I’ve finally located someone who believes Ruth Madoff’s story that she had no idea what her husband was up to. Not surprisingly, it’s Richard Cohen,
Cohen also explains why we shouldn’t regard Madoff’s victims as greedy. I don’t necessarily disagree, but I can’t help but be struck by the contrast between the outpouring of sympathy for people who put money in an investment scheme they didn’t understand and the outpouring of contempt for people who took out loans they didn’t understand. I’m sure it has nothing to do with the fact that Madoff’s victims are wealthy and white, while subprime loanees are (inaccurately) seen as mostly poor and black.
KCinDC
I don’t understand how these people got so rich in the first place, if they were willing to invest *all* their money in one place (especially a place that promised clearly unsustainable increases). Was all their wealth inherited?
joe from Lowell
Didn’t understand my butt!
When you’re getting 10+% year after year, you understand that there’s some sort of scam being run. Maybe you just don’t understand that the scam is being run on you.
DougJ
That’s a failure to understand, isn’t it?
Dennis-SGMM
“You can’t cheat an honest man.”
-W.C. Fields
Violet
What I don’t understand is why there isn’t much outrage at the regulators of the funds. They’re all upset with Madoff, and rightly so. But regulators were PAID to oversee funds like that and make sure scams weren’t happening. And they failed miserably at their jobs and enabled the scam. Why aren’t we seeing people demanding those folks go to prison for 150 years?
There was that one guy who warned about Madoff’s funds being a Ponzi scheme years ago, and he was laughed out of town. Why are people like that ignored?
srv
The former involved a well-connected, elite community with media connections. The latter were just common folk.
Stefan
I’m sure it has nothing to do with the fact that Madoff’s victims are wealthy and white, while subprime loanees are (inaccurately) seen as mostly poor and black.
Tsk tsk. Already so cynical while still yet young.
srv
@Violet: Regulatory Capture.
Shibby
My dad is a financial adviser and pretty much the nicest, most sympathetic guy you will ever meet in your life. Even he thinks the investors were greedy and undeserving of sympathy. So yeah I’m gonna side with him on this.
Zifnab
It’s easy to feel sympathy for someone you don’t intend to actually help out. If Obama put forward the “Madoff Investors Recovery Act”, I have no doubt we’d be hearing a wave of whining and crying about how “my” tax dollars are going to pay for mistakes. And from all the usual sources.
Maybe there would be less of an outcry – because these are rich white artistocrats getting scammed, not poor godless slackers – but if the Dems propose it, we know the ‘Pubs will oppose it.
XYZ
I’m struck by the contrast between the treatment of Stanford and Madoff.
Madoff admitted guilt but remained free pending trial. Stanford denies guilt but is in custody.
Madoff came to light well before Stanford but still not one other person has been charged with the Madoff scam.
Madoff’s wife worked in his organization, seemingly had no other income other than Madoff and his company and yet was 2.5M of the stolen money.
Something is very weird about the Madoff investigation
Cat Lady
I’m still confused about the how much actual money was lost – not to minimize the victims’ pain at all, which is heartbreaking, but the fraud was underway for a decade or more, and from what I understand the account statements Madoff sent out regularly were flat out made up, including names of funds he was “investing” in. If I were a victim, I would only count as a loss any money I earned and gave to him, not what he told me I had, which is bad enough, for sure.
But yes, DougJ, there is more sympathy for one group of people who should have known better than for another group who should have known better, and commenter srv hits the nail on the head as to why.
Jonathan
& suddenly, a judge’s empathy is not considered improper:
http://online.wsj.com/article/SB124632127336071155.html
jcricket
I’m actually pretty sympathetic to most of Madoff’s victims (not any of the feeder funds, mind you). Of course, I’m sympathetic to the people who got hosed by their mortgage loans too.
When organizations like Hadassah or people like Elie Wiesel lose all their money, it’s pretty hard for me to be like “you had it coming, you should have known”.
Sure, there’s people who probably “knew what they were getting into” (in both cases) – but claiming that most people “should know” just flies in the face of how the world operates (lots of trust, probably too much, but it’s there).
Look at all the people that lose their retirement savings in Enron or Worldcom. Should they have put their 401k entirely in company stock? Of course not. But they were encouraged to by their company, and the level of financial literacy amongst the “average person” is pretty low.
This is why I believe in regulation, enforcement, insanely high penalties for corporate cheats, etc. The people in power, by their nature, have the power to do things right/wrong (help/hurt people) – so the bulk of the contempt and blame should be heaped on them (Madoff, Enron, Mozilo, etc).
Frankly, when we’re looking at “each other” and heaping blame around, the evil, greedy, kleptocratic corporate overlords are laughing. So let’s stop.
scav
I’m just waiting for it to become vastly apparent that the bulk of people who took out prime loans recently didn’t understand them either. Only difference between them is when they reset/recast and guess who had their bad news delivered first?
The Other Steve
@srv:
In other words.
They was Jews.
I think there is a natural sympathy coming from someone like Richard Cohen.
On the other side the media that is not Jewish is reluctant to say “These Jews was Greedy!”
I don’t wish to get this thread sidetracked by a bunch of Nazi ranters, but clearly this is a big part of why Madoff investors are being treated with kid gloves.
The Other Steve
@XYZ:
Madoff turned himself in immediately and admitted guilt.
Stanford claims he is innocent, and has dual citizenship in Antigua where he’s been a major player and it’d be harder to extradite him.
Mary
I firmly believe that many of Madoff’s larger investors believed that he was front running for their (tribal) benefit and that there would be no consequences because of his SEC connections. That’s why Elie Wiesel said he thought Madoff was God. It was an affinity scam, in part.
Napoleon
I heard a story yesterday where some/most (?) of them making claims are making the claims based on what they were told they earned, which is complete bs.
Zifnab
I’m not sure what this talk of “They’re greedy!” is supposed to say. In business, you aim for the guy that can get you the highest return at the lowest risk. Definitely, it can be said that they were foolish for giving their money to a guy who was as opaque in his practice as Madoff. But every day we give our money to institutions – through banks, charities, stocks and bonds, treasuries – that we can’t or don’t have time to properly vet. How much do any of us know about the deep inner workings of Wells Fargo, for instance?
Ultimately, poo-pooing Madoff investors makes about as much sense as chastising anyone that bough Enron or Worldcomm stock. Were they “greedy” because they saw a company repeatedly releasing account reports beyond expectations and decided this large and quickly growing firm was a good investment? Were they “stupid” because they saw high percentage growth and didn’t immediately decry it as impossible? Microsoft, Google, Home Depot, Goldman Sachs, Exxon, Pfizer Pharmaceuticals – they’ve all posted record growth and profits at one point in time or another. Any one of them could be completely hollow and which of us would know it?
It’s a little bit hindsight-ish to start name calling Madoff victims now.
The Other Steve
@Napoleon: Agreed. The courts should try to get back to them close to what they put in, and go after those who took money out over the past 20 years.
gex
@Violet: The people who live off of investments and not labor have been making out like bandits due to lax regulation. They aren’t going to call out the regulators now.
The Other Steve
@Zifnab: I only purchase SEC regulated public funds in which I can read the prospectus… or put money into FDIC insured bank accounts.
I don’t give my money to Uncle Bernie down the street who gaurantees he can double it in two weeks.
DougJ
Isn’t the same true of subprime loanees?
jcricket
@DougJ: I completely agree (and said so in my comment).
In an oblique way, it reminds me of the comments on my local newspaper (SeattleTimes) whenever there’s an article that says “state workers forced to pay more for healthcare”. The comments all say, “Fucking government assholes. I pay a zillion for my healthcare, so they should to. No one should have it so good!”
Instead of, “Wow, I wish we all had benefits that good – doesn’t it suck that our corporate overlords always seem to protect their own salaries while the rest of us get the shaft?”
Basically we’re fighting each other when we name-call people like Madoff’s victims (again, not talking about the feeder funds or hedge fund managers, or even his family, who was probably in on it) – same is true with people who got into loans they didn’t understand, or simply “chose” to accept the version of “reality” their loan officer was providing.
Again, I save my anger for the perpetrator of the scams (Ken Lay, Madoff, Ebbers, Rigas, Mozillo, etc.) not the victims, no matter what their status was coming in.
maya
the Other Steve,
Probably true enough, however, I am saddened that AIPAC didn’t put all their cash in Bernie’s Plan.
Brick Oven Bill
Madoff’s victims were predominately Ashkenazi Jews. Ashkenazi Jews may be white, but Madoff was very selective on preying on this certain subset of white people. This is a very good discussion about Jewish genetics and how Jews and Gentiles differ biologically.
White Gentiles are more susceptible to Sham Wow marketing and commerative plate sets. I am not confident that the Madoff ‘victims’ were not bragging to their friends about their ‘inside connection’ at cocktail parties in the months before the fall.
harlana pepper
If it sounds too good to be true, it usually is.
Xenos
Why are people obsessed with race seem completely unable to recognize class dynamics? It is like even a little bit of sanitized, modernistic racism makes people allergic to seeing plain class conflict right in front of the Nazi-loving eyes.
geg6
@Zifnab:
Sorry, gotta call bullshit on that. The long-term earnings that Madoff was claiming he was getting for his investors were patently absurd. There is no fund or stock on earth that always makes a profit, let alone a very ridiculously high profit, for the 20 or so years Madoff was scamming these idiots. I’m no economist, stock broker, or financial planner. I’m just a lowly financial aid officer with a 401K which spurred me to look into the most simplistic explanations for how investments should and do work so that I can make semi-informed decisions about my distributions. But even an unsophisticated investor like me should know that Madoff’s claims were completely off the wall. I know that when I first read about Madoff and his Ponzi scheme, my first question was how these people fell for such obvious lies. I mean, most of these people were wealthy, which presupposes that they know a LOT more about money and investments than I. And I would have immediately questioned how such high profits were possible.
harlana pepper
Re: Madoff victims, there’s a sucker born every minute. Jeez, the really bad part about getting old is that all those adages you used to ignore turn out to be true 99% of the time.
(oh, jeez, that’s the title – i’m an idiot, who knew?)
tess
“Wealthy and white” usually does outrank “poor and black” on the media sympathy scale, but frankly, most of those who blame the people who have bad loans for taking out the bad loans, “poor” is probably enough reason to classify them as “undeserving.” There is no such thing as “deserving poor” to these people, unless the poor started rich and lost it. They’re the same ones outraged by honoring auto worker union contracts but see no problem with honoring bank exec contracts.
There were lots of signs of trouble w/Madoff for years, it seems like he was running a scam for his entire career. I just got around to watching Frontline’s Madoff episode yesterday–they talked to regular investors, as well as some of the fund managers. The regular investors blame the SEC; the fund managers sound like they had no choice (they did); and Madoff comes off like some sort of psychopath. You can watch the whole show at the link.
tavella
Eh, when you read about how Madoff hooked in fish, it’s pretty clear that most of the direct investors were lured in by the old con standby of thinking they were getting a leg up by dodgy means; that he was using his market position to cheat other people in their favor. Not all of them — some were just following bad advice and some inherited positions from other people — but Vanity Fair had a piece a few month ago from a guy who had spent years trying to get an in into Madoff’s funds, and it was pretty classic scam psychology.
I’m not going to hate on them, but my most serious sympathy goes for those who were indirect investors and those that were put into Madoff by other people.
Eric U.
I guess I’m having a hard time seeing the majority of the subprime loanees as being victims. For one thing, most of them aren’t in worse shape than they were before the crisis. Many of them bought a house they couldn’t afford and got to live in it for a while at a reasonable rate. Sure, there are some people who were talked into going subprime when they could have gotten a prime mortgage, and there were even worse scams. I am angry at the injustice these people have suffered. But I don’t see that as being particularly common. And when you look at the mortgage crisis as a whole, there were plenty of people living pretty well off of HELOCs they couldn’t afford.
hidflect
I think a lot of investors knew it was dodgy but thumbed their noses with a wink figuring Bernie was “one of them” and bought into the whole “Wall Street J*ws protect each other from investigation” meme. Well, for 20+ years they were right…
geg6
@tavella:
I agree that the Vanity Fair article was excellent and showed that most of the investors thought they were getting over on all the other not-as-well-connected people in the world. Classic in-crowd stuff: I’m better connected than you and so I deserve to make completely unrealistic profits and you don’t. I think Madoff and his whole operation should all be in prison forever and be made to pay every penny these people gave them back. But they chose their victimhood because they allowed themselves to believe that they were special and that even the rules of basic economics don’t apply to them.
srv
@DougJ:
I’m not a rocket scientist, but anyone who didn’t see the Enron or housing bubble coming had to be in a bomb shelter with only the HGTV channel.
Now that the world-wide economy is completely poisoned, I have plenty of compassion for people who don’t know what to do. There is no safe port anywhere.
Emma
I saw an interview with a Madoff client who was an accountant and broker. She studies his reports closely and only invested a bit at the time until she was convinced he was doing what he said he was doing. She was more flabbergasted than anything else at how good the con was. There was another client, a man who immigrated from Italy and ran his own business and was the same way.
Madoff was a good con man. One of the best probably. Not a lot different than the guys who con little old folk here in Florida with schemes about inexpensive roof repairs and the like, except at a grander scale. He knew how to forge the right documents and make it all seem sound. That’s what a good con is, and don’t say you couldn’t be taken by one, because all of us can at one time or another.
The people to be angry at are the supposed regulators. People were warning the bastards about Madoff for years and they did NOTHING. If you want to see the epicenter of the disaster, try the cozy relationship between the criminals (er… financial types) and the would-be criminals (er… regulators looking for a lucrative job once they get out of the regulatin’ business).
Emma
PS, on the other hand, the wife — don’t tell me she lived and worked with this man for decades and never knew what he was up to. That’s hysterical blindness taken to the psychopathic level.
DougJ
Class and race both play a role with the public’s view of subprime, IMHO.
Michael
The problem is that the victims (and many of them were, as they weren’t market savvy) shift their lifestyles to account for the extra money they think they have. As a result, it is now gone.
If they had some notice, then they would have acted more frugally.
On the issue of the 10-15% returns, to the non-savvy, that would make some sense that they’d believe it. For years, I’ve heard from legitimate investment people that returns in good years tend to run 7-9%. The number Madoff reported was not so far outside the range as to be patently unbelievable.
Also, for years people were told to diversify among many different equities. Madoff sent sheets claiming such a thing. What these people never really heard in the past was any real advice that they can’t trust any single investment house.
kay
@Eric U.:
They really didn’t understand the loans. I talk to them every day. They were sold a bunch of cleverly marketed bullshit, and it begins with language.
When did we start calling second mortgages “home equity loans” ?
I have to force them to use plain language. I say “you have a first mortgage, do you have a second?” They say “no, I have a home equity loan”. Wanna tell me when financial people decided to use deliberately deceptive language? I’m old enough to remember when you could understand a loan officer, when they’d explain the ramifications of securing a loan with the family home.
They pulled the equity out of their biggest asset, spent it on depreciating consumer garbage, and thus propped up the Greenspan game of musical chairs, while their wages were declining. That second is secured, unlike credit card debt, and can’t be discharged. No mystery why these crooks targeted mortgages. There’s an asset they could grab.
It was a scam.
Reverend Lowdown
I’m not sure that I believe that his wife was necessarily in on it. To perpetuate a scam like this, for as long as he did, one would have to severely limit the amount of people that actually know what’s going on. People talk, it’s simple as that. The few that he did let in are probably just as cold and self serving as he is. You let in anyone that has any trace of conscience and they will topple the whole scam through spreading the info around or directly talking to authorities. I mean, you’re screwing people over pretty bad and it takes some doing. Also, from recently going through my parent’s divorce, it is entirely possible to not have a clue about your spouse’s business dealings. My mother definitely didn’t. Is it a “head in the sand” mentality? Of course. It is what it is. Throw unbelievable amounts of money in the mix and I imagine it’s like an opiate. I think that she is going to skate with a couple million though. Honestly, at this stage of the game, what choice did she have if she did know? Confess and lose everything or put on an act and try to salvage something. I don’t think that we’ll ever really know.
sparky
@Emma: i agree that he pulled a good con, nay, an excellent con. but the problem i have with the idea that people didn’t know what they were getting into was that it went on for far too long. nobody, but nobody can have those kinds of results over that span of years.
sparky
@DougJ: yup. not a coincidence that the whole debacle has been blamed on the CRA. and it’s your own fault if you get shot when you live in a poor neighborhood. also.
Michael D.
@joe from Lowell:
Not sure I agree with this, because I’ve experienced it. There is a difference between GETTING 10%+ a year and BEING PROMISED 10%= a year.
I started working in the US in May of 1999. Coincidentally, the 3 employers I have worked for have all used Fidelity to house their 401k plans. Since 1999, up until about a year and a half ago, I did not make less than 12% annually on my 401k and I have all the statements to show it. I have made double digits every year except for last. One year, I made 16%. Of course, last year, I lost 30%.
I didn’t put my money in far-fetched mutual funds. I put them in things like “Fidelity Growth” and “Magellan.” I put them in things like “Freedom 30” and “Freedom 50.” Did I understand the plans? Well, outside of the average returns and 10+ year returns, probably not. But that’s the beauty of a 401k with a reputable company. You can put your money in a few of their fund and, generally, you can let people who DO understand the funds manage them.
On the other hand, no one PROMISED I would get 10%+. If that happened, I would run. Fast. BUT… if I saw that everyone else was getting 10%+, I might have been tempted. Of course, now that all the shit has hit the fan, something good is coming out of it. People will be suspicious when someone promises them big returns. Maybe the whole Madoff thing was a good thing.
LD50
Yup, BOB is a classic wingnut in this regard. They’re more than happy to explain all social dynamics on the basis of specious theories purporting to explain the behavior of Jews, ‘Mexicans’ and ‘Negroes’ on a racial basis that was discredited by the 1960s, and yet if you try to respond that wealth disparities explain far more about American society, they scream “COMIE! YOUR TRYING TO START CLASS WARFARE!!”
Oh, and these same people swear they are not racist, but Sotomayor *is*. Sigh.
Ash Can
@Michael D.:
As you should. But the place you should run to in that case is the nearest telephone, to place a call to the SEC. Financial firms and their employees are forbidden by law from making statements to potential or actual clients that either are promises or can reasonably be construed as such. (This isn’t to say that the less scrupulous types in the business don’t do this, it just means they can be busted for it.)
liberal
@Eric U.:
I don’t get it, either. Presumably the whole point here is that no one’s been putting much, if anything, down. So what did they lose?
OK, their credit got trashed. Big deal.
liberal
@Michael D.:
I could be wrong, but IIRC Madoff’s “returns” were extremely steady.
I presume that your returns were (until recently) quite lucrative, but not steady.
liberal
@The Other Steve:
But I thought people claimed from the outset that he might have done this to keep suspicion on him and off his family, particularly his children.
Libertina
@kay: Many will find this hard to believe, but there was a time, in Texas, no less, that “home equity loans” were illegal for this simple reason. The fact that Texas lawmakers felt it necessary to protect people from themselves tells me all I need to know about these products. The name is definitely deceptive on purpose.
Johnny B. Guud
Obviously there were exceptions in both groups. However both groups were inherently greedy.
The Madoff victims were getting over 10% return on their money, and I’m sure most of them received their principal, if not more so on their returns. In fact, the adminstrator of the remaining assets excluded certain investors who were getting such returns, but wanted their principal back anyway.
The subprime borrowers, again, showed a bit of greed. If you can barely make your rent and suddenly you’re being told you can buy a house, that you know deep inside you could not afford, but did it becasue “everyone else is doing it”, is an act of greed in itself. Deep inside, you had to know something was amiss.
Again, there were exceptions I’m sure and in no way does it excuse Madoff and his wife (who I believe was complicit in the scam) or the scum mortgage brokers who pushed their poison.
flukebucket
God damn I love you BOB!
kay
@Libertina:
I don’t find it hard to believe at all, Libertina. The provision for the establishment of bankruptcy courts in this country is in the goddamn Constitution. The Founders knew all about debtor’s prisons, and whether it’s a brick and mortar prison or just loading people up with fancifully named “loan products” it’s the same concept.
We used to have state usury laws, too. Imagine that. It’s like we’re getting increasingly stupid with each finance “innovation”.
I listened to the finance sector whine about Obama’s proposed consumer protection agency for financial products.
They whine: “we’ll only be able to offer plain vanilla products!”
What they mean is they’ll have to sell something people can actually comprehend, instead of scamming them. Horrors! How will they compete if they have to tell the truth?
jibeaux
Well, I’m guessing not everyone was in on it for the span of years Bernie Madoff was in on it. I mean, my husband’s retirement plan has been going for about ten years and only in the last year has it not made a pretty good return. If you got in ten years ago or less and believed you had a diversified portfolio, I think the returns would be fairly plausible. One lady I heard interviewed some time back was talking about how her broker was urging her to invest more in technology stocks, I think it was, I’m hazy on the timeline, and get away from this stodgy Madoff fellow because the returns wasn’t as good. And of course that just convinced her that he was the more solid, conservative, stable choice for her money.
scav
So, I’m still left waiting for it to click in that it wasn’t just those “sub-prime” individuals that have been living in homes they can’t afford etc. etc. etc.
LD50
@flukebucket: Another classic in the conning-the-elderly-gentiles-out-of-their-money sweepstakes are those ‘commemorative coin sets’ advertised relentlessly on cable. They take a bunch of badly worn, high-mintage US coins that taken together are probably worth no more than $7-$8, put them in a cheap frame, hype them with some theme like “FAMOUS AMERICAN PRESIDENTS” or “1945 THE YEAR HISTORY WAS MADE!!” and sell them to gullible Bill O’Reilly viewers for $50 as a COLLECTIBLE INVESTMENT THAT CAN ONLY INCREASE IN VALUE!!” Yeah, maybe in 10 years, it’ll be worth $9.
Comrade Kevin
@Ash Can: Yes, and we all know how on the ball the SEC are.
Ash Can
@Comrade Kevin: True dat.
Tax Analyst
Hey, was that a shoe that just whisked past my head just now? Whew! Good thing I ducked…good thing they don’t come in pairs. Oh…they DO? (OWWWCCCHHH!!!)
Brachiator
I don’t understand your comparison here. Madoff didn’t offer an investment scheme. It was a scam, a con. There were never any investments. The entire point was to steal people’s money, and most of Madoff’s investors were totally wiped out. Those who are elderly do not have the time to ever re-coup their losses.
Madoff’s promise of investments was a front for a criminal enterprise.
I do not understand why anyone wants to try to link this with any legitimate investment, even one that goes bad or is flawed or corrupt. I do not understand the supposed thinking of people who want to try to lump this all into something having to do with finance, financial markets or capitalism.
Of course, even professionals do this. The stupidest headline of the century was that of the LA Times. The print edition blared that the sentence “Sends a Message to Wall Street.” This is as ignorant as the magical thinking that views investing as mere “gambling.” Actually, you might do better going to Vegas, where the rules for an honest table are known to everyone.
You have got to be joking. Some of the slimiest articles out of New York (especially the New Yorker and Vanity Fair) breathed a sigh of relief that Madoff’s victims were mainly his fellow Jews. One portrait of Madoff went out of its way to note how “unrefined” he was even compared to the old German Jewish money, and how Madoff was an unworthy upstart and schlub.
Kate
Or, you know, maybe it’s because Madoff’s victims lost money they’d worked for and earned, while the subprimer’s (hardly victims) were taking money someone else had earned, to get stuff they couldn’t afford to pay for.
binzinerator
@kay:
Amen, kay.
I think lots of people got the obfuscating bullshit and were scammed. For Christ Sake I got the obfuscating bullshit on my mortgage when I bought my house, and I got the ‘home equity loan’ bullshit when I looked into borrowing money for a home improvement project.
They used that language because it was intended to be deceptive. And it works.
There is one more thing that guys like Eric U. ignores: Mortgages are made to be complicated. The basic ideas are not but the details and the jargon are not something most people have the expertise to even ask the right questions about. And there are variety of ‘mortgage products’, each with their own marketing jargon to describe this limitation or that liability. You learn the upsides they want you to learn. And they downplay the downsides and obfuscate them with language. Or they simply lie.
So why do certain people believe we all must somehow become the expert on a subject and insist it’s our own fault if we aren’t as knowledgeable about the mortgage business as the people who make it their careers? Guess because they are so much smarter than the rest, certainly smarter than me.
I see nothing wrong with trying to learn as much as possible about something like mortgages before signing one. But at some point for some things that have complexity and in many areas involving expert and specialized knowledge it is not a realistic expectation to become an expert.
The glib answer that one can become the expert falls apart the more specialized the knowledge becomes. If you are not knowledgeable about the finance and lending biz (or if you’ve never gone through the process of getting a mortgage — i.e. making mistakes) you still have no idea what’s good advice. You don’t even know what questions to ask.
And anything you find on the ‘net holds almost no cred next to the relationship you have with the mortgage officer. You trust him or her more because you discover you have to. Ask your internet-prompted questions. I did. I got a lot of soothing responses that while not denying the validity of those questions, had the calculated effect of making them far less of a concern.
And when all the people who are the experts are bullshitting you, it’s very tough to say ‘Hey this doesn’t seem like a good idea’ because every damn one of those people is telling you ‘Don’t worry, it’s a very good idea’.
Houses always go up in value. The experts were saying that, from the Cramer types on TV to the mortgage officers at the local bank. It was bullshit, it seems obvious now, and everything based on that was a scam.
It was very easy for a lot of good people while not stupid were obviously not as smart and shrewd and vigilant and knowledgeable and financially savvy as you, Eric U., and they were made to believe they were acting responsibly. Yes, they were victims.
BC
Me, I blame Alan Greenspan who endorsed people getting ARMs. ARMs are good vehicles if they have a cap on how much they can change in a certain period of time (say, can’t go up or down more than 1/2 point or something like that) and have a lifetime cap (say, can’t go up more than 5 points over the life of the loan). But these had no caps at all – and Greenspan, touted as a financial genius by the establishment, media, Democrats, Republicans endorsed them wholeheartedly. Does anyone but me blame him?