Subprime wheel of blame: It's the poor people, stupid

The subprime fallout has already been through a couple of the classic stages of grief: denial and blame. Earlier this year, newspaper stories revealed bitter bankrupt lenders ratting on their Wall Street investors, whom they say caused this mess. And Wall Street, not to be one-upped, punched back, blaming lenders for writing bad loans in the first place.

The latest scapegoat takes the cake for originality -- A "Wall Street trader"/ author writing an opinion column for Bloomberg News says it's poor people who caused this grief.

"So right after the Bear Stearns funds blew up, I had a thought: This is what happens when you lend money to poor people," Michael Lewis writes in the opening line. (See full opinion piece here, "A Wall Street Trader Draws Some Subprime Lessons.")

Among Lewis' thoughts about poor people: "They're masters of public relations," he says, and "Poor people don't respect other people's money in the way money deserves to be respected."

Commenting on the fact that many subprime borrowers had poor credit histories and then fell behind on their mortgage payments, Lewis makes no mention of the notion that these people may have been targeted by predatory lenders or misguided as to the terms of the loans there were given.

"Don't get me wrong: I have nothing personally against the poor. To my knowledge, I have nothing personally to do with the poor at all. It's not personal when a guy cuts your grass: that's business. He does what you say, you pay him. But you don't pay him in advance: That would be finance. And finance is one thing you should never engage in with the poor," Lewis writes.

Maybe Lewis is just trying to be funny (come on, no one is this insensitive, are they?), but there is some truth to what he's saying -- some borrowers most likely were not in a position to take out a mortgage, whether it was subprime or traditional, and they got themselves into unrealistic financial situations. But with Congress and the mortgage industries all cheerleading homeownership, can we really blame them for getting caught up in the hype? Homeownership is the American Dream, and it was dangled in front of everyone as an attainable goal.

Would love to hear your thoughts.

(Add: Here's a bit about Mr. Lewis and his books.)

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