffice. :)

My big concern about this whole issue in general is Greenspan's fingerprints all over it. Very shady stuff, if you ask me.
 
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dclary

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I'm not saying that people don't need to be responsible for their own decisions -- they do.

What I'm saying is that almost 5 years ago, the man responsible for the most important decisions in american finance knew that subprime lenders were starting to exploit and abuse lending rules. 2 years ago, he knew there would be serious repercussions as a result.

Why didn't he tell anyone about that until AFTER those serious repercussions started showing up?
 

MattW

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Normally, I educate myself because I have to, especially now. But it shouldn't have to be that way all of the time.
It absolutely should be your own responsibility.

Lending regulations should protect you from predatory and misleading loans, or usurious rates.

Only you are responsible for taking ill-advised or uninformed loans.

In some ways, I'm one of the lucky ones when it comes to loans in general. I only owe $5,000 to Sallie Mae. My Rutgers loans will be paid off by the State of New Jersey.
Your Rutgers loans will be paid by me, Matt Q. Taxpayer. Nicetameecha.
 

MattW

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I'm not saying that people don't need to be responsible for their own decisions -- they do.

What I'm saying is that almost 5 years ago, the man responsible for the most important decisions in american finance knew that subprime lenders were starting to exploit and abuse lending rules. 2 years ago, he knew there would be serious repercussions as a result.

Why didn't he tell anyone about that until AFTER those serious repercussions started showing up?
He had to liquidate his own at-risk investments first?

He was being forced out by the Bush admin and he wanted to stick the with a problem?

He wasn't as competant as we thought?

He's lying about realizing anything in 2005?
 

III

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I'm not saying that people don't need to be responsible for their own decisions -- they do.

What I'm saying is that almost 5 years ago, the man responsible for the most important decisions in american finance knew that subprime lenders were starting to exploit and abuse lending rules. 2 years ago, he knew there would be serious repercussions as a result.

Why didn't he tell anyone about that until AFTER those serious repercussions started showing up?

Was he the only one who knew? Everyone knew there were going to be big repercussions if the housing market slowed, but many lenders decided to take that risk and now they're paying the price. Many lenders and borrowers decided to prudently steer clear of the whole mess (gratefully my employer was one of them). But it's not like Greenspan was the ONLY one who knew and he kept it a big secret. Could he have done more to quell the rampant housing market five years ago? Pro'lly. Should he have? Personally, I don't think so. It's part of a cycle and we're on the downside now and HOPEFULLY the responsible parties have learned some lessons to apply in the future. Speculation is risky. Not Greenspan's fault.
 

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I think this kind of blame is really divvied up in pieces. But ultimately, we're all responsible for our own debt (and unfortunately, for that of the people who bailed out on their debt.)

When I bought my house, I thank the Lord above that I had my Mother and Stepfather's advice. In fact, they bought my house first, with my name on it as co-owner, then three years later my sister and I bought it from them - it was much easier since my name had already been on that huge purchase.

Signing those papers was the most frightening thing I'd ever done. And our house was under 100k ! Our payments are less than we were putting out for years in rent. We made sure it was a fixed rate loan, got plenty of insurance, and thanks to the sage advice of our elders who'd done this many times before, we're happy and secure.

Now I watch these programs on HGTV like "My First House" and see these 20-somethings decide they can spend $190k on a first home, then have the realtor show them 3 houses all priced at $210k, fall instantly in love and "find a way to afford it". Then they're signing papers with TWO loans, both variable rates, so they can avoid mortgage insurance, and end up with payments of $1400/month!

That's usually when I spit my coffee.

I paid off all my credit cards, I use utility bills, a car payment and mortgage to keep my credit score high, and pay cash for everything I want - even if it means I have to wait a long time for it.

Guess I'm just old fashioned.
 

SC Harrison

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It absolutely should be your own responsibility.

Lending regulations should protect you from predatory and misleading loans, or usurious rates.

Only you are responsible for taking ill-advised or uninformed loans.

This is true, but lenders approving loans they know will most likely result in default are committing fraud, plain and simple. I guarantee you those loan documents have clauses the lenders sign that say, "Loan recipient has suitable income to assume monthly debt burden, yada yada yada".

I'm sure many of those folks knew they would be in trouble down the road. But it's not up to them to judge that, it's up to the loan officer.
 

Mr. Fix

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Amateurs built the Ark, experts built the Titanic...

Or perhaps the lenders in question should warn consumers about the pitfalls of taking out loans in the first place, so that consumers shouldn't have to either a) find out for themselves or b) find out the hard way?

Honestly, most people are not financial experts. I know that I personally stay as far away from numbers as I possibly can.

My personal accountants are truely experts! They only work for the best companies.

My accountants: Anderson & Anderson

Clients?

Enron!

(I'm in the money:e2stooges)
 
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