financialcounselor

Bank CEOs Hopelessly Addicted to Giving out Mortgages that will never be Paid Back

In Opinion on December 7, 2010 at 8:41 pm

Addiction is a horrible thing. When a person cannot stop him or herself from doing something destructive, even after the person has seen the consequences of their destructive actions, well, that is sad indeed. And people can become addicted to anything. People can even become addicted to giving out mortgage loans that won’t be paid back.
It’s true. Not a lot of people are aware of this addiction; it’s much less common than something like alcoholism, for example. And this particular addiction is usually only found among people who run banks.
Two years ago, you may recall, the world’s entire financial system nearly collapsed because so many people were defaulting on their mortgage loans. If I remember correctly, economic leaders explained the necessity of bailing out the too-big-to-fail financial institutions by saying that the world was, “Looking into the financial abyss,” or something to that effect. Treasury Secretary Tim Geithner said that the bailout was unfair to the public, but “had to be done.”
So you might think that the same banks that nearly failed only two years ago because of mortgage defaults would not be giving out mortgages that are likely to be defaulted upon, what with how doing that nearly bankrupted them and caused us to look into the financial abyss and everything. I mean it’s only been two years!
But no, banks still give out mortgages to people who don’t have enough income to afford the monthly payments. (To read a story about 3 people who took out mortgages just this year, and have never made a single payment, see the blog post, https://onthefrontlinesofamericanswarwithdebt.wordpress.com/2010/10/12/banks-still-giving-out-unaffordable-mortgages/ )
Because I’ve never been a banker, I’ve never had the chance to experiment with giving out unaffordable mortgages. I’m glad, because it seems like a real tough monkey to get off your back.
It’s almost comical. Talk about a quick relapse. Only two years since tons of taxpayer money was injected into the financial system to keep huge financial companies from insolvency because of mortgage defaults. And apparently they never quit doing it.
Did the people running our banks miss that on the news? Were the bank CEOs out roaming the streets looking for people to sign up for mortgages when that story came on? “Hey man, hey man, you wanna buy a house? I got the money right here.”
I mean, those people currently running the nation’s banks have to be aware that their own firms nearly collapsed from mortgage defaults, right? Why would they keep doing the same thing that nearly bankrupted their companies only two years ago? All I can think is, giving out mortgage loans that will likely be defaulted upon must be one hell of a drug.
If it’s decided to give more taxpayer money to banks, perhaps the government could require bank executives complete a 12-Step program as a condition.

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