The point of the game was to originate mortgages to distribute to somebody else, not to hold these loans on their balance sheets. The banks got so greedy that many of them got stuck with large amounts of toxic assets they’d thought they could foist on others. That behavior may have been wrong, but it wasn’t necessarily dumb. There were a lot of non-bank actors involved, too, and they acted perfectly rationally—if unethically and immorally (and let’s not forget: illegally!).

There’s other nonsense in here. Like this:

In short, the root cause of the meltdown wasn’t that customers borrowed too much; it’s that banks lent too much.

Somebody has to borrow for somebody to lend, you know.


We should remember that for every mortgage customer that was hosed, others were willingly grabbing all the unsound mortgages they could get.

So screw those who got screwed! That’s the old blame-the-homeowners chestnut modified to acknowledge the preyed-upon but put them down the list of priorities—as if they were on top anyway.

All this twisted logic begets a twisted conclusion:

Rather than stop lenders from hurting consumers, the first priority should be to keep the banks from harming themselves.

No, that’s wrong, and it’s captured thinking. The point of a banking system in an economy is to serve consumers, not to serve itself profits. They’ve knifed consumers with near-impunity for too long. Suggesting that the stability of the financial system should be prioritized over protecting consumers is wrong—and a false choice.

What a mess.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at