Irresponsible Lending's Biggest Losers
While the US sub prime mortgage fiasco unravels still further, the rest of us can begin to reflect on who the biggest losers will be in the final reckoning.Merrill Lynch or Citigroup with their billion dollar writedowns? More parochially, maybe Northern Rock? However, I read the other day a news report from the USA about the spiralling number of house evictions and foreclosures that are ruining peoples’ lives and devastating whole cities and neighbourhoods across Amercia. Foreclosures are currently around the 1 million mark- that’s an awful lot of people soon to be without a roof over their head!! Apparently, in poor industrial cities like Cleveland, 1 in 10 homes are sitting empty, abandoned and in many cases now vandalised.
In human terms, my vote for biggest losers has to go to those high credit risk people who listened to the TV ads and mortgage companies and believed it was right to take out a loan without fully understanding the risks involved.
I told Sam, a business friend of mine ,recently about a company director who complained to Graydon about the low credit rating we were giving his business.Sam said " Instead of complaining,he should be thanking you for helping him not to over extend his business when it clearly wasn’t equipped to deal with it".
Boy, I thought, the US sub prime mortgage business could have done with a few more Sams!!