I think we can all agree that this is a mess. That may be about the only thing we can all agree on. This seems to be a pretty polarizing issue, with one camp focusing on personal responsibility and moral hazard and the other on predatory lending .
I lie somewhere in the middle.
There are people who took calculated risks by getting ARMs and lost out, and there are plenty of middle class families I know who're one minor crisis away from disaster, not as a result of an unfair system, but as a result of huge consumer debt they voluntarily assumed to pay for luxuries I can only dream of. I understand the grumbling about how we shouldn't finance other people's irresponsibility.
At the same time, I don't buy into the idea that the victims of predatory lending, which does exist, have no one but themselves to blame. In an ideal world,everyone would be well informed. However, we're not equipping people with the tools they need to make good decisions about money.
I think about my mother's co-worker, whom I tutored a couple of times. He's thirty and a nice guy. He has a high school diploma, which means he had more formal education than most of his family, and works as a cook at his aunt's pizzeria. He doesn't want to work there forever so he started taking classes through a well-known online university. When he got really far behind in his introductory algebra class, he called me for help.
He struggles with fractions. Problems involving simple interest were a mystery to him so there's no way he could figure the compound interest associated with his car payment. We're sending people out into the world who are functionally innumerate, giving them no formal guidance on financial matters, and expecting them to sink or swim in a society where easy credit has become almost a birthright. What did we expect would happen?