Friday, May 15, 2009

Edmund Andrews Bares a Lot

What a stunning confession!
A "sophisticated" NY Times writer, on economics of all things, documents how he descended into the world of unaffordable subprime mortgages, not as a reporter, but as a participant, and not for the purposes of reporting.
It is an incremental slide, and makes one realize how helpless many people would be in the hands of mortgage servicers similar to the one Andrews worked with.
Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds. We all had our reasons. The brokers and dealmakers were scoring huge commissions. Ordinary homebuyers were stretching to get into first houses, or bigger houses, or better neighborhoods. Some were greedy, some were desperate and some were deceived.
As for me, I had two utterly compelling reasons for taking the plunge: the money was there, and I was in love. It was August 2004, just as the mortgage party was getting really good. I was 48 years old and eager to start a new chapter in my life with Patricia Barreiro, who was then my fiancée.

But the fact was he simply could not afford the sort of house he and Patricia expected to be able to have. They find a dream home, have an offer accepted and find a mortgage company. During the credit examination we hear:
What about my alimony and child-support obligations? No need to mention them. What would happen when they saw the automatic withholdings in my paycheck? No need to show them. If I wanted to buy a house, Bob figured, it was my job to decide whether I could afford it. His job was to make it happen.
“I am here to enable dreams,” he explained to me long afterward. Bob’s view was that if I’d been unemployed for seven years and didn’t have a dime to my name but I wanted a house, he wouldn’t question my prudence. “Who am I to tell you that you shouldn’t do what you want to do? I am here to sell money and to help you do what you want to do. At the end of the day, it’s your signature on the mortgage — not mine.”
You had to admire this muscular logic. My lenders weren’t assuming that I was an angel. They were betting that a default would be more painful to me than to them. If I wanted to take a risk, for whatever reason, they were not going to second-guess me.

Well, we don't know at the end how this comes out, but he is not in a nice place right now.
It is a long but interesting read.
Megan McArdle catches a specific point about this that I, not a writer by profession, missed.

They [writers] are extremely well educated, and all that education is not only expensive, but builds expensive habits. You end up with a lot of friends who make much more money than you--who don't even realize that a dinner with $10 entrees and a bottle of wine is an expensive treat, not a cheap outing to catch up on old times. Our business is in crisis, and we lose jobs often. When we do, it's catastrophic.
This is what David Brooks calls "status-income disequilibrium", and unless you are among that happy breed of writers who is married to someone with a high-paying job, or who has a trust fund, you feel it keenly. Everyone you write about makes more than you. Most of the people you know make more than you. And you come to feel that shopping at the farmer's market, travelling to Europe, drinking good coffee, are minimum necessities. Your house is small, your furniture is shabby, and you can't even really afford to shop at Whole Foods. Yet you're at the top of your field, working for one of the world's top media outlets. This can't be so.
And so the debts creep up, one happy hour or Colorado backpacking adventure at a time.
Until we're comfortable with talking publicly about the fact that we don't make much money and likely never will, that our lives are risky, and that this has obvious impacts on our ability to consume on the level of our educational peers, writers will keep getting into trouble. Bravo to Andrews for leaning into the strike zone and taking one for the team.

Of course the core of Andrews' story is not dependent on his having been a writer; other people have clearly fallen into the same hole.
On the other hand, I am certainly glad I never aspired to be a professional writer!

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