New Study Shows Why It Makes Absolutely No Sense to Blame the Poor for the Financial Crisis

[kpete]

Last edited Wed Jan 28, 2015, 11:16 AM - Edit history (1)

Despite efforts to blame the housing crisis on lower-income buyers, the truth is that the rich had a greater impact on the economy by defaulting on significantly larger mortgages.

The Washington Post:

Irresponsible lending might have been one of the many causes of the financial crisis—but not just irresponsible lending to poor people, according to a new study.

“The large majority of mortgage dollars originated between 2002 and 2006 are obtained by middle- and high-income borrowers (not the poor),” the authors write. “In addition, borrowers in the middle and top of the distribution are the ones that contributed most significantly to the increase in mortgages in default after 2007.” Rich people tend to take out larger mortgages, of course, but the fact is that the amount of money poor borrowers failed to pay back was just never that significant, as this chart from the paper shows. In case you have a hard time believing that so many larger mortgages could have gone into default, The Washington Post just published a series of stories on subprime, sometimes predatory lending in relatively affluent places such as Prince George’s County, Md., outside Washington, D.C.

Read More.
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/27/wonkbook-affordable-housing-didnt-cause-the-financial-crisis/

—Posted by Natasha Hakimi Zapata
http://www.truthdig.com/eartotheground/item/study_shows_makes_no_sense_blame_poor_financial_crisis_20150128

[Scuba]

1. Nope, it was teacher's health insurance. That's what broke our nation's bank.

Well, either that or an utter lack of political will to tax the people who have all the money.

[kelliekat44]

2. Do you think that FOX "News" will run with the story since they spent so much time and press

blaming the poor for the housing crisis? Do you think Rush will apologize for all the nasty things he said about minorities getting into the housing market? I have always known that the most prized possession for blacks and other minorities is their home and USUALLY their mortgage gets paid before anything else. My folks scrimped and scraped for the home they eventually came to own in the 1960s. It took contributions from everyone. Sure some went in over their heads during the housing bubble but most of them took out second mortgages and jumped through many hoops to refinance. the very wealthy, on the other hand, jumped through hoops to avoid paying any kind of penalties and many of their mortgages were written off using smart attorneys and tying their properties to businesses. The system is stacked against the working folks for sure. The media, as with the Iraq invasion, spun the mortgage crisis the way the 1% and the racists wanted them to. Blaming working people for trying to get into a higher economic class and trying to get their part of the American dream by working hard and allowing vulture bankers and real estate brokers and lenders cook the books to qualify them is shameless. They could not have qualifies unless the vultures qualified them.

[Atman]

3. Staying out of that market was the best decision we ever made.

Easy money. We could have bought a huge house with the incomes we had. But I was Han Solo, baby, kept telling my wife (and you'll find it posted many times in my ancient DU journals) "I've got a baaaad feeling about this." Free money? No credit check? Re-Fi for 125% of your home's value? Who does this?

I was right, and now I am also virtually debt-free. No upside-down mortgage. Even my cars are paid for. Damn those poor people!

[valerief]

4. Mustn't let facts get in the way of propaganda. nt

[MindPilot]

5. That required a "study"?!

Using that same logic, you could blame the high cost of college on high school dropouts.