Thursday, October 2, 2008

"We demand that big business give the people a square deal... return we must insist that when anyone engaged in big business honestly endeavors to do right he shall himself be given a square deal." - Theodore Roosevelt

"We wish to control big business so as to secure among other things good wages for the wage-workers and reasonable prices for the consumers. Wherever in any business the prosperity of the businessman is obtained by lowering the wages of his workmen and charging an excessive price to the consumers we wish to interfere and stop such practices. We will not submit to that kind of prosperity any more than we will submit to prosperity obtained by swindling investors or getting unfair advantages over business rivals." - Theodore Roosevelt

I love Teddy Roosevelt. He was a Republican, and I very much admire him. He was a conservationist. He broke up large corporate monopolies. He was also a bonafide racist. Of course, Teddy Roosevelt would be the first person to honor that I believe that. He believed that it was treason to speak anything but the truth about the president, good, bad or indifferent. So when did this all change?

You see, I have been hearing some very disturbing things lately, and I can no longer keep quiet. It started in the irrational ravings of one Ms. Ann Coulter. Rumblings from disgruntled right-wingers trying desperately to salvage their party views on deregulation and make them sound sane in the face of overwhelming evidence that a market run amok will eventually collapse in on itself. Ms. Coulter attempted to carve her own twisted world view into a valid point - the housing crisis, credit crunch and subsequent market collapse you see, have nothing to do with the industry and everything to do with affirmative action.

Now, if you are a thinking person, you are as confused as I was when I started reading the article. I have to confess here that I do read the occasional Ann Coulter lunacy and intermittently turn away from rational television to listen to the mouth-foaming, kool-aid drinking dogma of Bill O'Reilly or Sean Hannity. I like to know what the other side is thinking. Sometimes, I even find things I agree with (which I am sure would surprise the right as well as the left.) I also have to confess that I sometimes find myself disagreeing with the far left and have to turn off Rachel Maddow or Keith Olbermann and seek out the quiet serenity of a good book. Political pundits from either side will wear on most of us after a while. But I digress...

Ann Coulter's point was that the good people at the well meaning mortgage companies and investment banks had been duped by left-wing extremists into giving good solid mortgages to "less qualified minorities" and that they had been encouraged to use non-traditional means of approving these mortgages "such as having a good jump shot". The hateful assertion that only minorities are poor or unqualified for mortgages, or that political correctness has already "ruined education, sports, science and entertainment" aside, where does this woman get her facts? I had initially dismissed this article as the frenzied gibbering of an angry right-wing neo-con with a racist belief system. She obviously is mentally unbalanced and belongs under observation at a mental institution, preferably heavily sedated. Then I heard these assertions repeated by another pundit. And another. And another...

What is going on?

First of all - FACT (These, contrary to what Ann Coulter thinks are things that can be backed up and proven...) People of all races, colors and income levels are loosing their homes in this foreclosure crisis. It does not discriminate.

FACT - The "affirmative action" legislation that Ms. Coulter is referring to is the Community Reinvestment Act of 1977 "intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations."- That was 30 years ago. Most of the first mortgages offered under the guise of this act ARE PAID OFF. 30 years is a long time. 30 years ago, someone bought a house at a standard fixed rate, paid their mortgages and lived in their homes with no problems (otherwise this melt down would have occurred decades ago... Seriously. Decades.)

FACT - People of all races colors and income levels were sold ARMS. I know a few. A few middle class white people with good jobs and great credit. They were sold the ARM with the line that it would be in their best interest, because one couple in particular had planned to move after a few years, before the ARM hit. These friends had asked about a fixed rate mortgage and had been sold (by a mortgage broker on a commission) an ARM with the rationale that it will save you money. Of course, they had planned to move for a job, that didn't materialize because the big company this young man worked for decided that their programming jobs would be better served overseas. So his work went away. He found a job that paid him a third of what he had originally made. They were still making their payments. They were doing fine.

Then their Adjustable Rate Mortgage rate adjusted. Their previously affordable house payment doubled. I don't know about you, but if my mortgage payment doubled, I would loose my home too.

I know another couple (again, they are white middle class two income household - registered and proud Republicans) sold an ARM so that they could "flip" the house they were buying. They bought one house, worked on it and sold it at a profit after a year. They bought a second house and did the same. The third time, they bought the house, the property values started to drop and the market slowed. They couldn't sell and lowered the price. Then the young man got really sick (cancer is a bitch). He couldn't work. He was on chemo therapy. They started eating into their savings and all of the profits from previous "flips". His medical bills piled up. His wife lost her job (again due to outsourcing) and they lost their insurance. She took the first thing she could find. They were going to be stuck in the house for a bit longer than they had planned, but, they reasoned, they could always re-finance. That is what their mortgage broker had told them.

Only they couldn't re-finance because by this time, their credit was shot. Mounting medical bills and lowered incomes were taking a toll. Then their ARM hit and their mortgage went through the roof. They lost their house. Then my friend lost her husband. She moved back to Indiana to live with her mother. I don't hear much from her these days.

These are two of the stories from people that I PERSONALLY KNOW. I am just one person. How many more of these tales are there? The race of my friends had nothing (absolutely nothing, Ann Coulter, you coward) to do with them loosing their homes. Circumstances changed and they could no longer afford the mortgages they had been sold. Both couples would have been able to afford the initial mortgage payments for a long time. Both couples would have been able to afford a regular rate 30 year fixed mortgage. The ARM killed them. The funny thing is that both middle class white couples would have been able to afford the ARM rate before loosing their income to illness and outsourcing. Life is funny that way.

If the problem had really been dead-beat minorities as so many on the right-wing espouse, then why were these people able to make their initial payments? Then when the ARMs adjusted, they still struggled to make their growing mortgage payments. These are not deadbeats. I will say this once, and I mean it: BROWN SKIN DOES NOT EQUAL DEADBEAT. BROWN SKIN DOES NOT EQUAL BAD CREDIT. Anyone and I mean anyone who ascertains that it does is a racist. That is all. If you, Ann Coulter, and your mealy-mouthed band of followers continue to preach that brown people are bad people, then get a hood and join the Klan, but stop trying to pass yourself off as a decent human being.

I wish I could get paid as much as that woman does to state my opinion and pass it off as fact. But I can't be that mean. I can't be that hateful. I would like to sleep at night and be able to look myself in the mirror in the morning. I have MORALS. (Yes, those of us on the left have morals. We love our spouses. We love our children. We believe in God and Jesus. We go to church. We pray. We do all of the same things in the same communities as the far right, but our voices get drowned out by the constant temper tantrum throwing right wing. For all of the talk about the liberal media, I would like to know where to find it. I can count ONE radio station and ONE television station that cater to the left wing view point. The others are centrist or so far to the right that there is nothing even slightly moderate about them. Thank you Fox News.)

FACT - Let's do some math. The average price of a single family home in Denver, CO was $279,000.00 before this melt down began. However, the average wage for a family of four in Denver, CO was $37,000.00 You are only supposed to spend 3 times your annual income on a house. Three times $37K is $111,000.00 You cannot purchase a house in Denver for $111,000.00 any more. Not even in a ghetto (trust me I looked high and low... this is why I am still renting.) Soooo... the average family cannot afford the average home. That is unsettling to say the least. Home prices have skyrocketed (along with the prices of everything else from gas to milk) and wages have remained stagnant.

How can these families afford these homes? Enter the ARM. Slick mortgage brokers on heavy commissions come in and tell the hopeful families (of ALL races and colors and income levels) that they too can afford their dream home. All they have to do is sign the Adjustable Rate Morgtage. It starts at a ridiculously low APR and will adjust after a set period of time. Sure, the broker tells them, that will raise the payments, but not until after a set period of time. They can re-finance before that ever becomes an issue, right?

He offers them a deal. A $279,000.00 home at a ridiculously low interest rate - say 3.5%... let's see... that makes their house payments roughly $1250 a month. That's reasonable! Right? After all, under a standard mortgage payment, we would be looking closer to $1600 a month. After 5 years we can re-finance before that arm hits. Of course, they don't really understand that re-financing is a lot easier said than done, and any change in their credit status can affect their ability to refinance.

And $1250 may look reasonable on paper... after all, at $37K a year, they get roughly $3000 each month - that leaves plenty left over for food and gas and bills and car payments and pediatrician visits and a family vacation... right?

Wrong. Most people (for whatever reason) don't really think about TAXES. This family is actually taking home about $2400 a month - which means that they are spending HALF on their housing. That same family would never qualify for $1200 in rent. They could manage $800 or $900 tops. This family will barely be scraping by once their mortgage is covered. Most people turn to credit cards for everything else. Now their debt to income ratio is way too high to re-finance.

It's a struggle, but they cover that mortgage payment. Until that ARM hits. Suddenly they are facing a 10% mortgage with a payment of $2450... that is almost double. Some people face almost triple the costs. If this family was taking home $2400 before and scraping by with a $1200 mortgage, now they are falling behind. Now they are in the hole. Now they can't even afford simple things like electricity or enough food. Now they are in the position where they are going to loose that house.

This is the scenario that is playing out all across the country. It has nothing to do with race and everything to do with greedy bankers. The first mortgage payment was netting the bank roughly $800 a month in interest alone. Of course once the ARM hit, the bank earned four times that amount. No wonder everyone wanted to get in on the mortgage act.

These products were sold indiscriminately to home buyers, with the knowledge that no one will read the lengthy mortgage documents when they are closing on their homes. If you are reading this blog and you did, pat yourself on the back for your intelligence and your diligence. You are part of about 2% if the population. Should people better understand their own mortgages before signing the paperwork - absolutely. I am one liberal who also believes that there is personal responsibility in this mess, and if you loose a house that you probably shouldn't have bought in the first place, well, maybe next time you will think things through.

However, I still believe it is wrong to trick people into products that they cannot afford. Housing prices skyrocketed because all of the sudden thanks to the ARM, people began to believe that they could afford a huge luxury home rather than a modest starter house. In our instant download society no one wants to wait for anything. People leapt without looking and without realizing that the only parachute around was attached to the back of the CEO of their bank and it was made of solid gold.

The rest of us paupers were expected to feed their gluttony, and god help us, we did. And we continue to. We turn to each other and point the fingers at those like us who made mistakes - either through our own hubris or because they were flat out conned. Instead we should turn and look at the people who control the banks and Wall Street and the major corporations. To the people who own so many houses they loose track. Those are the real culprits. Those are the people who deserve the finger pointing and the burden of this responsibility. Of course, they will never get it. They will send out their trained dogs to tell us that brown people caused this mess and that we should hate each other. Pay no attention, they say, to the man behind the curtain. It is a cheap ploy beneath the dignity of any thinking American. It is a ploy designed to incite blind hatred of brown and black people. And right now, I can think of one very prominent black person that the right wing is (rightfully) terrified of. This was a ploy that worked very well for Hitler when he chose to blame the German economic crisis on the Jewish people. Of course, far be it from me to actually compare Ann Coulter to Adolph Hitler. She just uses the same tired tactics.

Despite our political differences, I believe that we are more alike than we are different. I believe that Ann Coulter and those like her represent a diminishing fanatical fringe who have had their day, fouled in our collective nest, and now we have to clean it up in spite of their incessant squawking. And we will, because we are Americans: left, right, and center.

And we deserve better than that kind of messy backward ideaology.