Friday, February 27, 2009
Octomom, the Santelli rant and Nancy Reagan
Yes, your Honor, I think I can tie this up.
According to Phil Rosenthal's February 23 article for the Chicago Tribune, in the course of his recent tirade (see above), Chicago-based CNBC commentator Rick Santelli hollered, "This is America! How many of you people want to pay for your neighbors' mortgage that has an extra bathroom and can't pay their bills? ... President Obama, are you listening?"
The video above confirms that Mr. Santelli received an enthusiastic response from the traders on the floor. And, as Rosenthal reports, the White House was listening -- and was not amused. "I feel assured that Mr. Santelli doesn't know what he's talking about," Rosenthal quotes White House Press Secretary Robert Gibbs as saying. And in this sense Gibbs is right and Santelli is wrong: There's nothing new about people who are pulling their own weight subsidizing those who can't make it on their own. That's what a portion of our taxes have done in one way or another since at least the New Deal.
But here's the problem: We're not bailing out people who are simply down on their luck, or mere victims of circumstances. A lot of the people who are in foreclosure or "upside down" on their mortgages should never have gotten mortgages in the first place. Not even close. So America is being asked to bail out thousands and thousands of people who shouldn't ever have been put into this position in the first place.
At the height of the craziness it seems that anybody who could sign their name could get a mortgage. Why? Well -- for one reason -- mortgage brokers got paid anytime someone got a mortgage. For another, banks looked the other way at applications from hopeless cases. After all, the bank making the loan was just going to package and sell the mortgage anyway: It never planned on dealing with the consequences. And, besides, the unqualified loan customer could always sell -- because property values only go up, right? So even the hopeless cases might even make some money during the few months that they managed to handle the payments.
And then there were the balloon payments. In 1982, when Long Suffering Spouse and I were looking for our first house (when we started looking interest rates were up around 20% -- and that was with a 20% cash down payment), even we knew balloon payments were trouble. Maybe someone who was working for a company that transferred the family every three or four years would be better off with a balloon -- but, for anyone else, getting a balloon loan is like buying dynamite in the store with the fuse already lit and hoping to get it in place at the mine in time. But people were being steered into these products -- allegedly to save $50 a month or something on interest -- but really in the hopes of guaranteeing another loan commission down the road.
And then there were the outright frauds: The mortgage brokers cooperating with appraisers and lawyers who 'sold' parcels to one straw person after another, artificially inflating the price of the property -- and all neighboring properties -- with each phony sale.
And all this happened because nobody would say 'no.'
Octomom, with six kids already, goes to a fertility clinic, for fertility treatments. And now she has eight more.
Because nobody would tell her 'no.'
I don't blame necessarily blame the people who are stuck in impossible mortgages. I don't even necessarily blame Octomom. I blame the people who should have known better -- who did know better -- and who didn't say 'no.'
And now, your Honor, you see where Nancy Reagan is coming in, don't you? We'd all be better off... if responsible people had just said "NO!"