The notion that American consumers share the blame for the mortgage crisis is a lie. And it is one of the most pernicious out there.
In 2010, an FBI report drawing on figures from the consultancy Corelogic put total fraudulent mortgages during the peak boom year of 2006 at more than $25 billion. Twenty-five billion dollars is obviously not nothing. But here again, teasing those mortgages out of that year’s crisis-related write-downs of $2.7 trillion from U.S.-originated assets leaves our infamous “cagey” borrowers to blame for only a tiny share of the damage, especially since not all of the fraudulent mortgages were their fault. The ratio looks roughly something like this:
Maybe a few people tricked their banks, but look at the massive leveraged write-downs that banks incurred. They lost all those trillions on risky investments created by their own industry. Not John Q. Public.