the corner office

a blog, by Colin Pretorius

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Lead us not into personal responsibility

There was a documentary on Panorama this evening about a potential sub-prime mortgage crisis in the UK (*). I don't find the doomsday predictions very persuasive, but I don't doubt that the property and financial markets could take a bit of a beating, and to be honest, a bit of sanity in the property market wouldn't be an entirely bad thing for people like us who're not (yet) on the property ladder.

As always though, it didn't take long for me to get a little fractious at the tack the documentary was taking.

I don't for one second disagree that irresponsible and dishonest lenders should be taken to task and vilified if they're acting unethically, and prosecuted if they're breaking the law, but why was there absolutely no focus on the culpability of borrowers themselves? I'm not talking about hard-working people whose only crime was not being financially literate and being too trusting of lenders who lied to them about repayments and the like, but the reporter very sympathetically interviewed one woman who lied about her income and financial situation at the encouragement of her broker. While the broker's company deservedly came in for naming and shaming, this stupid and dishonest woman, who chose to remain anonymous, probably because she could (and should) get nailed for fraud, got portrayed as an unfortunate victim!

It boggles the mind.

(*) For South African readers: sub-prime mortgages have nothing to do with the South African notion of the prime overdraft rate. Instead, they're basically mortgages granted to people who're a poor credit risk and who don't qualify for credit from normal lenders.

{2007.10.09 - 00:08}

Comments:

1 Dean (2007.10.09 - 13:10) #

Colin,

Is that (*) meaning something similar to South African loan Shark`s?

2 Colin (2007.10.10 - 00:18) #

From what I gather pretty close, although unlike the ZA microfinance world, people can still loan insane amounts (in the show a dude earning around £30K got 2 mortgages worth £500K).

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