My Solution to the Debt Problem

First, I want to say that I don’t participate much in political discussions, nor do I generally think very deeply about politics in general. I tend to avoid these things because I’d rather be thinking about making something, be it games, guitars, or whatever I’m doing at the moment.

However, the “mortgage crisis” and the “solutions” proposed by various politicians, really bother me, especially when none of them seem to address the real problem, and only seem to be bandaids.

The REAL problem, as I see it, is that lenders are allowed to advertise using direct marketing methods, including both paper and electronic mediums. Since we bought our house, we’ve been deluged with refinance offers from a large number of companies, all wanting to help us take the equity out of our house or save money on payments with a lower rate. People on the border of not having enough cash to cover their bills are, I suspect, very vulnerable to those types of offers.

What’s really unsettling is that, even in the midst of this crisis, despite being on of the companies in deep trouble because of their past lending practices, I’m still getting emails from Countrywide (who is the current holder of our loan) promoting a poor financial choice in the current housing market.

“Mark, your estimated home equity may be as much as $xxxxx. You may be able to refinance, possibly lock in a lower interest rate, and receive up to $xxxxx cash from your home’s estimated available equity!”

They say it like it would be a good thing to remove any cushion I have with regard to being able to sell my house if I wanted to. I also can’t see how this is good for them in the long run, as I bet many of the people that take them up on these refi offers (especially right now) will end up upside down on their loan.

For other types of debt products, the worst offender in my book are the credit card companies. They send you pre-approved application after pre-approved application until they find the combination of numbers that gets you excited about going and buying whatever it is you want. They send them to college students who HAVE NO INCOME! These behaviors are predatory, as far as I’m concerned, and should be illegal. Why is our economy teetering on the edge of a knife? We’ve tapped out our credit. Financial institutions won’t even lend each other money anymore because they’re afraid they won’t get it back. The people in this country can’t afford to pay their debts, plain and simple.

Imagine a world where lenders couldn’t advertise debt “products” (calling a credit card a product makes me ill) directly to the consumer. No more pre-approved accounts in the mail. No more loans that come disguised as checks (this one really makes me want to scream). No more refinance “opportunities” in your email.

I think our economy would be sitting on a much more solid foundation than it is today. The sub-prime mortgage crisis may still have happened. Go figure – sub-prime seems to me to indicate something along the lines of “risky fucking borrower”. But I suspect that it wouldn’t be near the crisis that it is, as people might only be in debt up to their waste, instead of up to their eyeballs.