Are you ready for this one?
What's the great idea the federal brain trust has spawned to get us out of the housing debacle?
Wait for it...Lenders should make sure borrowers are able to repay the loans before granting credit.
That's it. What that means is that up to now, lenders have not, repeat not done their duty to be sure that the people to whom they lend money have got a ghost of a chance of being able to keep up their payments.
And it's not the first time this has gone on. More about that later.
And if you want to read my rant about the whole mess:
So who's to blame for this mess?
Blame it on the system? Sure. In the spirit of trying to convey the ability to own a piece of the American dream, a home of one's own, regulators and lenders skipped that little part of the equation.
One should also heap much of the blame, or perhaps most of the blame, on the fly-by-nights, the finaglers, the get-it-while-you-can operators who didn't care whether the borrower could pay back the loan, whether the borrower would eventually default and lose the house and all the money he or she had sunk into it. Why? Because they got fat fees for setting up the loan and then they could sell the loans to investors who bought them sight unseen.
It is those hedge funds and securitizers who are losing, as they should. Talk about buying a pig in a poke. But the loan granters should be held to task as well. They should be made to forfeit the huge profits they made by not explaining the consequences of taking out an adjustable or balloon or pay-what-you-wish loan to the borrower. Even if they explained it to the borrower, they didn't take the next step: telling the borrower, "I've looked at the numbers and there is no way on this green Earth you can afford this payment. Once you add in insurance, taxes, upkeep, utilities, and the inevitable increase in payments after the initial six months or year or whatever, you are in the hole even if there is no increase in taxes, insurance, utilities, upkeep and the million little costs a house presents. You should put down that pen and run out of this office now."
Of course they never said this.
Who else is at fault? The borrower, of course. It's nice to own your own home, but not if you can't afford the payments. The average borrower can add and subtract: add their income, subtract the amount of mortgage, fees, insurance food, clothing, car payments or costs and the rest. If the resulting number is a minus, they cannot afford this home, no matter what the ganif across the desk says.
So, do you think these guys have learned their lesson? Not on your abacus. There are still guys on television hawking cars and saying that no matter how lousy or lacking your credit is, you can drive away with a new car. What do they care? Before you turn the key, the loan has been sold to a bank and the dealer is counting his profit.
It's an axiom that history repeats itself. It certainly has in this case.
I remember around 1988 or 1989, I was working as real estate editor for the New Haven Register and I was doing a story on a condominium project somewhere in the Lower Naugatuck Valley. I had driven out to the site and it was atop a really steep hill. The site had been cleared and I think the builder was digging the holes that would become the basements.
As part of the story, I called the banker who had loaned the millions of dollars to the developer. The condo market had begun to go soft and I was wondering who would buy a condo way atop this hill, especially with the snow and ice we get.
The banker was shocked. He didn't know the project was way on top of a hill. The guy had loaned millions of dollars to the developer and had never seen the property. For all he knew, it was at the bottom of Lake Zoar.
That developer eventually went bankrupt and the bank went down the hole with him and other developers.
As Dylan wrote: "When will they ever learn?"
I'm not a big fan of Chris Dodd, but I have to congratulate him for this master stroke of flying back to Washington from Iowa to lead the charge against the granting of retroactive immunity to those who would sell out our privacy.
Dodd spoke for a few hours -- he made sure not to call it a filibuster -- and Senate boss Harry Reid decided that he'd better rethink the bill. That gives the Senate a few more weeks to grow some guts.
By the way, it was interesting that someone decided to do a piece on how Dodd was going to be stuck on the ballot in the Connecticut primary even if he drops out before then.
The chances are he will, but this is Democratic presidential politics and the watchword is "Never say never." The Democrats have gone to dark horses before. Like I said, chances are Dodd has no chance, but remember Adlai E. Stevenson and a rat named Jimmy Carter.
Speaking of presidential politics, what in the name of the Wide, Wide World of Sports was Joe Lieberman thinking when he came out for Sen. John McCain now?
On Neil Cavuto's Fox TV show, Lieberman said it was too important to wait, as he said he would, for the parties to determine their nominees and then pick. He had also said he wanted to be returned to the Senate, after Connecticut Democrats decided to endorse Ned Lamont, because he wanted to be able to assure that a Democrat would be elected president in 2008.
So, here he's saying that it's too important to keep his word in two instances.
Look, I know how important Lieberman thinks our continued involvement in Iraq is. I disagree. He also thinks it's important for us not to get bullied or lied to by our own experts on Iran. He feels Iran is still dangerous and that the intelligence estimate that Iran is not seeking to make an atomic bomb is naive poppycock. I'm not sure I disagree with him on that, especially since Israeli intelligence estimates say our analysis is cockeyed.
I also know Lieberman is very concerned about Israel, as am I.
But this looks lousy for Joe and I wonder how much help it is for McCain.
New York Mayor Michael Bloomberg was very instrumental in getting Lieberman re-elected to the Senate after Democrats turned their backs on him. Many of the campaign leaders were Bloomberg operatives and a lot of their work was funded by Bloomberg. I worked on the campaign and I know this.
Unless Bloomberg has told Lieberman that he's definitely not running for president, no matter if Rudy Giuliani implodes and people decide they want neither Bible-beater Huckabee or rich-guy Romney and don't want war-monger McCain, then maybe Joe should have held off.
Unless...unless there was a commitment from McCain for vice president. Hey, Joe tried it once on the Democrat side, won it, but was denied by GOP trickery. So maybe he wants to try on the other side. After all, that would be geographically balanced ticket, if not a politically balanced one.
Would it be too much to ask? Every time I step into a store -- Christmas music. All over the place -- Christmas music. Would it be too much to ask for once, just once, for somebody to play "Grandma Got Run Over By a Reindeer?" I haven't heard it for two or three years.
I hope that hasn't fallen victim to political correctness, like calling Christmas Christmas. If I hear Rachel Ray yap once more about "the holidays," I think I'll puke. The holidays this. The holidays that. People are not shopping for gifts for Hanukkah -- that was over weeks ago. I don't think there's a great tradition of Kwanzaa gift-giving, especially since most of the people who celebrate Kwanzaa also celebrate Christmas and how many gifts should people be expected to purchase? There is a Muslim holiday going on now, but that isn't about gift-giving, it's about a pilgrimage to Mecca.
I guess all I'm saying is: They are Christmas gifts. Say Christmas.
And play "Grandma Got Run Over by a Reindeer" just once. That's all I ask.
Until next time...