Aggressively Uninformed

Representative Brad Miller takes issue with the “Mexican strawberry picker making $14,000 getting a $750,000 loan” story, comparing it as a symbol to Reagan’s welfare queens. This anecdote, if true, should actually be promoted by advocates of reform. The dynamics of power between “housing boom-era bank” and “$14k/year agricultural worker” are indisputable. I really don’t see how any reasonable observer can read that anecdote and take away that the mortgage recipient is to blame. Furthermore, this loan cuts straight to the root cause of the crisis: the complete destruction of any incentives on the part of the banks to perform due diligence. When I hear this story, I don’t angrily put myself in the shoes of the powerless party in this transaction, I angrily put myself in the shoes of the banker that decided to loan a family 50 times their annual income. This is his or her job. There is no way that a system which produces transactions such as that is a healthy one. The Michael Lewis quote in my previous post is the most effective single sentence argument for greater regulation of the housing market that could possibly be made.