Mortgage Lenders Can't Escape Morgenson's Wrath

by: Tom Brown

If you’d asked Gretchen Morgenson a year ago the root cause of the mortgage crackup, she’d have told you (I believe) it was lax underwriting by those unscrupulous, money-grubbing, (and then still-solvent) subprime lenders. Countrywide Financial (CFC) was her poster child; she ripped it regularly. Last August, for instance, in one of her more breathless Countrywide takedowns, she moaned that “Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers.”

A profit-at-all-costs culture willing to stop at nothing in pursuit of profits--even if it meant loading down customers with debt well beyond there ability to service! Yes! That was the problem!

What a difference a year makes. Now Morgenson seem to believe that mortgage credit providers aren’t lending aggressively enough. In particular, she’s bemoaning the fact that credit providers seem to be reducing their customers’ home equity lines of credit, on account of falling home prices.

I detect an inconsistency.

Now, Gretchen, which is it? The old you damned the industry for lending too aggressively against the value of borrowers’ homes. The new you damns the industry for not lending aggressively enough against the value of borrowers’ homes.

You can’t have it both ways. If these flip-flops keep up, people might get the impression that you just don’t like the companies, no matter what they do.

Tom Brown is head of