The Widdershins

Bookmark worthy…

Posted on: January 29, 2015

Hope your Thursday is a good one. While perhaps not Seinfeld sponge worthy, this factoid might be bookmark worthy. If your life is like mine, it is punctuated with well-meaning conservatives who suffer from the intellectual malnourishment of Fox — a cable news induced scurvy of the mind. Granted, this fact won’t save them from knowing what they don’t know or even caring about not knowing it, but from here on you can take comfort in knowing they have been exposed to the contagion of truth on the subject.Myth versus Reality

From day one of the financial crisis, the media, particularly the conservative media, has singled out poor people as the culprits behind the 2008 collapse of the financial sector. The “poors” were called lots of things during these scapegoating reports — deadbeats, scofflaws, takers not makers, slugabeds, moochers, and the effervescently Reaganesque “strapping young bucks and welfare queens“. All dog whistles. All insulting. All hateful. And all categorically and unequivocally wrong.

The poors did not cause the financial crisis. The vast majority of mortgages in default were directly attributable to borrowers in the middle and top of the income scale.

I’ve harped on this fact previously in this space. In the book, All the Devils Are Here, by Bethany McLean and Joe Nocera, the takeaway fact was this: Eighty percent of the mortgage defaults were refinanced mortgages and of the remaining 20%, 80% of those were defaults on second home (not first homes, second home) mortgages. While a bit convoluted, what this means is the defaulting homeowners had previously secured long-term financing as good credit risks before the boiler rooms of predatory lenders ever came a’cold-calling. These people were educated, experienced borrowers and most certainly, they were not the poors.

Courtesy of a new study, we now have a simple one graph picture depicting the absolution of the poors. Here it is:

Chart on Mortgage Default


This chart is broken down into 20% quartiles. What it demonstrates is simple: From 2002 through 2006, the percentage of defaults were increasingly among the top three income quartiles while correspondingly, the percentage of defaults among the poorest dramatically declined.

In 2006, 76% of all defaults were among the top three quartiles — meaning three-quarters of all defaults were among the middle to highest income groups with a full 58% of those coming from the top income distribution.

Of course, rich people tend to take out larger mortgages especially if they are financing both a primary and secondary home. What is significant and has remained woefully explained and inadequately reported is this: The amount of money poor borrowers failed to pay back was never that significant, but they were resoundingly blamed for the crisis. That is a lie.

When you break away from the motivated reasoning represented in this prejudicial thinking it makes perfectly logical Myth Debunkedsense. It is just like the reason bank robbers rob banks — that is where the money is. The depths of the financial crisis were not predicated on loans for small row houses or one-bedroom condominiums, but on overvalued McMansions in gated communities where the residents had the keys to a second vacation home.

As the issue heats up around the modest federal efforts to make housing more affordable for low-income borrowers by loosening credit standards, this information will come in handy. Political opportunists will again undoubtedly sharpen their knives for the poors. They will be lying. For anyone who mistakenly falls prey to their lies, you now have the ammunition to prove otherwise.

Feel free to take the discussion in any direction you desire.


14 Responses to "Bookmark worthy…"

What a wonderful post. Your research is excellent, as always, and the train is pulling into Debunktion Junction.

Love your last two posts, Prolix. I agree with what you said about the financial crisis and what home loans caused it. I can see that in my own area.

From 2002 through 2006, the percentage of defaults were increasingly among the top three income quartiles while correspondingly, the percentage of defaults among the poorest dramatically declined

Thanks for pointing that out Prolix. I will swear I don’t believe I everheard or read about that little bit of info. 👿

Sorry for being here late. I swore that I did a “like” on the post earlier when I stopped by. I’ve been sort of bed-bound today and not stirring very much.

@1,2,3 — thanks folks. Appreciate it.

One of the things we libruls do or better said, I do, is once I find an answer like this, I am satisfied and go on to the next order of business. This isn’t the way the conservo-droids live their lives — they harp and they harp and they harp on a meme based on totally fabricated information, e.g. Sean Hannity, the dumbest man to have ever been paid to talk on teevee.

Pass this factoid about what caused the crisis on to anyone who might be interested. This is a story that hasn’t been told.

Conservatives have perfected their own version of the Big Lie. Take any convenient distortion, conflate it with something sort of truth-y, and repeat until everyone believes it, ala Saddam Hussein and 9/11.

Mitt’s not running! Now what are we gonna do for fun if we don’t have Mitt to kick around any more?

RIP, Rod McKuen.

@5: Yep, exactly what they do.

re: Mitt. Well there’s always Ted Cruz and Walker.


What! “Morning Joe at Night” preempts Maddow’s show???

On Friday, January 30, Chris Matthews, Mika Brzezinski, Joe Scarborough, Willie Geist and Ronan Farrow head to Arizona, home of Super Bowl XLIX.

Tune in to msnbc for a special, live broadcast of Hardball Live from Phoenix at 7 p.m. ET, followed by a special two-hour primetime edition of Morning Joe at Night Live from Phoenix at 8 p.m. ET.

So Scarborough wanted to go to the S.B. on Comcast’s dime and this is what they came up with?

Mitt out flipped his flip flopper by getting out before he got in — must be a fancy form or Mormon birth control. Who knows what can happen when you take off the magic underwear.

Now Mitt will have to sit in a room and whine to the mirror doing deep thoughts from Jack Handy — “I’m good enough, I’m handsome enough, I’m certainly rich enough, and at least 53% of the people might like me.”

And Ann can go back to her simple life as a 15 homed, typical equestrian, two Cadillac drivin’, Michigan right tree size lovin’ bitter, but smilin’ housewife.

And the boyz, Hooper, Looper, Dooper, Scooper, and Pooper, or whatever their names are, can go back to following Daddy’s example of believing they are the special anointed ones because they have had the good fortune to be genetically related.

America, where else can you be birthed with a silver spoon in your mouth and promptly proceed to use it to ladle out the business equivalent of arsenic to family owned companies and call yourself a hardworking, self-made prodigy.

Does that then make Ann a “stay at 15-home” Mom?

Prolix@11: Good one!!

@11: Well he’s really gonna flip now:

On the day that Mitt Romney announced that he’ll leave the pursuit of the Republican 2016 presidential nomination race to younger and fresher GOP faces, he was atop a Fox News poll. The poll showed him with support of 21 percent of GOP voters polled nationally, ahead of Mike Huckabee, with 11 percent, Jeb Bush, the presumed current frontrunner with Romney out of the race, with 10 percent, Ben Carson, at 9 percent and Scott Walker, at 8 percent.

and bringing up the bottom of the heap:

Louisiana Gov. Bobby Jindal is toward the bottom of the potential GOP presidential field in the Fox poll, with 2 percent of those choosing him, but ahead of former Pennsylvania Sen. Rick Santorum, Ohio Gov. John Kaisich and Sen. Lindsay Graham. R-SC, each of whom scored a dubious 1 percent support level.

Lil booby will look on the bright side and figure he’s ahead of Kaisich, Lady Lindsay and Santorum so that must be a good sign. 😆

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