What's Missing from Edmund Andrews' Mortgage Tale
Times economics reporter Edmund Andrews is the author of "Busted: Life Inside the Great Mortgage Meltdown," an upcoming book on his personal experience with the mortgage crisis. The book is due out next month, but the May10 New York Times Sunday Magazine ran a 5,000-word excerpt under the heading "My Personal Credit Crisis." But is Andrews telling the whole story?
It's certainly a compelling opening:
If there was anybodywho should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times, I have been the paper's chief eyes and ears on theFederal Reservefor the past six years. I watchedAlan Greenspanand his successor,Ben S. Bernanke, at close range. I wrote several early-warning articles in 2004 about the spike in go-go mortgages. Before that, I had a hand in covering the Asianfinancial crisisof 1997, the Russia meltdown in 1998 and the dot-com collapse in 2000. I know a lot about the curveballs that the economy can throw at us.
But in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. 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.
But part of Andrews' story didn't make the book. Megan McArdle at The Atlantic did some digging through court records and found the Andrews' story of their plunge into debt, and victimization by irresponsible bankers and mortgage brokers, not quite as simple as presented by Andrews:
At the end of his book's harrowing account of mortgage mistakes and credit card crises,Edmund Andrewswrites:"While our misadventure had certainly been more extreme than those of many other Americans, our situation was not all that unusual."And indeed the book reads like the story of an American Everyman, easily sucked in to the alluring world of easy credit as he struggled to blend a new family.The terrifying implication is that it could happen to you - to anyone who leads with their heart and not their head.
But en route to that moral, it turns out the story has been tidied up a little.Patty Barreiro, Andrews' wife, has declared bankruptcy twice.The second time was while they were married, a detail that didn't make it into either the book or the excerpt that ran in last Sunday's New York Times Magazine.
Andrews' desire to shield his wife is understandable - hell, laudable.No decent person wants to parade their spouse's financial trouble in front of the world.But this is material information that changes the tenor of his story.Serial bankruptcy is not a creation of the current credit crisis, and it doesn't just happen to anyone, particularly anyone with a six figure salary.
In September 1998, California bankruptcy court records indicate that Patty and her first husband declared bankruptcy.The financial statement they filed with the court indicated family income of $174,000 in 1996, $87,000 in 1997, and $126,000 in the first nine months of 1998.The income fluctuations are not surprising, given that her husband was in the film production industry.By the time of the filing, the couple owed about $30,000 on 8 credit cards, over $200,000 in back taxes, and almost $15,000 in private school tuition, as well as substantial car and mortgage payments.
Andrews has been admirably open about many of the poor decisions and the wishful thinking that led him deep into debt.Nonetheless, he has laid much of the blame onto irresponsible bankers and mortgage brokers. The missing bankruptcies substantially undermine this basic narrative arc of Andrews' story.Particularly in his book, the bankers are the villains, America's current troubles are the inevitable denouement of their maniacal greed, and the Andrews household stands in for an American public led, by their own greed and longing and hopeful trust, into the money pit.