Main Street greed, right here in San Luis Obispo
There is a lot of blame to go around in the credit crisis we are now having. But regardless of the inexcusable practices of financial institutions these last few years, it all started in the last decade when Bill Clinton rewrote Jimmy Carter’s 1977 Community Reinvestment Act in order to increase home ownership in minority communities, pushing banks to loan to otherwise unqualified buyers or face a lowering of their CRA rating. Now that the housing boom has bust and created the credit crisis, politicians are backing Main Street to blame Wall Street for all their ills. But this pandering for votes denies who the real culprits are. And that’s you Mr. and Mrs. Average Citizen of San Luis Obispo, and every other town across America.
I’m sick of all the crying by people who are losing their homes due to rate-adjusting loans becoming unaffordable. Didn’t your read the contract? Didn’t you think ahead? Didn’t you have a budget? Don’t lie to me, I know you knew what an adjustable rate mortgage was. What you won’t admit now is that you were caught up in the mania that housing prices would continue rising and you could always refinance later with all that increased equity. I remember hearing, “San Luis Obispo is insolated, prices will never go down,” and “everyone wants to live here.” Blah, blah, blah. I remember your average work-a-day neighbor at cocktail parties saying things like, “I’ve picked up three homes last month and they are already worth $50,000 more!” Of course, the rents didn’t cover the payments, but someday! I heard the bragging at bars, I overheard the boasting simply walking downtown. I have a fried who went from no home to having 14 rentals (not any more, he’s broke now). But, the most common story was from homeowners telling me how the value of their primary home had risen so much that they were able to refinance at a low (teaser) rate, use the cash to take a vacation, buy that new fancy car, and hang up a new Plasma TV to boot. Ah, life was good, wasn’t it? We were all financial geniuses! Of course, our local Realtors encouraged us to buy, buy, buy! Not that I blame them, they are just doing their jobs, selling homes. After all, who in their right mind would turn down a willin customer?
Yes, forget Wall Street greed–from San Luis Obispo to Pismo Beach to Cambria to Paso Robles, Main Street, greed was rampant. But you’re not so rich now are you? Stop your crying and accept your blame. You took advantage of the easy money and inflamed the bubble, and are the cause of the bust and the ensuing credit crisis. Now you have to face what you created.
Apologies to those who did not act on their greed, got fixed loans that they could handle, and lived within their means. I feel your pain. It’s not your fault and you’re going to have to bailout your less responsible neighbors.