You and Me, Mario

I've travelled this world over

And met all funny kinds of men.

Some will rob you with a six gun

And some with a fountain pen.

But wherever you may ramble

And wherever you may roam

You'll never see an outlaw

Drive a family from their home.

-Woody Guthrie

Rick Santelli says the government is "promoting bad behavior" by "subidizing the losers' mortgages" when we should "at least buy cars and buy houses in foreclosure and give them to people that might have a chance to actually prosper down the road."

First of all, you know you're on the right side when you refer to tens of thousands of homeless families as "losers."  I wonder if he also refers to victims of domestic violence as "wimps."

Second of all, let's keep in mind that the mortgage crisis was not caused by millions of people trying to live beyond their means.  Let's take a quick look at a simplistic breakdown of the crisis:

During the late 90s and especially the early 00s, banks went crazy with mortgage backed securities.  The simplest way to define a mortgage backed security is for you to think of it as a stock on the stock market.  What the banks could do is take these mortgages and sell them to investors who would buy shares in these mortgages.  The bank would then make money by selling off the loans and the investors - theoretically - would make money off of the interest on the loan.

What happened was banks and mortgage lenders realized that the integrity of the loans didn't matter if they were just going to sell them to investors later on.  This is why everyone began seeing these crazy loan options (i.e. 40-year mortgages, no income mortgages, "everyone qualifies" mortgages), because what mattered now was the number of loans you could sell to investors.  Therefore, the more loans you have to sell, the more money you have to make.  So, why not give everyone a mortgage?

Well, the banks did just that, engaging in extremely deceptive and oftentimes illegal lending practices in order to convince potential homeowners into believing these mortgages and home purchases were reasonable.  People were not knowingly entering into agreements they could not follow through with.  Mortgage lenders were telling them whatever it would take, even outright lying to them, to get them to sign these mortgages.  The banks didn't care about the homeowners, their investors, nor the stability of the nation's economy.  All they saw were dollar signs, and they hunted them down like a hungry Pac-Man drunk on Power Pellets.

So, bad behavior would actually be promoted by buying up foreclosed homes.  Allowing banks to profit from increasing the homeless population of America I would say is far worse than helping families in need.  Helping these families to stay in their homes in spite of the predatory lenders' efforts is actually addressing the problem at hand and trying to heal the damage that has been done.

SANTELLI:  How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?

Before I go on, I would like to again state that these are not people living in mansions who just aren't paying their bills.  It's also not just one guy on the corner who's letting his lawn go and holds pot parties every night.  In Cleveland alone, there have been over 50,000 foreclosures since 2005.  This is not an isolated problem nor is it a rare occurrence.  This is a major crisis that is happening to the whole country.

Despite that, the above question Santelli asks makes it clear he has never set foot in any neighborhood affected by the mortgage crisis.  Take one look at Slavic Village and you will see not only that these houses do not have extra bathrooms, but also that if given the option, I think you'd be surprised how many of the homeowners in those neighborhood would've gladly helped out their neighbors with their mortgages rather than see every other house on the street get foreclosed, abandoned, boarded up, stripped, and then act as an anchor sinking everybody else's property values.  Boarded up homes also have a canny ability to draw crime, which not only affects property values, but also the safety of the residents of the neighborhood.  People are not living in bubbles and it is in the interest of homeowners that their neighbors' houses do not go into foreclosure.

People who are under the impression that the current mortgage crisis was caused by people living in houses with extra bathrooms not paying their bills have no comprehension of the crisis.

When it comes to crazy rants, this is more my style:

--

Fry:  I can't swallow that.

Farnsworth:  Then, good news!  It's a suppository!