The madness of crowds

I spent a few minutes last week listening to a show on NPR called “On Point.” An attorney phoned in to talk about how the financial service industry let down consumers, especially blue-collar ones, during the financial meltdown of 2007-2008. She was angry and said she could no longer trust financial services companies.

The host, with what seemed like glee, seemed to be trying to incite his guest expert, who was, by chance, also a lawyer, by saying things to her like, “Do you think she’s right (referring to the caller) about the financial services companies?” And his guest expert kept trying to tone it down by saying that there were plenty of small and large firms in the financial services industry that were responsible and good. Nevertheless, the host kept working the room, so to speak, trying to get things moving in a kind of let’s get the bastards attitude.

It all got me to thinking. You know who the real culprits are, right? The real desperados were the plain old everyday citizens, folks like you and me, who got greedy and who tried to flip houses. Our neighbor (or cousin, or uncle) would tell us how he or she made a gazillion dollars by buying a second home and then reselling it a few months later, and we would get titillated and try the same thing. Some flipped again and again, almost as many times, they said, as the average burger joint turned hamburgers over.

But here’s the thing: our neighbor, cousin or uncle lied on the mortgage application about how much he or she was worth and about yearly earnings. Am I right? You bet I’m right. May I hear an amen! And the little mortgage company around the corner lied, too. It knew that we applicants were lying. Even so, it said each lie was the truth and passed it along to the next level. The little mortgage company lied so that it could make a nice profit on each deal that was passed along. Those of us who wanted mortgages lied so we could flip a house and make big bucks. The government lied because it wanted everyone to own a home — Greenspan even encouraged our bad behavior — whether or not we could really afford one. (I’m not sure maestro Alan, whose tune is a little different now, actually knew about the flipping, but he was heavy into home ownership.)

So when you get to thinking about the financial mess, please remember that the government encouraged very bad behavior, and those of us who were flipping houses lied like rugs. No matter how many annoyed-at-the-financial-industry lawyers phone NPR about bad, bad financial services companies, remember that, at the core, the mortgage consumers lied. And, by the way, each of them knew that after three or five years, the artificially low mortgage payment would increase dramatically. It’s nice to cast blame everywhere, but it all began with us and with typically selfish bubblicious behavior.

Have a magnificent week, and don’t tell any lies, okay?