Thursday, August 23, 2007; 8:32 AM
Memo to the media: Everyone who is defaulting on a home mortgage is not necessarily a victim.
I feel sorry for anyone in that situation. Losing a home is an awful thing. Some were undoubtedly pressured into buying by unscrupulous lenders. Too many greedy players on Wall Street got away with making shaky loans for too long. They sliced and diced mortgage debt into increasingly exotic paper and lost sight of the risks involved, figuring the Fed would bail them out if things got out of hand.
But let's face it: Most of the people who took out home mortgages for no money down knew that this was a roll of the dice. Who gets to buy a house without a down payment? And most of those who took out adjustable-rate mortgages knew that their rate would balloon in a couple of years, and could do so at a level that would be hard to afford. They took the risk anyway. No one forced these folks to take on big mortgages they could barely handle.
My colleague Michael Rosenwald owned up to this the other day, describing how he and his wife bought a $459,000 Maryland home with an interest-only, adjustable-rate mortgage just as the housing bubble was about to pop. Now he's facing a difficult time, with a rate that could jump to 10.1 percent.
He'll probably be okay; many others are not. Like people who raced to buy dot-com stocks of companies with no profits, folks bought houses they couldn't afford because the escalator had been going up so quickly for so long that it seemed like a reasonable bet.
But when the mortgage meltdown pieces are written or broadcast, the lead is inevitably someone who is about to lose his or her house, with not so much as a nod toward the notion that these people might have overreached or bears any responsibility at all for their financial plight.
Perhaps inevitably, Hillary Clinton has now proposed a $1-billion fund to help struggling families catch up on their mortgage payments, and John Edwards also wants to give money to those who can't make their payments. So the taxpayers should bail out folks who took out these loans with their eyes wide open?
Again, I'm not unsympathetic. And there's plenty of blame to go around. But we shouldn't let homebuyers completely off the hook just because it makes for a better narrative.
Speaking of the mortgage mess, Columbia Journalism Review praises the NYT: "The fact is, theTimes has been hitting the subprime issue harder and longer than Forbes, Fortune, The Wall Street Journal, The Financial Times, and other publications devoted solely to business and financial news. This should not be, but it is."
While American Journalism Review is in financial trouble, as I reported yesterday, CJR says it's running $50,000 in the black.
Time now to talk about the war. The Vietnam War.
"With a tough battle with Congress over the future of the war expected to come in September," says the NYT, "President Bush offered a rousing defense of his Iraq policy today, declaring that he envisions an American victory there and asserting that a hasty withdrawal by the United States would unleash a bloodbath reminiscent of the Vietnam War era.