Wednesday, April 23, 2014

Rescuing Idiots

People were “victimized” by rising interest rates on the home mortgages, we are told, because bankers lied to them and sold them mortgages by making false statements about the nature of the mortgages, not disclosing what was in the terms of the mortgages (and presumably not allowing them to read the documents), and making promises that they had no intentions of keeping. Elizabeth Warren cites one such homeowner in her book,

Flora explained that she’d gotten a call a few years ago from “a nice man from the bank.” She said he’d told her that because interest rates were low, he could give her a mortgage with a lower payment. She’d asked him what would happen to the payment if interest rates went back up. According to Flora, he’d assured her that “the banks know about these things in advance” and that he would “call her and put her back in her old mortgage.”

That is a lie on the face of it for several reasons, and any thinking person would smell a rat and run as fast as possible in the other direction. Any person, that is, who was not too overly focused on the enticement of the lower monthly payment to really care what the pitfalls might be. Warren does go on to say, emphasis mine,

“A lot of people didn’t look too closely at the deals—and like Flora, many relied on the word of a salesman who gave a slick description of the arrangements,” but she still regards the problem as having been created entirely by unscrupulous mortgage bankers and the homeowners as poor innocent victims who should be relieved of the burdens imposed on them through no fault of their own. She does not notice her own words, such as “didn’t look too closely” and “relied on the word of a salesman.”

I like liberals, actually, and I admire politicians who advance populist causes, but I am not a big fan of political idiots.

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