Riding the subprime wave

And then crashing. In the world of finance, those who can, do. Those who can't become business writers. In this Sunday's NYT magazine, economics reporter Edmund Andrews writes about the mess he made of a $460,000 home purchase in Silver Spring, Md. Andrews, who has covered the Federal Reserve and should know a lot about money stuff, couldn't handle the financing (heavy duty alimony and child support and a new wife who didn't have a job and spent too much). He wound up with a mortgage lender who concocted all kinds of loans to fit his deteriorating financial condition - and who kept on telling his client, "Don't worry" (never a good sign).

As I walked out of the settlement office with my loan papers, I couldn't shake the sense of having just done something bad . . . but also kind of cool. I had just come up with almost a half-million dollars, and I had barely lifted a finger. It had been so easy and fast. Almost fun. I couldn't help feeling like a high roller, a sophisticated player who could lay his hands on big money at a moment's notice. Despite my nagging anxiety about the gamble that Patty and I were taking, I had whipped through the pile of loan documents in less than 45 minutes.

The icy slap of reality hit me two weeks after New Year's Day in January 2005. We had been living in our new house for five months. I walked out of The Times's Washington bureau, several blocks from the White House, and crossed Farragut Square to my bank. I had a bad feeling about what the A.T.M. would reveal about my balance, but I was shocked when I looked at the receipt: $196. We were broke. My stomach churning, I reached Patty on her cellphone as she was running errands. "We are out of money," I snapped, skipping over any warm-up chat. "What do you mean, we're out of money?" she asked in bewilderment. "I mean, I just checked my bank account, and we are out of money," I repeated, my voice rising in panic. "We can't buy anything!"

Andrews has a book coming out on his experiences called "Busted: Life Inside the Great Mortgage Meltdown." and he's still writing at the NYT. Too bad many of the other subprime victims were not nearly as well-positioned.