Exploding idiots

Ben Smith quotes Obama on Leno, who appeared to be paraphrasing someone at Harvard:

Obama, last night on Leno:

When you buy a toaster, if it explodes in your face there's a law that says your toasters need to be safe. But when you get a credit card, or you get a mortgage, there's no law on the books that says if that explodes in your face financially, somehow you're going to be protected.

Harvard's Elizabeth Warren in Democracy's Summer 2007 issue:

It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street–and the mortgage won’t even carry a disclosure of that fact to the homeowner. Similarly, it’s impossible to change the price on a toaster once it has been purchased. But long after the papers have been signed, it is possible to triple the price of the credit used to finance the purchase of that appliance, even if the customer meets all the credit terms, in full and on time. Why are consumers safe when they purchase tangible consumer products with cash, but when they sign up for routine financial products like mortgages and credit cards they are left at the mercy of their creditors?

Your toaster is exploding? My head is exploding.

For all the talk of people being cheated on their mortgages, I have yet to see a single news story about a person being cheated on their mortgage. I've seen stories about a woman with a $1.3m home whose interest rate was a "whopping" 7% (which isn't whopping at all for a home that large). (Oh, and ABC didn't bother divulging that the "poor" woman had a million-dollar home.) I've seen stories about a 30-something couple, who both went to Ivy league schools and decided to buy a house with an adjustable interest rate, and then when the rate went up, just like they were told it would, they couldn't afford it any more. The wife was crying on TV, in her now-empty home, talking about how she and her husband KNEW they couldn't afford the ARM after it went up, but they also "knew" they could sell the house before that and make a killing.

Well, boo freaking hoo for you.

People aren't being sold defective toasters. They're being sold good toasters, and bringing them into the shower to play with them because they're idiots. (These are the same brainiacs who need warning labels on McDonald's coffee to let them know that it's hot.)

I am willing to believe that some people, even a lot of people, got cheated on their mortgages. But for the life of me, where are they? The government is not in the business of making sure I'm not a blithering idiot (in fact, sometimes we even elect them). This notion that somehow mortgages are inherently dangerous products that per se need to be regulated. I just bought a condo. I watched interest rates every single day for two months, constantly bugging my mortgage broker, or whoever she was, about the best rate I could get. At my closing it was clearly explained to me how my mortgage worked. I scoured my finances, saved for years, all to ensure that even if this year is a disaster, I can pay my mortgage out of my savings for at least a good while.

What is the problem here?

Again, I am happy to believe, and do believe, that some people got cheated on their mortgages. But how many news stories do we have to see - how many people do each of us know - who are now skating on thin financial ice because they speculated on a get-rich-quick mortgage, and lost? I have zero sympathy for these people. And presenting it as though "evil" mortgages did these people in, when their own evil avarice and stupidity got the better of them, is increasingly annoying and disingenuous. It also means that whatever "fix" our government comes up with is going to be a bit of a mess if we can't even understand the real problem.