Mini Collaboration #2

Ryan Trebing, Ronnie Trebing, Bailey Foster, Aviana Freece, Riley Weaver, Armaan Garcha 

The Big Short by Micheal Lewis focuses on the events leading up to, surrounding, and consequences of the 2008 housing crisis. The pivotal characters involved are the “higher-ups” in corporations and sneaky CEOs on Wall Street. 

Although The Big Short sheds light on the housing crisis and the financial aspects that go into it, it is missing the real life consequences and the effects it had on people in the financial lower classes. 

One of the key points that is missing in The Big Short would be the discussion of minorities and the effects it had on the community. Minorities, essentially people of color, made up most of the lower financial class. Banks manipulated and took advantage of this group of people without discussing the long term effects of their actions: “…How do you make poor people feel wealthy when their wages are stagnant? You give them cheap loans.” (Lewis, page 14). This quote shows how the banks were giving mortgage loans to the people who could not afford them. They would do this just to cash in big money and become rich. The lower class people of color lost everything after this. The bankers did this because they did not care for this group, all they wanted to do was to make money as fast as possible. “In early October 2008, after the U.S. government had stepped in to say it would, in effect, absorb all the losses in the financial system and prevent any big Wall Street firm from failing…” (Lewis page 247). This quote shows that the “higher-ups” in the financial district of New York City faced no real consequences when their fast money making scheme failed. The U.S. government was there to dime them out when they needed to face the reality of their situation; but they never did, and still have not paid.  

    The Big Short tells about the housing boom that caused banks to give out even more mortgages. They even gave them to people who had no jobs, no income, and no assistance. The lenders were not verifying that the people borrowing the money to buy the house could afford to pay it back. Wall street investments institutions were borrowing heavily to invest in them. This causes them to inflate their value. The lenders offered adjustable mortgage rates that started out very low. People thought they might be able to afford these mortgage rates. Then as the housing market got saturated with too many homes for sale the real estate prices of homes dropped dramatically. People defaulted on their loans and these products became worthless causing a bursting housing bubble and a collapsing Wall Street. The Financial institutions were cut to make profits, even if they had to take advantage of the poor. Borrowers were at first told that they would be able to pay off their loan at a low rate, but this conversation isn’t real. It was a teaser, just to get them to sign up. Subprime loans ended up with high interest rates. The Turner House family went through his experience with their family home. The value of their home went from 40,000 dollars, which they still owned, to the actual market value at that time which was only 4,000 dollars. The Big Short never really went into this whole “Ponzi scheme”. This affected the poor families and their lives.Then as the housing market got saturated with too many homes for sale the real estate prices of homes dropped dramatically. These bankers were mostly concerned in making a lot of money really fast and dishonestly. In The Turner House the real life consequences and damage that Wall Street did is apparent through the unpayable loans and mortgages. For example on page 77 it reads, “The banks are being extra predatory right now. I saw it on the news. They know people can’t pay their mortgages, they knew it when they gave them the loans or let them refinance, but they refuse to renegotiate.” The banks did not care for the lower class people whatsoever. All they wanted was money and this was a great way to take advantage of someone who wasn’t able to do anything about it. The banks would do anything to get the money back that these people owed. “Basically, because you know how these banks are, running through your whole family tree trying to get their money…” (Flournoy page 66). The quote shows how in real life the banks would go through family ties in some cases to get the money they wanted. Some people even resorted to gambling to try and pay off the ridiculous loans and mortgages. Lelah is a prime example of this; even though her gambling was not necessarily related to paying off the family home mortgage, she still suffered the same consequences as a chronic gambler. The Turner House did shed light on situations that The Big Short did not cover or even think about. 

The relevance of these situations and books are prevalent because the consequences of the 2008 housing crisis are still connected to current day 2022 society and economics. People are still suffering and trying to survive from paying mortgages and loans over 10 years ago, while Wall Street still thrives with no accountability of the damages they have done. We see this happening all over the world today in many ways. For example in the Oneida area there are many casinos that are enablers for people with financial issues, possibly still trying to recover from issues caused by the housing crisis. Also COVID-19 not only had an affect on people’s health, it also had an affect on peoples economic situations. At the time of quarantine, a lot of jobs were forcibly shut down and lost, making people lose money and unable to afford basic needs. With this lack of money it can be imagined that it was even harder to pay off loans putting people further into debt. This affects many people’s lives and it will continue to do so in the incoming years. 

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