The Blame Game

I recently finished Behind the Housing Crash, by Aaron Clarey (aka “Captain Capitalism” in the blogosphere). Aaron is a former analyst for several lending institutions in the Minneapolis/St. Paul metropolitan area who witnessed the housing bubble firsthand, and relayed his experiences in print.

I wrote Aaron a week or so ago to congratulate him on his book, and asked him the following question:

“…you lay a considerable amount of blame for the current crisis (rightfully, I feel), among several parties, including consumers, developers, bankers, government and Wall Street. In your opinion, what percent of the blame should fall upon low-income mortgage owners, who shouldn't have been approved for in the first place but benefited from governmental requirements to financial institutions to open up the aperture of loans? I guess said differently, do these low-income (and in many cases, minority) defaulters comprise a large share of the toxic assets? We hear a lot of political hand-wringing with regard to Fannie and Freddie, but were their failures just a symptom of a larger illness?”

As part of his response, contained here, he provides a pie chart with what he feels are the factors that contributed to the real estate bubble and ensuing financial meltdown. His answers may surprise you. They did me.