spanish moss

Is Countrywide Financial the Next Enron?

I don't doubt your conclusion regarding CFC, it is certainly a possibility, particularly with the falling real estate market and the huge volume of Option ARMs CFC (and others) wrote.

However, I am less sanguine about your positioning borrowers as innocents. Most borrowers know a good loan from a bad loan, and it they don't they know financial lingo, the do know a) "there is no such thing as a free lunch", and b) "if it's too good to be true, it probably isn't true", etc.

My take is that the vast, vast majority of borrowers were complicit in taking low payment options to acquire real estate at any cost lest they should not participate in the huge appreciation fueled by low cost payments in tandem with both cheap and easy money.


Regardless as to whether we agree or disagree, about borrower complicity or innocence, there is plenty of blame to go around. In addition to borrower greed, there are lenders and mortgage brokers who offered the products, Realators who profited from them, regulators who ignored them, and investment bankers, hedge funds and credit reporting agencies who pushed them.

At the end of the day, I think the old axiom, if you want to dance you have to pay the fiddler, is appropriate, and borrowers will be, and should be, paying along with lenders, mortgage brokers, Realtors, and all those the Wall Street schmoes.