While KPBS is re-airing This American Life’s “The Giant Pool of Money,” a really great episode explaining what the heck bankers, mortgage brokers, lenders and lendees were thinking while helping to create the current financial crisis we’re all in, I couldn’t help but think, I still don’t really get it and I’m still not sure how, exactly, any of this is going to affect me and “main street” as the media like to refer to small businesses not directly involved with wall street and shady lending practices. I don’t know if this bail-out thing is such a good idea, or if it’s fair. I really don’t know anything anymore, but I am a little scared.
What I do know is this: In 2005, a 23-year-old friend of mine bought a house. I ended up moving into the garage of that house and living like the poor person I am because, unlike her, I didn’t apply for a crazy no-money-down loan.
My friend had a good job and made a lot more money than me, but she only had that good job for less than a year and she had already bought herself a brand-new BMW and had about four credit cards that were nearly maxed out. I wouldn’t have dared lend her money, so I was shocked when the bank did.
My friend decided to buy her house because she saw it as an easy way to make money. She was going to buy it and sell it a year later after the price jumped up at least $100,000.
That was her plan anyway. The loan she ended up getting wasn’t one of the so-called No-Income, No-Asset (NINA, for short) loans. The bank did do a check of her earnings but, as I found out in a casual conversation later, her mortgage broker was a good friend of hers and he “did her a favor” by depositing some extra cash into her bank accounts while the loaning bank was doing its checks.
She qualified for the loan and quickly moved me and another friend in to help pay what was then a pretty modest mortgage payment. But when the loan reset and my friend had to start paying almost double what she had gotten used to, it didn’t take long before she started missing payments and the bank foreclosed on the property. She ended up losing her job, too.
She moved to San Francisco, stopped paying all her credit card bills and took the hit of having a foreclosure on her credit record. Meanwhile, I moved to Tijuana and continued living like the poor person I am. My car got stolen and I tried to get a loan for a new one, but the banks denied me. My parents had to end up buying me a new (used) car. There was just no way any of the suddenly conservative loaners were going to give me any money, even though I’m pretty damned responsible when it comes to paying my bills, which includes two monthly payments I’ve never missed on my student loans.
And my friend, just a year or so later, seems to be doing financially better than I am, again. She worked out some deal with the credit card companies and, in my eyes, got little more than a slap on the wrist for making her financial mistakes. Her mortgage broker, I’m almost sure, lost his job, but he’s probably doing better than me financially, too.
With all the media coverage of the financial crisis, I can’t help but only half-jokingly ask my boyfriend at least once a week, “So, who do you think’s gonna lose their job first, me or you?” And in my head, I think about what we’d do if that did end up happening. Living in Tijuana, I see how a country in financial crisis lives. We Americans, or at least me and my BF, would most likely end up doing what the Mexicans do: move back in with our parents (or even my grandparents—if they were still alive), save real cash and only buy things when I had enough real cash to do so. Very few of the Tijuanenses I know have credit cards. This whole debacle must seem even more incomprehensible and alien to them than it does to me.
But ultimately, I can’t help but feel like screaming, “Wait a minute! This isn’t my fault, why do I have to suffer!? And why the heck should we bail out people who did stupid shit?!”
Even though I don’t really “get it” when it comes to the financial crisis, I feel like I, and the rest of those who never took any stupid financial risks, are getting screwed.