CNN is reporting on a new interactive map at USA Today that shows dramatically how foreclosures are intensively hitting south Florida and the southwestern U.S. (California, Nevada and Arizona specifically).
This raises the immediate question of whether there was a regulatory or business-related reason why they are occurring primarily in these areas. The geographical distribution suggests strongly to me that certain individuals or organizations took advantage of lax oversight in these areas to rake in the money. This puts the lie to Republican claims that “poor people” caused the crisis by borrowing irresponsibly.
If it were poor people who caused the crisis, the foreclosures would have been far more widely distributed because there are poor people everywhere. In fact, it might be argued that the areas hit represent the areas where the wealthier gather, so perhaps wealthy speculators caused this problem.
A CNN segment with (I believe) Josh Levs shows how heavily specific areas were hit by the crisis. An interactive map at USA Today shows how foreclosures have bloomed in a limited number of counties (about 40, I believe) between 2006 and 2008. These counties are largely in California, Nevada, Arizona, Colorado (around Denver), and south Florida (with a smattering in economically hard-hit areas, such as Michigan).
What caused this pattern? I think there is more here than just the dynamics of the housing market. This looks like systematic fraud in certain areas. Who was in charge of regulation in these specific areas? Which companies were lending in these limited regions?
I’m sure that the pattern is partly due to the continuing flight to the Sun Belt. But it is hard for me to believe that this was the only factor.