[personal profile] forsyth
"Well hey, if they're dumb enough to fall for it, that's hardly my fault, is it?"

Con men are fun and glamorous in stories. Because in the story, we're in on the con. We get to feel smarter than the victims, because we know everything that's going on. We get the same high the con men do. And we got to feel superior, because we're too smart to fall for that kind of setup.http://drmcninja.com/page.php?pageNum=18&issue=10
http://drmcninja.com/page.php?pageNum=18&issue=10

Except, con men have a saying. The easiest people to con are smart people, because they think they can't be conned. For starters, nobody has time to be smart about everything. That's why we have specialization and experts. And we pay somebody else to be smart on our behalf about stuff we don't know. Especially technobabble, that sounds important and meaningful, but is actually gibberish. Nobody wants to be the one who's not good and smart enough to see the emperor's new clothes.

And then of course the con man can salve his conscience with his ill-gotten gains and the fact we gave them to him of :our own free will" 'cause we should have known better. It's all the victim's fault, for not being smart enough, or not paying enough attention, nevermind the fact the conmen were deliberately trying to keep you from paying enough attention, or bringing your intelligence to bear.

Just look at the subprime mortgage mess. Many of the people who should have known better, even Alan Greenspan, chairman of the Federal Reserve, got behind these. The banks got behind them because they made more profit than a regular mortgage. And the banks, the investment companies, and the independent loan people all pushed them on all of us, even people who could have qualified for regular loans. Nobody listened to the naysayers, because for years, housing prices kept going up, and going up, and every year they did, it "proved" people were wrong when they said this couldn't last forever. And now here we are, and the stock market is shocked, SHOCKED that loans made to people who couldn't afford more than the interest aren't being repaid.

When the experts, who are hired to be smart and supposed to know these things are either conned, or in cahoots with the con men, or just pushing things because it makes them more money, what are regular people supposed to do?

Which is why I'm not convinced by conservatives' refrains of "Personal responsibility". Yes, we really do need to provide people with better financial education. But saying that's all we need, and people should know better and read the contracts and so on only goes so far. It ignores the willful deception on the part of the lenders, who pushed these kinds of things as far as they could, and got rich off it. And now they've left a lot of other people holding the bag. Trying to make it into a matter of "personal responsibility" becomes blaming the victim.

Anybody can get taken by a con man. It doesn't do any good to blame the victim, the fault lies with the con man, who ran the actual con.

TILA

Date: 2007-12-07 04:00 pm (UTC)
From: [identity profile] meridethfate.livejournal.com
The Truth in Lending Act (TILA) of 1968 is a United States federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The statute is contained in title I of the Consumer Credit Protection Act, as amended (15 USC 1601 et seq.). The regulations implementing the statute, which are known as "Regulation Z", are codified at 12 CFR Part 226. Most of the specific requirements imposed by TILA are found in Regulation Z, so a reference to the requirements of TILA usually refers to the requirements contained in Regulation Z as well as the statute itself.

http://www.bankersonline.com/regs/226/226.html

b) Purpose. The purpose of this regulation is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. The regulation also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. The regulation does not govern charges for consumer credit. The regulation requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.

(c) Coverage. (1) In general, this regulation applies to each individual or business that offers or extends credit when four conditions are met: (i) The credit is offered or extended to consumers; (ii) the offering or extension of credit is done regularly;1 (iii) the credit is subject to a finance charge or is payable by a written agreement in more than 4 installments; and (iv) the credit is primarily for personal, family, or household purposes.
_________________

Arguement

Date: 2007-12-07 04:01 pm (UTC)
From: [identity profile] meridethfate.livejournal.com

Agree: subprime mortgages sucked! A majorly stupid idea.
Disagree: the catalyst of this problem isnt centered on the lenders. the lenders are regulated--and if you look at the above, the clause that allows Bush to do what he is doing about the mortgages was something EVERY consumer whom had one for their primary home could have done--the cause of this goes back the the economy. If America doesnt have a product and sell a product YOU HAVE NO MONEY. If you have no money or SUB-comfort money you are going to need welfare or manipulated funding as the above to REMAIN in the style of living you are accustomed too. The generation of the last ten years is the first to not supercede their parents in wealth. The other problem is that what productivity there is in this country is being caught at the top and not trickling down the way it should. That *is* a crime.

Agree: conmen are bad people, they seek to gain from others what they are not willing to work for.
Disagree: If you are fool enough not to mind your own business and secure yourself and yours, whatever comes your way comes your way--this is your gamble. There are laws that require that you are fully disclosed of all information regarding your funds. The Subprime mortgage was a gamble. It required that you KNEW that you would only be in that house for X-amount of time and that you WOULD be able to sell that home. There are homes that are on the "market" for years. If you believed those things to be true and took that gamble, when all things--INCLUDING the consequences of your actions--are disclosed to you, then that is YOUR gamble. The government doesnt stop you from going to Vegas or betting on the horses or poker. If you choose to make a risky investment that is your dance with the devil. Thank the stars that someone relized that people make foolish decisions and allowed the clause of keeping the primary dwelling from harm in Reg Z. Its a better guarantee than you get with playing the local lottery. Most people dont eat things that are past the expire date. When it is bad, SOMEONE stamps it on there for you...all you have to do is READ it. If you choose not to read it, and you eat it and get sick, has someone "conned" you into being sick? The disclosure was there. At that point do you have the right to sue, scream, or balk at the person at the grocery store that sold you that item? Or maybe the president of the store? Are they con men then? The surgeon general puts lables on ciggarettes that disclose what they will do to you. People still smoke. They advertise for it, and against it. People are still DUMB and do it. If you get some horrible lung disease and die, is it the manufacturers fault for disclosing the possible risks, and you still doing it? They don't deny you what you claim you need. In fact they feed your need/addiction. Have they conned you for giving you what you want/say you need? I ride horses. If i fall off and break something, do I shoot the horse? There were normal, average, low to mid middle class Americans who now own houses that without subprimes would have NEVER gotten out of the funk of renting. They took the gamble, and won. Good for them. For the rest that didnt win, you were notified, and even given a get out jail free clause, and then...the government that wont regulate Global economy (which is what these folks who got caught up in all of this are really VICTIM of) is going to come in and help you save your own behind in this gamble. Its not enough help according to that Clinton Bitch, but ey...how many houses did she do closings for as an attorney?

Re: Arguement

Date: 2007-12-07 04:39 pm (UTC)
From: [identity profile] forsythferret.livejournal.com
I agree the economy has been completely distorted for the last many years, with almost all of the gains going to the very very very very few at the top. I also agree we need to manufacture more stuff here, but for slightly different reasons than you do, I think. Mainly because it's stupid to spend the money and energy shipping plastic junk from China.

Gambling is a poor analogy. For one, many states ban gambling. For two, many people weren't in these loans to make money, they took out loans to buy a house, or to refinance when they got sick, or because their "Financial Advisor" or the house company encouraged them to pick from these loans, instead of a regular loan. However, gambling houses do do their best to try and show gambling as luxurious and everyone's a winner, which is related to this.

Cigarettes are also a bad example. For many many many years, cigarettes were advertised without any kinds of warnings, even though the health risks were known. For many years, the cigarette execs and marketers lied and cooked up fake studies to pretend the health risks weren't severe, even though they knew otherwise. And they have marketed them for years even knowing they're addictive. Though I guess the addictive part isn't a bad analogy, because once they get you in, it's really hard to get out. And the government and economists knew the subprime loans were risky, and the housing market was unsustainable, but kept pushing the whole shebang anyway, not even adding "warning labels". So I guess it's not that bad an analogy.

Here's some testimony from the Federal Reserve hearings. One important bit:

"The final major factor explaining the current increase in delinquency rates is the apparent deterioration in underwriting standards beginning in late 2005. An increasing number of subprime loans were made with layers of additional risk factors, such as a lack of full documentation or very high loan-to-value ratios. Much of this weakening in underwriting standards happened outside of institutions regulated by the federal banking agencies. For instance, in 2006, over 45 percent of high-cost first mortgages were originated by independent mortgage companies. In addition, prior to late 2005, high demand for housing and rising house prices allowed borrowers to recover from these risks through profitable home sales and refinancings, hiding the weakened underwriting standards from view."

A lot of these loans were made by fly by night "independent mortgage companies", but they were promoted heavily by the big banks and even the freaking Federal Reserve, under Clinton and especially Bush.

Bush's bailout plan is a piece of crap. It won't protect those people who couldn't afford homes without subprime loans, it leaves out most low income people, specifically because you must not have missed a payment, and your house must be worth more than your mortgage. Considering how far house prices have dropped in many areas (that aren't Northern Virginia with all sorts of government jobs), that's a lot of people. Hell, nobody likes the bailout plan, not consumer groups and not people who waited to buy a house.

I don't think Hillary Clinton's career involved many house closings, from a look at Wikipedia. And even if it, I'm really not sure what that would have to do with Bush's bailout being a piece of crap. I'm surprised he's bothered to do anything to help regular people, instead of just bailing out the con men.

You know what the specific legalese and bankerese terms mean, and you know how to find the important bits in the two pages of 8 point font. Most people don't, which is why there are experts who are supposed to help with these things. And in this case, many of the experts were either conned, or suborned by the con-men and the profits.

Re: Arguement

Date: 2007-12-07 05:25 pm (UTC)
From: [identity profile] meridethfate.livejournal.com
I miscommunicated this. Because I agree with you about the subprime loans, and I do think that they are a crime and a really bad idea. Where your arguement bothered me the most was in the fact that there is no expectation for the consumer to be aware in their own right. The disclosures were out there. Lending institutions that were backed with the FDIC, etc, were available.

People do have personal responsibility. You never let anyone make or influence a decision for you. You analyze EVERY bit of information you can put your hands on and you make the best decision for you and yours. I dont know about the fake/bad mortgage lenders. The Banking industry is FDIC regulated. That means when someone sits down with you, you knew what the payment would be when the ARM/Subprime/Interest only part of the loan let up. I still maintain, that if you couldnt make that payment you should not be signing that loan.

I guess Im odd in that I dont want the government micro-managing me. I dont want them in the loans i can make any more then I want them in the business that I do. There are a thousand pitfalls and with each new safety net that is created, someone somewhere will find a way around it. I have to be ready for that. I know that there are malicious people in the world, I've been privvy to them unfortunatly. And ive made my really dumb mistakes, just like a bunch of other people. I even had people who knew better then me guiding me against making those decisions. I made those decisions anyway, and now i have to bear the consequences of those decisions. You cannot stop nor control human action. The best you can do is care and watchout for yourself. As a consumer you have to be informed. You never believe the experts, you seek and find for yourself. I know we argued about how people arent taught these things. I know you think that I am cold when I say that its their responsibility to find out how. Basic instinct should drive it. If your ancestors had not known how to hunt, you would not be here because they would have starved to death. If you want something, you make it happen. You DO NOT expect someone elses information to be right to your cause. It will always be right the THEIR cause--they will always watch out for themselves first. And if you do not want to do these things for yourself, just suck it up and be ready to declare, "Long live the King", and let someone elses whims become your life and your desires.

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Forsyth

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