October 24th, 2008
10:25 AM ET

Culprits of the Collapse – #1 You


So who is to blame for this financial fiasco?
That’s the question we’ve begun investigating.
We’ve put together a list of the Ten Most Wanted: Culprits of the Collapse.
#1 on our list: This time we look at you, the consumer. CNN's Randi Kaye reports.

soundoff (83 Responses)
  1. Lynn pitzer

    Anderson, How about adding a hedge fund manager to your culprit's list with regard to derivatives involving the mortgage market?

    October 26, 2008 at 9:22 pm |
  2. Juan

    Wow. It wasn't long ago that I was name Person of the Year. Not I'm here caught red handed.

    October 26, 2008 at 5:12 pm |
  3. Steve

    Thank you for having the courage to say this. Personally I think it was about time that somebody came out and said it. I, let me repeat that, I, do my own financial calculations and know what I can afford. I have no problem making the mortgage payment. I carry no credit card debt, student loans or even car payments. I live within my means. Unlike some of those that have responded and want to blame the President because “he” spends too much or doesn’t lead correctly or because they have high credit card interest rates or can’t help but apply for every credit card application that comes in the mail, I actually think for myself and know what I can afford. I don’t feel upset in the least that AC has the finger pointed at everyone because I know it is not pointed at us. Notice how many times I used “I”? AC and CNN had to include themselves and “everyone” for the simple fact that if they came right out and said what we the responsible already know there would have been a much bigger outcry then what there will be.

    October 26, 2008 at 2:01 pm |
  4. Bob

    Right on!!! Thank you for having the guts to point the finger where it belongs. On those same lines, why don’t we reward those who sat on the sidelines during the last 5 years, and did not participate in the process of applying for 'No Document' or 'Stated Income' mortgages which they could not afford, instead of lending a hand to those who may have cheated the system in the first place?

    Here is a better, fairer idea for solving the credit crisis:

    Why not offer $400 Billion of low interest rate loans ONLY to those who did not participate in the ‘no doc’ or ‘stated income” loans of the last 5 years. This would represent a buying power of almost 2.5 million homes, which is more than half of the country's entire real estate inventory backlog. Given the average mortgage only lasts 7 years, the treasury can float a mix of 5 year and 10 year notes at a blended rate of near 3%. Take this money and offer 3% mortgages, which would be approximately half the current mortgage rate for a new home, and you will stimulate a mass of home buying like never before. As a country where we should reward those who are deserving and not bail out those who have misrepresented themselves, offer these mortgages only to Americans who have not refinanced, or purchased homes/condo’s during the last 3 years by utilizing sub-prime loans, ‘No Doc’ and ‘Stated Income’ loans.

    How will this solve the crisis?

    1. Home inventories would quickly diminish, as this potential buying force would be very substantial.
    2. Home Prices would rise, especially with the low cost mortgages making home prices more affordable.
    3. The overall real estate market sentiment would improve dramatically, and almost immediately, which would serve to quickly fuel the healing process of our economy.
    4. Mortgage foreclosures would decrease as the home prices rise. In the cases where the current homeowners still can’t afford to stay where they are, there would be foreclosures. However, the massive pool of new buyers would gobble up these foreclosures and stabilize the pricing.
    5. In effect, the new buyers, who have better credit , will replace the homeowners who cannot afford to stay in the homes they purchased which they could not afford. This will stabilize the prospect for our future.
    6. Mortgage Backed Securities and Collateralized Debt Obligations, and related products, which are being held by financial institutions worldwide, would increase in value as the home prices firm up, fueled by this wave of buying supported by low interest rate loans. This would bring stability to financial institutions worldwide, and would free up credit.
    7. The $400 Billion would reward the people who are not responsible, and would not cost taxpayers anything, because the money would be spent on housing where the buyers are quality buyers.

    October 26, 2008 at 12:31 pm |
  5. Charles

    Congressional misfeasance resulting in the fraudulent misuse of tax funds should be at the top of any list. The implementation of new administrative rules for the Community Reinvestment Act in 1995, which essentially forced financial institutions to loan money to people whose credit worthiness was suspect, also played a significant part in the current financial panic.

    Congress should call for a thorough investigation into this matter, but probably won't since the controlling party bears the brunt of responsibility in this entire collapse.

    October 26, 2008 at 12:08 pm |
  6. APG

    Once again CNN gives a pass to Barney (I had nothing to do with it) Frank, Chris Dodd, Chuck Schumer and the rest of those finger pointing doofuses on Capital Hill. Oversight? I call it no sight. They encouraged lending institutions to make all these risky loans to low income Americans that didn’t know what they were getting into. So who does CNN blame instead, the entire American populous.
    I pay my mortgage every month and drive economic automobiles that are paid off or close to it. I work 50 hours a week and my wife does too. So go ahead CNN put the blame on middle class Americans that bust their but every day instead on the do nothing congress, that’s been run by Democrats for the last two years. What the hell, we’re just the ones that keep this country going, that’s all. Will the real journalist please step forward.

    October 26, 2008 at 11:07 am |
  7. Eric Robinson

    Wow, the concept of identifying who is to blame so that we can reduce the odds of this repeating itself is a fantastic idea. I applaud CNN for attempting to do so. Unfortunately, CNN got most of the culprits wrong with "you" being the most ridiculous proposal. You cannot fault those that are playing the game only those that make the rules to the game. CEOs and consumers are just playing the game that the government has laid out. It is the failed policies of our government that has caused the collapse. While Capitalism is clearly the best foundation for an economy a complete Lasie Faire approach always falls short. The lack of regulation is the cause of our mess. Even Greenspan had finally come that conclusion. If the rules of the game were set up correctly then a balanced growth can and will be achieved. How could you possibly fault the consumer who is given credit while someone else takes on most of the risk? It is simply good business to buy a house with nothing down and let the bank take all the risk. Shame on CNN for not emphasizing the real problem to reset the mindset for the future. Maybe the media should be the #1 culprit in its inability to provide a legitimate analysis? History will repeat itself if appropriate government regulation is not put into place.

    October 26, 2008 at 1:14 am |
  8. Janice

    I suppose the Republicans would label my family "Joe Six Pack" and this is why I find 360 adding me to their list offensive. I have an education a husband, two kids and live the middle income existence we keep hearing about. I owe much less than my house is worth, drive cars that are over 7 years old, have no credit card debt and live within my means. Please don't assume all middle income earners are uneducated, in-debt losers. There are a many of us who are intelligent individuals that have simply chosen to spend more time with our families than at work.

    I think Anderson needs to put some type of qualifier on his label.

    October 25, 2008 at 11:38 pm |
  9. E. Red

    Why are there no realtors on the list?

    The obvious candidate is David Lereah, former Chief Economist for the National Association of Realtors (NAR). He was the tireless cheerleader of the housing bubble from start to finish. Many other NAR and local spokespeople come to mind, for example Leslie Appleton-Young of CAR (California).

    But in reality, ALL realtors are collectively to blame as a group. Realtors were the ground zero of the housing bubble, and they deserve a very large portion of the blame. It is not just about the financial industry, it is about the Real-Estate Industrial Complex.

    October 25, 2008 at 9:58 pm |
  10. Lonnie

    You list a whole bunch of CEOs, a seantor that hasn't been in congress for six years, and us. You completely ignore the current congress with culprits like Chris Dodd and Barney Frank. What a crock.

    October 25, 2008 at 7:22 pm |
  11. Dick

    I can't believe you are letting the rating agencies off the hook. These guys are the one's that told everyone the piles of stinking mortgages were AAA or AA credit. That is like letting an appraiser that comes in at 150% of real value off the hook. The rating agencies are culprit number 1.

    October 25, 2008 at 6:39 pm |
  12. Randhir

    The public have been goaded into buying for the last 30 years.

    Buy,buy,buy....Keep the conomy humming the leaders say.

    It has become a habit they can't shake.

    No one says save save save and save the nation.

    Now we blame the people for being patriotic.

    But you are doing a good job Anderson and I look forward to the other culprits that you will name in the coming days.

    How about the financial media that keep talking up the market.

    CNBC comes to mind. Watch it sometime. It is like a circus from 9 am onwards. Each segment trying to outdo the other and it is a party daily.

    They are petrified that if the market comes down to its true level none of these so called "CNBC all stars..." will have a job.

    They have done and continue to do a big disservice to the country.

    October 25, 2008 at 12:11 pm |
  13. Cynthia

    Did enjoyed the segement

    October 25, 2008 at 10:15 am |
  14. Cynthia

    I missed the last one,but I refused to accept that I caused this. I had four different income when I purchased my home. I worked for the company that intially gave me my mortgage. 7 months after puechase the company that I had worked for for 10 years downsized and out the window went one income. One child graduated from high school and out the window went two income. I have manager to lose all income through no fault of my own. ver 2years unemployed with no hope insight. Mortgage sold to another company and required to pay $400.00-800.00 more a month with nothing coming in. I trully missed something here

    October 25, 2008 at 10:14 am |
  15. Elvis

    I had money down on Paulson being the #1 culprit. As head of GS he petitioned the the Gov't to allow increased leverage and sold these MBS's CDS's, etc to Pensions, SWF and Gov't across the globe. Now he is the person in charge to put the fire out!

    We couldn't afford a house even with two salaries near 100K ea. We just saved. We don't deserve your finger. You and the top 10 deserve ours!

    October 25, 2008 at 9:05 am |
  16. Tam D. san jose, california

    Okay, this is getting me mad. We the people were tricked, and lured into something we can't possibly known well of. We thought (for myself only here); that wow! since the interest rate was so low, seeing people with their monster home across the street and why not. We kept reading, and hearing on the "news" on a daily basis how it would be such a wasted of chance not to be in it. We were bombarded with messaging you need a home. No one from the credit lenders to banks and even the agents said this was a trap, don't get hooked into it. NO one stopped us, NO one came out to said...hey something stink, maybe because they're all just crooked thieves as those politicians and on Wall-Street, after all they do get commissions.

    (You see, once the people get "smart" and realized they in a mind-control stated, ooohh look out!)

    I don't know what kind of world you and everyone living in, but in our currently renting home. Things breaks down, and have broke down even when we did buy the top of line model. It an automatic an upgrades This and That just so you can finished your work, homework, or whatever. Starting next Feb. either we have to upgrade or left behind on our tv sets. I remembered we used to have a washer and dryer that last for years and years. Now if we're lucky, a few more years before it breaks down. Maybe, just maybe the superwealthy can distributes some of their money instead hording it, hiding it and sending it to some offshores accounts to fled from the I.R.S. never have to pay for taxes "The Cheating of America" by Charles Lewis and Bill Allison How Tax Avoidance and Evasion by the Super Rich Are Costing the Country Billions...Even if those fat cats can't spares some dollars, couldn't they be satisfied with what they got?.

    All i'm saying is, this is a political issue, a social issue, and maybe a cultural issue that it must be looking into.

    October 25, 2008 at 2:21 am |
  17. Johnny Smoke

    Oh... and btw VW is running a promo on their new car the Routan (and all their cars for that matter) with $0 down and a signature loan. I hope VW doesn't take anyone up on this.... we may end up having to bail them out too.

    October 25, 2008 at 1:37 am |
  18. Joyce Delbosque

    I agree with all the names on the culprits of the collapse list except for one and that is Mr Greenspan. This has to do with INTENTION. He did not profit millions from decisions he made like these culprits have.
    After all he would not have been the Fed chief for nearly 20yrs
    if he did not make decisions based on what was in the best interest of our nation!
    Las Vegas

    October 24, 2008 at 11:28 pm |
  19. Bill Hewitt

    Bush and Clinton and Obama and McCain and Pelosi and Reid should be on your list because they pushed FREE TRADE and voted for more debt and war. Bush must really hate McCain because he has made certain that Obama and his terrorist buddy Ayers will win the election by bailing out all his wall street cronies and crooks. Bush is a good used car salesman getting Nancy Pelosi, Barack Obama, Hillary Clinton, Harry Reid to bailout the wall street crooks by giving Paulson $1 TRILLION of taxpayer's money. I believe Paulson should be called ringleader of the Bush Bank Robber's gang. These bank robbers have placed a $63 TRILLION debt on American taxpayers according to congressional testimony in the past 2 weeks. Only the new democracies in latin america, Venezuela, Argentina, Bolivia, Ecuador, and Nicaragua will escape the coming world depression because they were smart enough to dump FREE TRADE and IMF and World bank.

    October 24, 2008 at 11:27 pm |
  20. James

    Oh this is good. So explain to me how I am the culprit? I didnt go out and try to buy a home that I couldnt afford. Take an adjustable rate loan. Borrow against the equity of my over inflated home value to go buy cars, boats, etc... I worked my butt off to stay afloat and put food on my families table. I didnt live beyond my means. This is great. First the government uses my money to bailout people who took on too much debt and now I am getting blamed for it!

    October 24, 2008 at 3:09 pm |
  21. Gisselle - Houston, Texas

    As a responsible consumer I will share .000001% of the blame with the irresponsible ones, wait no, that is just way to much how about 00000000000000%.

    Sorry guys there are people out there living outside of their means but all I have to say is, if the glove don't fit- you must acquit right? So I don' take offense and think the #10 culprit of our financial collapse was chosen right.

    To all the responsible people out there, don't take it to heart, they aren't talking about you but perhaps one of your relatives, friends or coworkers, look around and you shall find a #10 whipping that credit card out though it is close to the max!

    October 24, 2008 at 3:06 pm |
  22. Drew D'Acquisto

    Let me tell you what I think the reason is for the financial collapse. It's something that has yet to be talked about, and I fear will never be addressed. It is the foundation of our lending system and is at the heart of the problem.
    In order to best illustrate my point I will explain it allegorically.... Two families walk into a bank looking for a $350K loan to buy a house. One family is middle class with 40K of debt in student loans and is looking to buy their first house. Together they make $75K a year. The second family is upper class, with no current debt, and is looking to buy a vacation home and makes $280K a year. The bank has decided to give both of these families a loan. The first family is considered a medium risk loan and will be give a 30 year fixed loan at 8%. The second family is considered very low risk and will recieve a 20 year fixed loan at 5%. Seems normal enough, because it is.
    What we are not paying attention to is the fact that the first family is being charged more money than the second, despite the fact that they make less and will have a harder time paying off their loan. So the banking industry is knowingly making it more difficult for the first family to pay back their loan and taking more money out of the pockets of those who need it the most. We in turn see many of these families facing late fees and penalties and then increased interest rates when they have difficulty paying this mortgage on time when an emergency comes up. This makes it even more difficult, and often leads to the foreclosures we are seeing by the thousands. Until these practices are changed and we see both investors treated equally we will continue to see more foreclosures and a greater discrepency of wealth between the upper and lower classes!

    October 24, 2008 at 3:05 pm |
  23. Johnny Smoke

    Wow! You're on to us CNN

    It was us that laid awake at night dreaming of ways we could convince credit card and mortgage companies to spend millions of dollars on ads, marketing and lobbyists so they could assure us their financing schemes were "all the rage", non-predatory and part of the American Dream. It was us who suddenly grew brains by creating financial instruments such as CDOs and then sold them on the secondary markets as highly rated debt products. It was us who passed legislation to make bankruptcy more difficult and oversight of Fannie Mae/Freddie Mac more difficult. It was us who willingly and sheepishly watch your ads about which products to buy and how to attain lifestyles beyond our means. Shame on us!

    Now it makes sense to me why we should give the poor old, dumb corporations more of our money. We duped them. They didn't stand a chance against our sheer and tenacity.

    You better watch out... the next thing we'll be doing is bankrupting all these precious metal companies and reverse mortgage firms that endlessly advertise on your lil' ol' TV station. I'd hate to see us run Robert Wagner out of the good gig he's got.

    JS – Houston, TX

    October 24, 2008 at 2:50 pm |
  24. Stacy

    Bravo CNN for having the guts to say what had to be said. Finally naming each and every one of us as one of the ten most wanted culprits of the collapse is exactly what consumers needed to hear long ago. It's high time we all start taking responsibility for our own actions and decisions in all facets of life. What are we teaching our children about being responsible Americans and human beings when we accept no blame for our own poor judgment? Let the buck stop here and America let’s grow up! Take some responsibility for yourself, your family and the state that our country is in on so many levels.

    October 24, 2008 at 2:47 pm |
  25. John-Albert Dickert

    Dear Mr. Cooper,

    I enjoy your show but strongly disagree with your view on the "collective guilt" of American's for this episode of unbridled greed and deregulation of our market place. No sir! Not all people are greedy, not all people spent beyond their means nor did they lie, cheat or steal to make a living.

    This is not coming from the vantage of moral superiority, not whatsoever. We all have our short commings. I have known people who lost their livelihoods because they would not lie, cheat or steal, who were cast off because they were a constant reminder to those who were lying, cheating and stealing their way to false success that indeed their success was a horrible lie. And one which is now catching up with them.

    All collective guilt allows is the opportunity for those guilty to escape accountability and punishment. Which you yourself have tried to ensure not to happen. I think you need to rethink the number ten spot and put someone who belongs there and not the "You" that you have.

    Perhaps you should do a Ten Most admired for having the courage to be honest!

    I hope you think about this and give it your consideration.

    In Truth,
    John-A;bert Dickert

    October 24, 2008 at 2:35 pm |
  26. BMCinSC

    This is investigative reporting? What a joke. What about the role of ACORN and Congress in forcing banks to lower their credit standards? BTW, like most great Americans, I'm current on my mortgage payments – so don't spread my wealth around to cover up inept leadership and oversight of our Do Nothing Congress.

    October 24, 2008 at 2:31 pm |
  27. Pamina

    I was wondering if you were finally going to point a finger at the rest of us. We, the public, had a part in all of this too. This is a nasty wake-up call, but one we probably needed to get. I know I learned my lesson.

    October 24, 2008 at 2:22 pm |
  28. Brad

    SORRY CNN, but it's NOT me. I pay all of my bills on time. I have no credit card debt, only a mortgage, and only buy what I can afford. I agree with everyone else who has already posted the same response before me. Nice try CNN. Try to get it right next time.

    October 24, 2008 at 2:21 pm |
  29. KG

    George Bush is on a list of his own as the worst president of the U.S., the economy is part of that rating. I think most people already know that. The list of 10 culprits of the collapse is to show us who else is responsible for the mess we're in aside from Bush. Whether you like it or not we are also responsible for this collapse. If we weren't a nation so dependent on credit for the things we need and want, then maybe the economy wouldn't be where it is now. There are people out there who have paid all their debts and lived within their means but there are more people who live to spend, spend, spend thinking they have the funds to do that, little did they know. Maybe it's time to reevaluate our credit system and think of other ways to save and spend our money wisely.

    October 24, 2008 at 2:17 pm |
  30. SAntonio

    This is gravely misleading, debt of the American public helped bring down the financial system of the US and the rest of the world. Not correct!
    Follow me on this, let say half of the population were irresponsible and borrowed too much, under the old way of doing business, this would have stressed and most likely, bankrupt, a few dozens banks. The FDIC would have stepped in and cleanup the problem. The result would not have threaten the financial fabric of this great country nor the rest of the world.
    While you blame the public and identify a few (deservingly) culprits,
    there so many other heads of institutions given a free pass like the rating agencies,
    insurance, investment banks (GS, MS, all of them) and the Government
    Please, please inform yourself on how this house of card was created.

    This is a good book as any, Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve by William Fleckenstein and Fred Sheehan

    October 24, 2008 at 2:15 pm |
  31. John Grinold

    Your omission of the obvious roots of the collapse in government policies to encourage lending to the "undeserved". Barney Frank, ACORN, Maxine Waters, FANNIE MAY bribes to Chris Dodd.

    Your agenda is transparent and partisan. Vilifying CEOs does nothing to solve any issue. We can vote out the corrupt left but unless we are the stock holders the CEO who operate within the laws are not our concern.

    October 24, 2008 at 2:06 pm |
  32. Ignacio

    I remember the 70´s when all Latin American countries where in deep debt, because of easy money that came from loans provided by "oil countries" of the so called "petrodollars".

    On that era was there was discussion going, that if those countries should pay said debt, specially if the lenders knew the debtors had a "no-paying" power. I think that discussion still in process on the so called "Paris Club" and some countries still in deep poverty and deep debt.

    Interesting how story repeats itself. For Americans and the rest of the world is PAYTIME. So we will see in a few years most of people will over come this situation, but some others will stay in poverty and in debt.

    I hope this time we can get to a conclusion on how much punishment should a lender get for giving bad loans? I think NONE, every body should pay its own debts or pay the consequences.

    What I don't think is acceptable is that CEOs and corporations have cheated their investors regarding the risks they were taking with their moneys. And my last question: DID ANY ONE KNEW IT WAS COMING IN?

    October 24, 2008 at 1:52 pm |
  33. Ida

    CNN should be listed along with all the other media outlets that have reported endlessly on all this stuff and made it all sound so normal. Where were the alarm bells?

    When housing prices outstripped people's ability to pay for them because wages were flat – I didn't see the big expose' by the corporate media explaining that it was untenable and that is would have to explode at some point.

    Where were the discussions of the stock market instruments that were and are a ticking time bomb?

    CNN, along with the rest of the corporate media should point that finger directly at themselves and ask where were we when we could have made a difference? Why did we continue the cherade that everything was fine and normal, that the Bush administration was just another presidency, etc, etc.

    Take a long hard look in the mirror, CNN, where were you when it mattered? Where are you now?

    October 24, 2008 at 1:50 pm |
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