Diverting from Wall Street Bonuses for a moment, let’s look at that article by Stan Leibowitz from the Wall Street Journal claiming that subprime mortgages didn’t fuel the economic meltdown.

The writer claims he’s made a study and “found” that it is negative equity, not subprime loans, that led to the majority of defaults on mortgages. He’s claiming that prime loans with no money paid down are the major culprit (putting the blame back on the borrower again. Giving the public a slap in the face, with love from the Big Banks.).

Yeah. But when a loan company makes you a prime loan and you pay no money down, they will usually then arrange a second loan on top of the first to provide for that money normally given as a down payment on a house. Countrywide, for instance, made this type of arrangement. (Because somehow many lenders still paid lip service to the money-down standard, while shedding every other standard along the way.) That second mortgage might be a subprime loan and the WSJ writer has not identified it either way.

Either way, the no-money-down mortgage is a liar loan. It was improper to approve it. And furthermore: Liar Loans have a much greater impact on this WSJ writer’s “study” than he will say, because liar loans are supposed to be those in which the lender failed to ascertain the real financial status of the borrower.

That isn’t really what they are. They are more often loans for which the lender MADE UP  the financial status of the borrower — as testified to by a whistleblower former employee of Ameriquest.  See the interesting video.

So that’s two parts of his stats I don’t believe.

Borrowers can borrow only what you lend them. We know who started the meltdown and profited from it. Wasn’t borrowers…