Not so tonight. There was a commentary from some woman I have never heard of - Susan Lee - entitled "There's a good side to subprime lending." You can listen for yourself and/or read the transcript here. But I'm so irritated by the idiotic, twisted logic of this New-York based "economist and commentator" that I feel a need to rip it apart.Following is Ms. Lee's commentary, along with my responses.
OK, so the subprime mortgage market is plagued with fraud and abuse. But what would the housing market look like without subprimes?
The way things are going, we just might find out what the housing market will look like without these predators. They're dropping like flies lately!
For starters, homeownership wouldn't be at a record high of 69 percent. It would be several percentage points lower.
Again, thanks to them that rate is dropping daily...by the thousands!
And those percentage points represent lots of would-be minority buyers — blacks and Latinos who would've been shut out of the market.
This is where she really starts to get warped. Just who does she think are the people who are most suffering from totally overextending themselves? Who does she think are the people who are now losing their homes because of the deceitful practices of the subprime lenders?
Credit is a good thing. It allows people to use the services of something without having to pay for it all at once, up-front.
Yeah, OK...duh! But how about the fact that nobody in America is managing to save any money any longer? And that bankruptcy is rampant? And our nation is so far in debt - both personal and the government - that we might never climb out of it without a major depression?
Credit lets people drive cars, go to college and live in houses. It's axiomatic that an efficient economy runs on a well-functioning credit market.
And the economy collapses when no one can any longer pay back their debt! No way is this woman an "economist!" What an inane, stupid comment!
Until the subprime mortgage market came along, about 17 years ago, home ownership was mostly restricted to the rich and middle class.
I suppose you could say it that way, but in reality home ownership was restricted to people who could afford to pay the mortgage! What was the real benefit of giving people money knowing full well they will probably NOT be able to continue making the payments, especially if they continue to spiral upward much faster then the person's income possibly can? The benefit is a quick hit for the unscrupulous subprime lenders. The whole subprime industry is based upon greed.
It wasn't until financial innovations like variable-rate mortgages and securitization that housing credit was extended to lower-income people.
Again, this is a good thing? No, it's not. And there's no such word as "securitization," you fool!
The problem is that lower-income people are greater credit risks. Their rates of delinquency and foreclosure are higher than richer people's. And they have to pay higher interest rates to compensate lenders for that risk.
Huh? The people who have the least amount of money are required to pay more money that the people who have plenty of money? I don't get that. Why not just charge the rich people a higher rate to cover the cost of defaults from low-income borrowers? Now THAT'S fair!
And so it's no wonder that as soon as interest rates started climbing and the housing bubble began popping, the subprime market began to totter.
Wait a minute...isn't this commentary about a "good side to subprime lending?" Didn't she just completely contradict her entire premise? At this point I think her credibility is completely shot.
But let's not exaggerate.
We don't have to. The facts are scary enough without embellishing them!
So far, fewer than 15 percent of subprime borrowers have been late with their mortgage payments.
Hmmm...that sounds like a lot to me. 15 percent of an entire industry has had trouble making their mortgage payment? That's horrible! But let's not exaggerate.
And even if 20 percent of subprime mortgages end up in foreclosure, it still leaves the other 80 percent of subprime borrowers cutting their own lawns and, most important, creating wealth in the form of home equity.
OK, you have just officially become a total moron. I'm impressed with your mathematical abilities, but "creating wealth?" A lot of subprime mortgages are interest-only. Nobody is making any money but the lenders. All the borrowers have is a place to sleep and a huge money pit that takes more and more of their income every month.
Yes, let's clean up the subprime market and help salvage the homes of people suckered by aggressive lending. But let's not forget the subprime market serves poor minorities — and that's a good thing.
No, Ms. Lee, it SCREWS poor minorities, as does your subprime commentary. NPR should be ashamed for giving you an opportunity to spew your ignorant (and actually somewhat racist) opinions in an attempt to whitewash a serious disaster that should send many, many people to jail.
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