Monday, December 3, 2007



Today’s Wall Street Journal story outlining that paper’s study concluding that (surprise!) the impact of the “sub-prime” crisis is wider than the echo chamber that is Wall Street and the financial media had supposed included a common defense of the lascivious lending practices that have contributed to the mortgage problems we are currently experiencing. A spokesman for Fremont Investment & Loan, responding to a suit against Fremont by Massachusetts Attorney General Martha Coakley alleging unfair and deceptive lending practices, countered that, without access to Fremont’s loans “…many Massachusetts residents who are homeowners today would never have been able to purchase homes.”

This is a defense? This diaphanous codswallop presupposes that homeownership is both a right and is per se a great thing. Neither, despite what some financially fatuous would have you believe, is true. Back when the world of finance was dominated by clear thinkers with their own money, or at least their own careers, on the line, we somehow had developed the quaint notion that people who can’t afford homes shouldn’t be homeowners until they were financially prepared to do so.

If the Fremont spokesobfuscator had added a few words to his quote, viz:

“many Massachusetts residents who are homeowners today and who have no business whatsoever being homeowners would never have been able to purchase their homes”

his statement would have been true. Unfortunately, it would not have advanced his position, so, in the modern world of high finance, what merit would it have had?

Look for this pathetic excuse for an argument (i.e., “whatever nefarious scheme we cooked up helped people become homeowners”) become even more frequent as politicians conduct the ineluctable witch-hunts that accompany any discomfort that they can label a “crisis.” Why? Because this idiotic line of reasoning appeals to an American public that has been taught to eschew thinking in favor of feeling.

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