Income is tightly correlated with the sophistication to understand what it being sold to somebody. Does the government have a responsibility to protect those that are less "able" to make the correct decisions, and if the government protects these people, where is the line drawn? (to not intrude into the decisions of those that are able to take their own decisions given full information and which make economies grow and markets move?) Perhaps the old liberal vs. conservative argument - should the government help some people and by establishing policies to help such people, do you then perhaps create an environment that is less conducive to growth (and thus end up with a smaller pie, and helping them less to start with).
Back to the mortgage market - I personally find it hard to believe that given the extent of the paperwork, and the size of the economic transaction, that these people were actually taken for a ride. I think it was wishful thinking (to buy a home knowing very well the risks inherent in the mortgage), the same wishful thinking that the experienced people went through - that home values would never decline, that refinancing is always an option (that led these people to take out these loans).
Why were minorities overrepresented in sub-prime pools - partly because of lack of education (taken for a ride) and partly because they are poorer and have worse credit on average (than non-minorities). Having said that (even if they were taken for a ride), it doesn't mean that they didn't make the decision (to buy a home or refinance) knowing that there wasn't a risk...
In general, I don't support the supposition that on average, the customer was taken for a ride - its too much of an important transaction for anybody, no matter their financial circumstances to claim that it wasn't their fault. Make buyers very responsible for the decision and potentially we would not have had this extent of a mess.
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