Culture > Q&A

Greed all around

"Greed all around" Continued...

Issue: "Clutching two, dropping four," April 23, 2011

Did some people from poor backgrounds not understand the danger of taking on adjustable rate mortgages? When someone who doesn't come from a financial background sits down at the table to take a loan, and is told that the payment will be one amount, they're probably not going to go through the fine print and find that the payment might go up two or three times.

And some lenders knew that many of the loans wouldn't be paid back? They knew that people couldn't pay, but the loan officers were getting commissions by production, so care was lifted. Then, concerning the marketing packages, rating agencies didn't do a credible job. Following that, the investing groups didn't do sufficient diligence in understanding what was in the bundle of loans they were buying with their investors' money. All the way up and down the line, irresponsibility.

Did Democrats tend to blame guys at the top, and Republicans those at the bottom? Plenty of Republicans were critical of banking institutions. President Bush had been working for years to reform Fannie Mae and Freddie Mac. So much money was tied up in those institutions that people try to blame them primarily, which isn't really fair. There's a danger in ascribing responsibility to one person: We all have to take responsibility for this.

Was the housing bubble evidence of original sin, with greed all over? A lot of greed. People all around this daisy chain were making money. When this collapsed, the damage was incredible. And part of our problem of responsibility is that people have just been walking away from their mortgages.

Does government have a role in providing housing? For the most part, the government is not competent to deliver housing. It is important for us as a society to get people off of the street. A step up from homelessness is public housing, but it perpetuates itself. We should be driving people ahead to give children better opportunities.

HUD secretaries often come from politics and go back into politics. Did it make a difference that you came from the private sector and went back into it? I wasn't concerned about tiptoeing, because I wasn't trying to get elected.

Listen to Marvin Olasky's complete interview with Steve Preston.

Marvin Olasky
Marvin Olasky

Marvin is editor in chief of WORLD News Group and the author of more than 20 books, including The Tragedy of American Compassion. Follow Marvin on Twitter @MarvinOlasky.

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