Main Street, Wall Street share blame

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By Ralph Z. Hallow and S.A. Miller

For every "greedy" Wall Street banker, there were millions of Main Street Americans willing to live beyond their means.

And for every predatory lender, there were stupendously more home buyers willing to suspend fiscal reality for mortgages they didn't understand, couldn't afford, or in many cases, didn't even bother to read.

From the California congresswoman who defaulted on several mortgages to credit-card holders with sky-high debt and escalating interest rates, financial experts, lawmakers and average citizens say the behavior of Americans is as much to blame for the nation's financial crises as was the lax oversight by Congress and manipulation by the nation´s financial movers and shakers.

David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, places much of the blame directly on the borrowers.

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"They are the ones who signed those contracts and should have known what could happen. They think the government should let them stay in their homes or force the lender to alter loans to make less money.

"They call the [original mortgage] deal usurious," he said. "Certainly, most responsible people in this country would disagree with that."

The delinquency rate for home-mortgage loans hit 6.41 percent of all loans outstanding at the end of the second quarter of 2008, a historic high in the Mortgage Bankers Association survey.

The survey showed the rate of foreclosure starts varied by loan types from a low of 0.34 percent for fixed-rate loans to 6.63 percent for subprime adjustable-rate mortgages, or ARMs, that let borrowers purchase pricey homes with low interest rates that later inflate.

"We're seeing a disavowal of individual responsibility," said Hunt Burke, president of the Burke & Herbert Bank & Trust Co. in Alexandria.