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Wait, What If We Try Giving People Home Loans They Can’t Actually Afford To Pay Off?

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Wait, What If We Try Giving People Home Loans They Can’t Actually Afford To Pay Off?

There’s no doubt about it: Times are still tough for millions of Americans out there. The country is continuing to recover from the monumental economic downturn resulting from the 2008 financial crisis, and even though there are some recent reasons for optimism, things aren’t improving nearly as quickly as they need to be. As the Chief Executive Officer of Citigroup, I’m always looking for new, innovative ways to expand our business, and the current economy has certainly made that job tougher. However, with that in mind, I’ve been thinking, what if—and please bear with me, because I’m just spitballing here—but what if we were to approve home loans for people who can in no way actually afford to pay them off?

Now, I’m talking loans that homebuyers will never, ever be able to pay off in their lifetimes—not in 10 years, not in 20 years, not in 100 years. Loans that are so big and inflated by high compound interest rates that these people will have to win the goddamn lottery if they want any hope of affording their monthly payments.

Pretty smart, right? I’m telling you, I really think this can work!

I’ll give you an example to help better paint the picture of what I’m talking about, since I realize this is a pretty off-the-wall idea. Let’s say, just for argument’s sake, we come across somebody who’s looking to become a first-time homeowner—maybe a young married couple who have yet to solidify their careers, put away much in savings, or build strong credit. First, we relax our underwriting standards so they can qualify for a loan in the first place—and I’m talking about a pretty big loan here, something in the hundreds of thousands of dollars. It’ll be crystal clear to us that they can’t afford this in the long term, but instead of saying, “Look, this loan is very risky and could easily lead to early default, so this is not a sound investment for you,” we just say, “Thank you very much, and congratulations on your new home!”

Then—and this is where it gets really good—we just sit back and wait. Before that young, wide-eyed couple knows it, they’re up to their necks in debt, they can’t qualify to refinance the rapidly growing mortgage, and they’re driven into total insolvency, after which we seize the very house we gave them the loan for in the first place and then, when that alone doesn’t cover the accrual from the high interest rate we set, we seize all of their financial assets, leaving them with absolutely nothing and us with a nice, healthy profit margin.

It’s so simple. In fact, the more I think about it, the better it sounds. Hell, this could be just the kind of shot in the arm our economy needs!

I know this all sounds pretty outside-the-box, pretty ahead of its time, but aren’t the best ideas always like that? And you want to know the best part? This doesn’t have to just stop at home loans. We could do this with literally any loan: loans for college, loans to start a new business, loans for whatever! I don’t want to get too ambitious here, but we could even explore some kind of further option where we package all these loans together in some way and then sell these packages to investors, creating a sort of massive win-win situation. It sounds technical, I know. But trust me, it’ll work.

The cool thing is that it sounds kind of risky on the surface, but it actually isn’t at all! I’m telling you, I had some of my guys run the numbers on this and it’s essentially a can’t-miss. Now, I know what you’re thinking: C’mon, Mike, there’s an entire regulatory system in place to prevent us from doing this exact thing. That’s what the entire Dodd-Frank law is there for. Well, you’re right. But you know what? I have a feeling—just a hunch—that we can get around all that. In fact, that gives me another idea: Why don’t we just go through with this whole thing without any regard to the legal or ethical ramifications of our actions—especially the ethical ramifications—and then if things go south, we’ll just use the incredibly expensive, high-powered legal team we have on retainer to negotiate with SEC prosecutors so we can just pay a paltry nine-figure fine and be on our way.

God, why didn’t anybody think of this before? Somebody call Mensa; I think I’m a fucking genius.

Now, if anyone has any doubts, or can think up any reasons why this could potentially be a bad idea, I’m all ears. But from where I’m sitting, it seems pretty damned foolproof. Hell, we might as well just try it and see how it goes, right? I mean, what’s the worst that could happen?

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