A sign is seen in front of a foreclosed home November 19, 2008 in Rio Vista, Calif. (Justin Sullivan/Getty Images)
A sign is seen in front of a foreclosed home November 19, 2008 in Rio Vista, Calif. (Justin Sullivan/Getty Images)

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.

The findings undermine criticism of recent modest efforts by the Obama administration to make housing more affordable for low-income borrowers by loosening federal credit standards. It's important to lend responsibly, even for the federal government, but the risks in this case might be exaggerated.


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What's in Wonkbook: 1) Reforming fee-for-service 2) Opinions, including Elizabeth Stoker Bruenig on family-friendly policy 3) The plight of the black middle class, a federal database on where Americans are driving, and more

Chart of the day: The number of oil rigs operating in Texas declined by roughly 9 percent in just two weeks on low oil prices, according to the Federal Reserve Bank of Dallas.

1. Top story: Administration to reform fee-for-service Medicare payments

The Obama administration wants doctors to be paid based on whether their treatments work, not how many services they provide. "The goal is for half of all Medicare payments to be handled this way by 2018. Monday's announcement marks the administration's biggest effort yet to shape how doctors are compensated across the health-care system. As the country's largest payer of health-care services, Medicare influences medical care generally, meaning the changes being initiated by the administration will likely be felt in doctor's offices and hospitals across the country." Jason Millman in The Washington Post.

Paying doctors for keeping patients healthy is common sense. "But for most of Medicare's 50-year history, that wasn't how the bills got paid. Hospitals and doctors earned money when they performed a service. It's called, literally, 'fee-for-service,' and it has nothing to do with whether the patient got better, whether some other kind of care might have been more effective, or -- even worse -- whether the service was necessary at all. Instead of laws and regulations, the Obama administration is relying on a few programs under Obamacare that are growing and many more, outside of the government, that probably would have happened regardless. Change in the industry has been fueled by growing public disgust with the nation's $3 trillion annual health-care bill and the fee-for-service system that drives it." Alex Wayne for Bloomberg.

This change has been long in coming. "Back when the White House was drafting Obamacare, some advisers pushed for a target just like this to be included in the legislation. It would commit the federal government to moving quickly, they argued. ... Today's announcement is, in some ways, the big change that some health care experts pleaded for in 2010. It's the first time the federal government has set a specific goal for moving towards a health care system that rewards value." Sarah Kliff at Vox.

ORSZAG: Now the administration has to make it happen. "To be sure, more needs to be done: The targets have to be hit. And that will require action. Today’s announcement provided no details about the specific steps ahead. Will Medicare move more toward bundled payments for specific episodes of care, or toward accountable-care organizations, through which hospitals and other providers receive one payment for all the care a patient needs during a year? Such details are crucial. The first step in any worthy project, though, is to set clear goals." Bloomberg View.

2. Top opinions

ELIZABETH STOKER BRUENIG: Neither party has a serious plan to help families. "To reach all families, and to render the most efficacious aid stream possible, a monthly child allowance makes more sense than either the Republican or Democratic tax-based proposals. Like social security benefits, a child allowance would come at a set amount on a monthly basis, and would not decrease due to parents' work choices or income, and would not taper down to nil due to the number of kids born to a particular family." The New Republic.

Virginia lawmakers risk worsening the problem by requiring colleges to notify police of all reports of sexual assaults. "Hastily shaped legislation now under consideration is not likely to help and may even make the situation worse for victims of sexual violence. ... We're sympathetic with those who say universities are ill prepared to substitute for a court system in adjudicating serious felonies. But the seeming logic behind mandatory reporting — a crime occurs; call police — is challenged by the very people it aims to help. Survivors of sexual assaults and their advocates have been loud and clear in arguing that the decision about whether to report a sexual crime to police must lie with the victim. Taking that decision away from victims could well result in the refusal to come forward, which would not only deprive them of needed support services but also eliminate any possibility of them ever going to police." The Washington Post.

GERSON: Immigration has only a small effect on wages for native-born workers. "Economists sift and dispute the evidence. But the long-term impact of immigration on native wages seems to be slight — slightly positive for those with a high school and some college education, slightly negative for those who don't graduate from high school. These effects, however, are overwhelmed by other economic trends, such as the advance of technology and globalized labor markets. The white working class does have many problems, but competition from low-skilled immigrants is not among the biggest ones." The Washington Post.

What would New Jersey Gov. Chris Christie's agenda be in a presidential campaign? "For journalists covering the campaign there will also be no more entertaining assignment. But candidacies rooted in personality or biography alone rarely win. ... Chris Christie will need a reform agenda worthy of the name. On the economy, taxes and health care in particular, plans that simply achieve consensus among the donor community of Manhattan business leaders probably won't cut it." The Wall Street Journal.

Greece's leftists are right to insist on writing down European countries' debts. "Amid the populist rhetoric that propelled the far-left Syriza party to victory in Greece's parliamentary elections, there's one idea that Germany in particular should take to heart: revive growth in the euro area by giving the hardest-hit countries a break on their debts. ... Enforced hardship isn't improving the countries' ability to pay their debts or helping the European Union's economic prospects. Slow growth has eroded the fiscal benefits of austerity. Despite spending cuts and tax increases, Greece, Italy, Portugal, Spain and even France will be unable to get their ratios of debt to gross domestic product down to the euro area's permitted maximum of 60 percent in the foreseeable future." Bloomberg View.

3. In case you missed it

The federal government is tracking the movements of Americans' cars. "The Justice Department has been building a national database to track in real time the movement of vehicles around the U.S., a secret domestic intelligence-gathering program that scans and stores hundreds of millions of records about motorists, according to current and former officials and government documents." Devlin Barrett in The Wall Street Journal.

As white homeowners are doing better, the plight of the black middle class is worsening. Home prices remain depressed in minority neighborhoods, where predatory lending was more common even among relatively secure places such as Prince George's County, Md. A three-part series. (1, 2 and 3). The Washington Post.

A study finds that people are less informed and less likely to vote in cities where local newspapers have closed down. "To the extent that a knowledgeable and participatory citizenry is a marker of a healthy political system, the demise of local news should raise concerns about the operation of electoral democracy." Danny Hayes in The Washington Post.

G.O.P. governors in several states are proposing tax increases. "Many of these tax increases face tough sledding in Republican-controlled legislatures like Nevada’s. And a host of Republican governors are pushing for cuts or holding the line on taxes. Still, the shift is striking, and it comes in the wake of problems that Gov. Sam Brownback of Kansas, a Republican, suffered after pushing though sharp cuts in business and income taxes." Adam Nagourney and Shaila Dewan in The New York Times.

Obama will ask for another $1.2 billion to control drug-resistant bacteria. "Scientists, doctors and other public health officials have increasingly warned that if antibiotic resistance were to continue at the current rate, routine infections eventually could become life-threatening. Common modern surgeries, such as knee replacements and organ transplants, could again become precarious. Vulnerable hospital patients and nursing-home residents could be at especially high risk for contracting deadly infections." Brady Dennis in The Washington Post.

The Keystone XL bill has stalled in the Senate. "The outcome handed at least a temporary victory to some Democrats and environmentalists, who staunchly oppose construction of the pipeline. But Monday's vote was more a speed bump than a roadblock; both parties are expected to continue hashing out their differences on the bill." Sean Sullivan in The Washington Post.

Republicans shift gears on economic inequality. "As recently as December 2011, when the Occupy movements were grabbing headlines, Republican presidential candidate Rick Santorum could say he was 'for income inequality' because it was the natural outgrowth of capitalism. ... The next year, the conservative National Review labeled income inequality a 'myth.' But many Republicans found the approach wanting." Benjamin Tenerella-Brody for Bloomberg.

VINIK: Blaming Obama for increasing inequality is a sign of desperation. In fact, from the stimulus to Obamacare, the president's major policies have helped the poor in spite of Republican opposition. Meanwhile, many Republicans were clamoring for a premature increase in interest rates at the Federal Reserve, which would have been disastrous for the lower-income tiers. The New Republic.