“ But let’s try another way of looking at this. Why don’t we turn around the “personal responsibility” issue on the lender? He knew: 1) the person signing the mortgage would not be able to make the payments, 2) that this mortgage would end up becoming a bad asset, 3) that if his institution acquired enough bad assets, his institution would become insolvent, and 4) if his institution became insolvent, it would collapse. He not only is responsible for the bad mortgage, he is also the only party involved guaranteed to know and understand the risk he is taking with the bad mortgage, and also the only one obligated to be concerned about the wellbeing of the financial institution itself if something goes wrong with the mortgage. In any kind of logical assessment of this situation, if a guy can’t pay his mortgage, his repercussion is losing his house, and if a financial institution knowingly gives out too many bad mortgages, its repercussion should be losing money, jobs and the institution itself. Somehow, though, in the American moral universe where business is always in the right, if a guy can’t pay his mortgage he’s responsible for his house and the company, too. The company itself is responsible for nothing.
March 25, 2009
