This is an interesting story. I wonder when some good data for analysis will be available for all the mortgage restructing being done today. Will the raw data be available? Or will the Obama administration have a 'media' ready package with the analysis already complete? (Much like the package they produce today for Obama events?)
At the end of his book's harrowing account of mortgage mistakes and credit card crises, Edmund Andrews writes: "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.
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.
In 2007, nearly as soon as she was eligible, Patty Barreiro filed again in Montgomery Country. When called for comment yesterday, Andrews was unavailable, but there is no question that it is his wife: his income and occupation are prominently featured in the docket.
This is really highly unusual. For starters, the overwhelming majority of people who file bankruptcy do not make anything close to $100,000 a year--the standard estimate when the 2005 bankruptcy reform was passed was that about 80% of filers had household incomes below the median income in their state. The number of affluent people who file twice is even smaller, and has presumably gone down since the 2005 filing largely eliminated abusive serial Chapter 13 filings, which used to be used, often by quite wealthy people, to forestall evictions or foreclosure.
...Ms. Barreiro seems to have spent most of the last two decades living right up to the edge of her income, and beyond, and then massively defaulting.
Of course, no matter what he told me, it wouldn't let the bankers off the hook. Whatever Patty Barreiro's spending history, it's still true that she and Andrews were able to dig themselves in a lot deeper because of fantastically easy credit from a variety of fantastically stupid bankers, most of whom now seem to have gone fantastically bankrupt. But while the willing lenders amplified the problem, given Ms. Barreiro's history, it seems unlikely they were at the root of it. It's hard to see them as victims either of those bankers, or a mass mania.
http://meganmcardle.theatlantic.com/archives/2009/05/the_road_to_bankruptcy.phpThe mortgage ads on TV and media used to go something like this - "Do you have no credit, bad credit, bankruptcy? No problem."
from the comments -
Megan McArdle -
I got a tip about the bankruptcies. The rest is all straight from the BK court dockets, which are open to anyone willing to pay 8 cents a page for searches.
Market Karma -
"Rather, Ms. Barreiro seems to have spent most of the last two decades living right up to the edge of her income, and beyond, and then massively defaulting."
It would appear her skill set might fit well in the current Obama administration -- I hear the Treasury department has alot of unfilled positions.
Is the TARP what happens when super rich global corporations, banks, and investment bank investers go bust? The rest of us, and our children and grandchildren get to pay for it?
Same with the mortgage recovery programs? Not really intended for Main Street, but to pass through money to banks and mortgage companies? Pretend we're making Freddie and Fannie better? Pay Peter by robbing Paul?
jmho
