Greed

This is an old post from my now-defunct Myspace blog. I'm going to post some of the older postings in reverse chronological order to put a little meat on the bones of this puppy.

Originally posted on Wednesday, January 23, 2008 .

Lk 12:15 - Be on guard against every form of greed; life is not in possessions.

So we've all pretty much decided we're heading toward a recession thanks to the housing market mess, right? And it's been fun to watch the pundits on television talk about the irresponsible lenders who sold bad loans (and/or excessively large loans) to people with questionable credit. No doubt, they deserve some of the blame. I've been working with a few different lenders to get my mortgage in order before I close on a condo next month, and it's remarkable even to them how much things have changed. With credit tightening, they want to see everything: bank statements, student loan statements, 401(k) statements, pay stubs… oh and you better have at least $10,000 in reserves on top of that 5% plus closing costs.

Until recently, you could do not only 100% mortgages, apparently you could do 110% mortgages. "Here! Take our money! We'll just rape you with interest payments!" A colleague of mine is refinancing and told me that when he bought his place a few years ago the paperwork was frighteningly minimal. "How much do you make? Oh, really? Great, sign here." As the banks change the requirements almost daily now, I'm left scratching my head and wondering, "Dear God, why aren't there laws on this crap?" Sure, all the paperwork I've had to dig up and time I've had to spend tracking down numbers for my lender is a pain in my bum, but unethical lending is made far too easy to perpetrate when all they basically do is ask you what your salary is and pull your credit score before they fork over hundreds of thousands of dollars. Why did no one see this coming? Is it really as simple as retarded Republican under-regulation? The older I get, the more moderate I become, but I'm still reminded of a speech I heard a business leader give to us in college once. "Business cannot regulate itself," he warned. "Greed will always rule the day if you don't lay down some rules."

So the banks and the lenders are guilty of shady deals in service of the big G: Greed. But at the end of the day, you really have to blame the retarded American consumer—already awash in debt—for overreaching with characteristic American greed. Some of these foreclosure stories reported in the press could almost be comedic if they weren't so pathetic. One in the New York Times was practically as ridiculous as the following: "Hi, I'm Bob, and I make $40,000/year being a handyman. My wife Suzy makes $30,000/year being a secretary. We were just shocked when our adjustable rate mortgage went up and we couldn't afford our $550,000, six-bedroom home anymore." Hel-LO? Adjustable rate mortgage? It adjusts? But no one explained that! And, what, we don't really need six bedrooms for three people? But we have to have more than the Joneses!

America has a habit of catering to stupid people. Every morning I walk by "Caution, Wet Floor" signs in the lobby of my law firm. Reeeally? The ground is covered in snow and there's a possibility that in the warm lobby—where snow from our shoes might melt into H20—there might be wet floors? Shocker. But not really. American tort law is responsible for all those stupid warning labels on products. Why? Because manufacturers are legally responsible not only for the intended uses of a product but also for the reasonably foreseeable but unintended uses of a product. Stuck the scissors in your eye? That's reasonably foreseeable. Better label those puppies as "sharp" before we get sued. Lame.

The New York Times reported today on a couple that is suing their real estate broker because, they claim, they overpaid for their house in San Diego, and he made false and misleading statements implicating that the house was worth the inflated price. On one hand, you feel a bit sorry for the couple. The broker is the "expert," and you rely on him to give you accurate information. On the other hand, this couple was educated and the house was worth over a million dollars. They must have understood that brokers collect a percentage of the selling price as their commission, so there's a built-in incentive to inflate the purchase price. Look at the comparable properties recently sold in the same neighborhood, retards! Legally, it's one thing if the agent told you a flat-out lie; it's quite another if he engaged in "mere puffery." Do your homework, shut your mouth, and realize it's because you were stupid that you overpaid.

Anyway, it's unfortunate that the credit crisis is going to result in lost jobs and depressed wages for a large sector of the economy when the blame seems to lie squarely in the hands of the greedy and the stupid. Banks: Stop giving large loans to people of modest means! Dumb people: stop overreaching! If you can't keep up with the Joneses, don't.