07 October 2008


I do not understand the sense of entitlement that has become so prevalent in our country. We demand nice cars and expensive clothes. And if our income is not enough to afford such things, well, that's what credit is for.

And then we have the American dream of home ownership. At some point, it was decided that everyone, regardless of economic situation, was entitles to a home. Loans were given to people with poor credit, income to low to pay a mortgage, and even recent bankruptcies. 

The thousands of people unable to pay mortgages they never should have been approved for in the first place suddenly found themselves, well, unable to pay their mortgages. As far as I know, this is a major factor in the current economic crisis we find ourselves in. 

Who can we thank for this shift in values? It appears much of the responsibility is claimed by a group called ACORN, or Association of Community Organizations for Reform Now. Back in the 1990's, this group made it a priority to get low-income individuals into homes. 

You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness.

Wow. Now look, I understand the allure of buying a home. Mandi and I watch HGTV a lot, and dream of getting out of our apartment and into a larger property. 

The problem is, I'm a journalism major. I expect a starting wage of no more than $30,000 a year, maximum. That means the most expensive house we can reasonably and responsibly expect to purchase is around $65,000, if our math is correct. 

In today's markets, $65,000 doesn't buy a whole lot. It won't even come close to buying our dream home. But you know what? That's okay. We understand that in our current economic circumstance, we can't get our dream home. Maybe one day we will, but for now, we wait. 

Where was this common sense for thousands and tens of thousands of people who signed up for mortgages they knew they could not pay? What is ACORN thinking, giving homes to people who do not have the resources to pay for them?

And where was our government? Where were the people brave enough to stand up to ACORN's bullying tactics?

"In one of the first book-length scholarly studies of ACORN, Organizing Urban America, Rutgers University political scientist Heidi Swarts describes this group, so dear to Barack Obama, as “oppositional outlaws.” Swarts, a strong supporter of ACORN, has no qualms about stating that its members think of themselves as “militants unafraid to confront the powers that be.” “This identity as a uniquely militant organization,” says Swarts, “is reinforced by contentious action.” ACORN protesters will break into private offices, show up at a banker’s home to intimidate his family, or pour protesters into bank lobbies to scare away customers, all in an effort to force a lowering of credit standards for poor and minority customers. According to Swarts, long-term ACORN organizers “tend to see the organization as a solitary vanguard of principled leftists...the only truly radical community organization."

I don't know. Neither Republicans nor Democrats seemed interested in preventing this catastrophe, though at least the right warned of coming problems with these mortgages. Small bragging right when they weren't willing to actually do anything about it. 

We're in big, big trouble, and whoever wins this November is going to inherit a mess unlike anything we've had for a long time. I don't envy them.


Stu said...

You really need to listen to this show:

This American Life - The Giant Pool of Money

(there is a link on the right side called "Full Episode")

I think it makes a pretty strong case for why this wasn't just the fault of people living beyond their means, but rather it was a problem with lenders demanding that more and more people get loans, sometimes going as far as to lie to the person about how there was no possible way they could afford a loan like this (no income no asset loans, are you kidding me?)

Jimmy said...

Can you get any house at all for 65,000? That surprises me.

LaPaube said...

You've hit upon a very important point here--blame should be shared with borrowers and the rabble-rousing organizations that pushed them to demand "the right" to own a house.

I totally agree with your main point that the sense of entitlement is a major problem now. And there's no doubt that lefties in Congress pushed Fannie and Freddie with a mandate to increase home ownership. When, as legislators, you demand that an artificially high number of people own homes, you increase demand (and therefore prices) for homes and you have to find non-creditworthy people to lend to.

The story doesn't end with just blaming Wall Street execs and the Bush Administration.

MooKoo Joe said...

Where was the government you ask?


Oh man, sorry, excuse me.

graham and heather said...

The mortgages is the biggest frustration to me in the financial issues. This is a long coming issue and the bubble finally popped. Now we wait, the market will correct itself, that is if the government and media would get out of the way.