I am sort of torn on this subject. I have worked in the financial industry of many years one of whom was a credit card provider. The moment the government told banks to make credit more available is the day banks and other credit providers jumped for joy. They were given an open book on what they were allowed to do. So, who were the easiest targets? People who were in the sub prime market. Here are a group of people struggling to make it by and you are offering then an almost blank check. Yes they are to blame for trying to live above their means, but when you dangle a steak in front of a hungry dog you should not be surprised when he snatches it out of your hands and eats himself sick.
I remember sitting in meetings where companies would trying to think of the next way to leach money out of people they know they did not have it. This was more prevalent in the credit card industry than anywhere else. Here have this piece of plastic that will let you get whatever you want. We know you are not going to read the fine print and we are going to make sure that even if you try to read it you will be so confused that you will not know which way is up.
Here is an actual quote from a product manager of a credit card company I worked for. “We just have to get them to spend that first dollar and we will have them. Even if they go into collections, we will just sell the account to one of our subsidiaries; take the tax break and then collect on the whole debt.â€
I worked for banks where their lending department had the very same philosophy. “We just need to get them in the door and the deal closed and get as much money as we can upfront then if they default we will still make a nice profit.†That is why interest only loans were so popular for a while.
There is a reason why I don’t work in the financial industry any more. Here is an institution that is built on trust and sound principals that feed on the hopelessness of people. If consumers are to blame for taking out loans they could not afford, lending companies are to blame for giving them the money. That is why we are in the situation we are in now and why the rest of the world is in it with us.
People should have been more cautious and done more research, but the people who were targeted were just hungry for someone promising them a better life. Both sides are to blame. Who do you point the finger at, the starving dog or the person with the steak.
I have watched friends that were in great financial situations loose their jobs because businesses where doing the same as your common consumer and are now either facing foreclosure or have already been foreclosed upon. These are people that had no issues playing their expenses, but because of the overall situation of the world they are now jobless and searching for a place to live.
This is a problem that is above you and me. Letting all the blame fall on the end consumer and having them face the consequences while we sit back and watch the banks crumble would put the world in such a negative financial state that we may not recover. This is what happens when the world gets greedy.
