The Death of Personal Financial Responsibility in America

It is becoming increasingly difficult to view an entire financial news segment without some mention of the nation's current housing crisis. Foreclosures are at an all-time high, and with interest rates on the rise it seems even more are at risk thanks to the popularity of adjustable rate mortgage products. As with all great national struggles Congress is hard at work looking for someone to blame. While banks and predatory lenders should take their share of the blame, the overwhelming majority of those responsible for the current personal financial crisis are consumers themselves. Sure, those no-money-down interest-only loans looked nice through the banks window, but no one forced you inside to sign up. And those 0% financing offers at the new car lot seemed to justify spending $30,000 plus on a new car, but it didn't change the fact a more reasonably priced used car could have served your driving needs.

The Blame Game
The American consumer has recently had an insatiable appetite for debt, snapping up mortgages and car loans at record rates over the last few years. A combination of low interest rates, increased competition, and the addition of "sophisticated" loan products has spurred the increased borrowing. Now that rates have ticked up, competition is consolidating, and new loan models have received criticism it seems the American consumer has awakened from their slumber and is angrily looking for someone to blame. Fortunately for them, Congress and several of the candidates for president 2008 are eager to take up their cause.

Hillary to the Rescue
We recently learned of Hillary Clinton's glorious plan to save us from financial ruin. During a recent campaign stop in New Hampshire, Clinton said "It's a combination now, of economic conditions that are not working for the majority of Americans, and unsavory practices that are undermining the dream of home ownership." You are correct, Mrs. Clinton, that "unsavory" practices have led to the "undermining" of home ownership. However, it is us, the American consumer, who has allowed these unsavory practices to continue. It is us, the American consumer, who continues to spend more than we make, save nothing and borrow ourselves in to oblivion. Clinton's solution, besides penalties for lenders deemed predatory, is the establishment of a $1 billion fund to assist homeowners in avoiding foreclosure. Short of making mortgage payments for those in trouble, I'm not sure what $1 billion in a federal fund would actually do to intervene on the consumer's behalf. When did it become the responsibility of the federal government to bail out homeowners behind on their mortgage?

Personal Responsibility
What is comes down to is personal responsibility. If people stopped buying more than they can afford with money they don't have from people who shouldn't be trusted then we could at the very least stop the bleeding. Those already in over their heads should consider selling their home and downsizing, or picking up a second job, or refinancing to a more traditional, fixed-rate mortgage. The last thing we need is for a new generation of Americans expecting to be rescued from their fiscal stupidity by their government.