Posted on 07/22/2008 10:19:44 AM PDT by mojito
On the front page of Sunday’s Times, Gretchen Morgenson described Diane McLeod’s spiral into indebtedness, and now a debate has erupted over who is to blame.
Some people emphasize the predatory lenders who seduced her with too-good-to-be-true credit lines and incomprehensible mortgage offers. Here was a single mother made vulnerable by health problems and divorce. Working two jobs and stressed, she found herself barraged by credit card companies offering easy access to money. Mortgage lenders offered her credit on the basis of the supposedly rising value of her house. These lenders had little interest in whether she could pay off her loans. They made most of their money via initial lending fees and then sold off the loans to third parties.
In short, these predatory companies swooped down on a vulnerable woman, took what they could and left her careening toward bankruptcy.
Other people emphasize McLeod’s own responsibility. She is the one who took the credit card offers knowing that debt is a promise that has to be kept. After her divorce, she went on a shopping spree to make herself feel better. After surgery, she sat at home watching the home shopping channels, charging thousands more.
Free societies depend on individual choice and responsibility, those in this camp argue. People have to be held accountable for their indulgences or there is no justice. As McLeod herself admirably told Morgenson: “I regret not dealing with my emotions instead of just shopping.”
If you go to the online comment section affixed to Morgenson’s article, you see advocates of these two positions talking past one another, one side talking the morality of social protection and the other the morality of personal responsibility.
(Excerpt) Read more at nytimes.com ...
Although Mr. Brooks is not a conservative, he’s also not wrong about everything. There are some excellent points in this article.
I think people are ultimately responsible for their decisions, but financial institutions of all types need to exercise more fiduciary restraint towards its customers or they are begging for regulation.
Is it the fault of beer makers if people use their products and become alcoholics? It's the responsibility of the end user to make the right choices. The lady referenced here could have easily turned down the offers from the credit card companies and banks, but she chose to use them unwisely.
Can we no longer assume personal responsibility for anything anymore?
I have never understood how a business profits by lending money to people who do not pay it back - any help?
What the heck do we expect? When kids regularly borrow 20 - 30 thousand dollars to get a crappy college education, it’s no wonder they borrow, borrow, borrow...
Collect the origination fees, then sell the loans off to a bagholder someone else. ;)
They can afford for a large percentage to default, if the remainder are paying 24% APR.
We are constantly surrounded by temptations and seductions, some more beguiling than others. If we have not the strength of character to resist them, then we shall come to grief and woe.
There is a book, I believe, where this is discussed at length. However, that book is out of favor these days with our media and cultural elite because hedonism is the cultural value they most prize.
The ones that do the original lending then "sell" the "bundled", loans to another institution which does(or does not) do its homework on what it is purchasing.
I’d disagree with him a little. My parents were awful with money and I learned how not to spend from them. I’m very glad that I am not a shepple that has to run with the crowd and have everything to make myself feel important. Designer labels are nice but even nicer if you find them at 75% off! :D
If you don't care about being out of style, you can pick it all up on e-bay, brand new, as soon as whatever season is over. There's something very pleasant about cutting a sales tag for $140 off a skirt you paid $10 for.
When you use a credit card to buy a coffee at Dunkin’ donuts,you may have a problem!
Judging by the way most people look in what the designers say is in style, I don’t mind finding something nice that suits me and is a great buy! ;)
Bullseye!
Thanks for that gem! :)
On the other hand, why would prudent lenders throw offers for additional credit at borrowers who are already at risk for default?
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