Move over Eastenders the next soap opera is here

Earlier this week, whilst catching up on news from America, I came across an article in the New York Times announcing, "The credit crisis is no longer just a subprime mortgage problem."

As for the rest of us, we haven’t exactly been waiting on the Grey Lady’s proclamation. Economists, analysts and the financial press have effectively analyzed this whole mess from every angle, and long ago concluded that we will be seeing the knock-on effects of subprime lending and housing market reversals -- including defaults of "prime" loans -- for some time to come.

What I find interesting about this and other mainstream media coverage isn’t that it’s late to the game. What’s fascinating is that it doesn’t even bother with analysis or explanation. Instead, the NYT sets a dumbed-down, soap-opera scene: scheming banks and mortgage companies "cajoled or pushed" clueless, well-intentioned borrowers into taking risky loans! Now, they’re tightening the screws by tightening lending standards, forcing honest "prime" lenders to default on debts, and ruining lives. Hapless non-affluent homeowners have become the latest victims of the capitalist money machine. Rate cuts and rebates can’t save them, and there’s nothing they can do!!!

Whew!

Wouldn’t it be nice to instead see some level-headed discussion of how the booming housing market led speculators, investors, originators and securitizers to create housing inventory, loans and debt products that went beyond sensible risk tolerances?

Why not educate the public on why the debt bubble burst, break down why the system wasn’t prepared for the shocks, and talk about one silver lining of the crisis: the growing awareness and adoption of risk and performance management practices that can make a real difference in helping banks better forecast and weather future extreme risk events. And while we’re at it, how about reminding the public that investing in home ownership is a risk, not a right, and that financing that risk is the responsibility of the owner/borrower? After all there is the standard clause in the mortgage contract that states "your home is at risk if you do not keep up repayments on your mortgage".  If you decline to make an educated decision and take a loan you can’t afford, there’s no one really to blame but yourself.

That’s a line I’d love to read in the media.