<p>I thought this <a href="http://online.wsj.com/article/SB119872013682151831.html?mod=todays_us_opinion">opinion article in today's WSJ</a> was relevant to this discussion...</p>
Debt and Responsibility
By <strong>ROB ASGHAR</strong>
December 27, 2007; Page A10
<p class="times">I blame the borrower. Yes, on the eve of an election year, it is bad politics and bad manners to say that the "little guy" deserves the brunt of the blame for the global subprime mortgage crisis. But I blame him nonetheless, with minimal qualifications and apologies.</p>
<p class="times">Remember, first of all, that the 2008 elections will be decided by this same little guy. Remember that, as America seeks to bring the gospel of freedom to societies such as my native Pakistan, we must convince these nations that their own little guys can be trusted in decisions both grand and small. Once, America's little guy was sane enough. He saved a dime on every dollar in the 1980s and a nickel on every dollar into the 1990s. Then, infected by rampant and ill-considered consumerism, he helped the national savings rate go negative in 2005, for the first time since the Great Depression.</p>
<p class="times">The little guy has wanted the government off his back and has hoped to release as few of his hard-earned dollars as possible to that fat bureaucracy. Now he longs for a paternal force to save him from people who promised to help him keep up with his overspending neighbors.</p>
<p class="times">On the surface at least, it would seem that others would make better scapegoats. I dealt with such potential scapegoats in 2004 and 2005, when I spent two years as the communications director at a burgeoning subprime mortgage originator in Orange County, Calif.</p>
<p class="times">Pricey and posh Orange County office complexes housed half of America's 20 leading subprime lenders. I occasionally asked mortgage executives what explained this coincidence. The question puzzled them. They lived in ocean-view Newport Beach homes. Why would they want to work anywhere else? The subprime industry chose to ignore economic and efficiency factors that had driven so many other businesses far from the costly California coast.</p>
<p class="times">Another peculiarity was compensation. Top salespersons at companies such as New Century Mortgage Corporation often drew astronomical seven-figure salaries (and perks such as first-class trips to Spain and Germany). Capped teeth and breast implants trumped a work ethic for many who aspired to make it in subprime sales. Their counterparts in prime lending were lucky if they reached six figures.</p>
<p class="times">Investors foolishly tossed billions of dollars at inefficient enterprises while expecting massive, long-term benefits. New Century's now-laughable slogan was "a new shade of blue-chip," and Wall Street proved gullible for a long time.</p>
<p class="times">By and large, the lenders were no less irresponsible than the borrowers who aspired to live a bigger life than they could afford. But all of the strange creatures of subprime -- the overpaid loan officers, bloated budgets, lavish Las Vegas "planning meetings" and the like -- were nurtured by consumers who believed that incurring massive debt was the secret to becoming a rich landholder (or boat owner).</p>
<p class="times">Regulation of the industry may address some problems -- but not without creating the new ones that inevitably result from straitjacketing the free market. Besides, market forces were already slaying subprime's monsters. By late 2005, most in the business knew the feast was entering its final moments.</p>
<p class="times">The recent effort by the Bush administration to help a segment of subprime borrowers is, fortunately, a mostly cosmetic matter. (One mortgage executive tells me that only about 5% of the loans in his company's loan portfolio will be affected.) Policy makers in Washington would do well to leave it at that. We need bureaucratic meddling far less than we need a sober and clear-eyed citizenry.</p>
<p class="times">As my own friends bought and maintained homes, I quietly mused about how the homes owned them, not the other way around. I moved often, based on job commitments, with no interest in buying a house.</p>
<p class="times">I may own a home someday, if prices return to sane levels once unfettered market forces play out their Shiva-esque roles as both Creator and Destroyer of fortunes. When the average person learns to treat those forces with humility and respect, we'll all be served far better than by any political promises that claim to stand up for the little guy.</p>
<p class="times"><em><strong>Mr. Asghar is a writer and editor based in Southern California.</strong></em></p>
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