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.
Andrews' desire to shield his wife is
understandable--hell, laudable. No decent person wants to parade their
spouse's financial trouble in front of the world. But this is material
information that changes the tenor of his story. Serial bankruptcy is not a creation of the current credit crisis, and it doesn't just happen to anyone, particularly anyone with a six figure salary.
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.
The bankruptcy code requires filers to wait 8 years
after a previous Chapter 7 discharge. Barely four months after she
became eligible, Patty Barreiro filed again. And the filing shows some suggestion of strategic debt management.
Ms. Barreiro filed separately from
Andrews, and had to amend the filing to include Andrews' income after a
complaint from a creditor who wanted to force her into a Chapter 13
repayment plan. She filed when her income was at rock bottom,
consisting only of unemployment; the timing may have just excluded having to declare $5,000 in freelance editing income Andrews mentions in the book. And she shed what appear to be jointly incurred
debts, such as a Comcast account. Comcast does not service the address
listed on the 1998 filing, but as I can attest (to my sorrow), it is
the main cable provider in Silver Spring, where she moved to live with Andrews in 2004.
Serial bankruptcies
can, of course, happen to anyone with enough bad luck. But they usually don't. And when they do, they usually hit people with marginal incomes that leave no margin for error in the budget. Most people, even in LA, are able to build a sustainable budget out of an income in the low six figures.
Moreover, pesky bad luck isn't
really the picture painted by either filing. 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. If you structure your finances so that absolutely everything
has to go right, it's hard to blame the mortgage company when you don't quite make it.
Andrews
has been admirably open about many of the poor decisions and the
wishful thinking that led him deep into debt. Nonetheless, he has laid much of the blame onto irresponsible bankers and mortgage brokers. The missing
bankruptcies substantially undermine this basic narrative arc of
Andrews' story. Particularly in his book, the bankers are the villains, America's
current troubles are the inevitable denouement of their maniacal greed,
and the Andrews household stands in for an American public led, by
their own greed and longing and hopeful trust, into the money pit.
It's hard to argue that Ms. Barreiro was forced into bankruptcy by crazed
subprime mortgage lenders in 1998. Greedy bankers certainly didn't keep her and
her first husband from paying their taxes.
Of course, her first
husband was involved too--there's no way of knowing who was at fault in
the first case. If indeed anyone was: there may have been a business failure or some other mitigating factor. As I mentioned, I tried to reach Andrews for comment several times, leaving messages on both his office and cell phone that made it clear I was reporting for The Atlantic, and that I wanted to speak to him about Patty's bankruptcies. For whatever reason, he has not called me back, and so I don't have his (her) side of the story to tell you.
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.
Andrews married a woman with a lengthy history of debt and spending problems. Serial bankrupts were
getting into trouble long before there was a credit bubble, indeed long
before there were credit cards or 30-year self-amortizing mortgages. In fact, the literary history of America is littered with them; we owe much of Mark Twain's later work to his catastrophic financial mismanagement.
Credit encourages people to spend more by separating the pain of
payment from the pleasure of consumption. For many, maybe most,
people, this means at least one brush with unpleasantly large
overdrafts or credit card balances. And for a small subset of folks,
that easy accumulation leads to real, often repeated, trouble. Those
kinds of problems can't be fixed with tighter mortgage lending
standards or a 500 basis point uptick in the Fed Funds rate. And they aren't the main problems facing most Americans today.
Copyright © 2010 by The Atlantic Monthly Group. All rights reserved.
My best friend's (now ex-) wife is a serial defaulter and bankruptcy filer. It caused the marriage to fail, and even after they separated their finances, he's had to bail her out several times because they have two kids.
Obviously, attitudes toward money aren't trivial when it comes to marriage. What's the over/under on the time until Andrews and his current wife file for divorce?
As I recall, you opposed that law (which only had real effects on people above median income for their area) because you believed that people like Patty were rare enough that the benefits of changing the law were outweighed by the downsides.
Of course, there's no reason to change your mind based on one anecdote. Still, she does appear to be exactly the sort of person that the law writers had in mind.
I didn't oppose that particular provision, just the bankruptcy ruling as a whole.
So, by "that particular provision," do you mean any of the "you can't file Chapter 7 if above median income for your locale" provisions? Or were there portions of the part aimed at people over median income that were okay and portions not?
Because the only other major change in there was the probably useless and time consuming "mandatory Credit Counseling and Financial Management Course." Did you oppose it on that grounds, or something else?
There of course was the problem that some people took on debt intending to discharge under the old rules, though there was a phase in. (During which bankruptcy filings jumped as people got in under the old rules.)
Or did you perhaps object to the elimination of the homestead exemption for people who suddenly move to Florida just in time to buy a mansion and then declare bankruptcy?
The change to more liability for bankruptcy lawyers is relatively minor, so I'll assume it wasn't that.
I enjoyed the article, but it also infuriates me. My wife is the polar opposite of this woman: you have never seen anyone ride shotgun over a dollar like my wife does. We have no debt, except our mortgage, have accelerated that payment to shorten the loan term. Credit cards get paid in full every month, if not my wife is completely capable of eating plain white rice for breakfast, lunch, and dinner until the debt is paid, even if it takes 6 months (and inflicting said diet on the rest of us).
Maybe you could profile profligate savers who only give up a dollar when it is pried from their hands. May God have mercy on me if I ever manage to incur a cc fee. Maybe such profiles could assist in turning the current ethos around. Just a thought.
Excellent digging, Megan.
Agreed, good job at uncovering this.
Is a schedule of debts from her latest filing available?
Megan McArdle, for what it's worth, I salute you! This spirit of investigative journalism, dispassionately looking into nuances, unearthing the story behind the story, is what once made newspaper content great. If only the msm journalists stuck to the 'hard work' approach vs parroting the party line.
Did you conduct all of this research by yourself?
Well.
I stand my my judgmental prick-ism.
it's funny. when institutions do this we call them "to big to fail."
Better duck and cover because the NYT doesn't like when you criticize one of their own. Next thing you know they'll be mocking you on SNL....
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.
It never ceases to amaze me how much public information people fail to realize they can easily obtain.
Court records in particular.
Another good example is the bankruptcy filing for Chrysler, with the document listing the 9 of 20 hedge funds -- the non-tarp lenders -- who say they didn't hedge their investments; resulting in the suggestion here that there were no hedges at all. By my count, we're still waiting on information for the other 11 who withdrew from this group, at according to the document they filed. I believe Congress is requesting that information, though I haven't checked on results yet. My guess would be the other 11 withdrew because they'd hedged, but it's only a guess.
Good reporting, Megan. Those tips are why it so important to protect sources -- that's often where tips come from. But while anonymous sources are often the genesis of good reporting, they should rarely form the bones of it.
Nobody said they didn't realize these documents weren't available. Our intrepid reporter has done very little information gathering on her own before, so I was wondering whether or not this info was gathered by her or someone else.
Wow, this is fascinating. I join the others in commending your investigation, Megan! Well done. What made you think to look for bankruptcy filings of the wife? Clearly, you have an eye for the omitted detail.
I also join Rob Lyman in standing by my judgement of the couple.
It's such a nice feeling when the things you thought were true at first blush turn out, upon further investigation, to actually be true.
it's a strange assumption by those who seek to game the system that everyone else will play by the rules while they seek to, at best, conduct "regulatory arbitrage"
with the prevalence of munitions/firearms in modern america, i am surprised that fear of "irrational violent retribution" on the part of wronged folks does not keep Ms Barreiro et al in a more conventional posture - add to this the fact that folks with relations/loved-ones who are either cops, prison guards or actual inmates/ex-cons often can find very effective "offscreen" means of having violence done to others.......just sayin'
The rest is all straight from the BK court dockets, which are open to anyone willing to pay 8 cents a page for searches.
Not all of us have extravagant expense accounts like you journalists, you know.
They're not that big. I think it cost me $10.
Sarcasm, my dear. It costs more for the email I send a paralegal asking for docs than for the docs themselves. I was just playing on the post of a couple of days ago.
[Blush] [stutter] [back slowly out of the comment thread]
"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.
As I recall, in the NY times excerpt, Andrews did allude to the profligate spending habits of his wife but not too the extent that you describe and the primary role it may have had in their financial downfall. It was interesting to me that, in an NPR interview, he referred to the love he has for his wife as the one salvageable thing that he has drawn from his situation (he did not mention his book deal).
Her ex-husband must have taken a huge income hit. Child support for two kids is going to run in the low 20ish% range. Assuming the midpoint of that, and even assuming that her ex-husband suffered an income drop to $120k, that's monthly child support of $2250, not $700 as Andrews claimed.
Something smells fishy.
From the sounds of it, he's a hollywood producer with an extremely variable income, which means he might actually have been broke or might have had the ability to defer some income during the court proceedings. (Plus, he had been married to Barrerio for the 6 years between 98 and 04!)
Alternately, Andrews said that he needed a home for Barerrio's "younger children" - I don't know if he meant younger than Andrews' own children or that the ex-husband had custody of some teenagers.
She has 4 kids total, 2 of whom live with her in MD. The older two are in CA, or at least not living with her. He has 3 teens, who life with them on the weekends.
Her ex produced commercials and PSAs which isn't the big bucks that "a Hollywood producer" might lead one to assume. If you read the first filing carefully, he had a little production entity at home.
Only the youngest lives with her. The third boy couldn't get away fast enough. He is back in Los Angeles living with his father.
You're my hero. Thanks for demonstrating the power and value of good journalism.
Good work, Megan. This story makes pre-marriage credit checks seem like a very good idea.
The worst part of Ms. Barreiro's story is that she hadn't worked in 20 years. I can see having a taste for the high life . But, when you're so increadibly lazy...that spells trouble.
I mean her original family was on the verge of bankruptcy, with 200k in back taxes, and she couldn't get off her fat ass?
Really - my God what a beast.
As I recall, Pinocchio visits Pleasure Island and becomes a donkey. The book predates the movie by about 60 years. The general story is over 125 years old.
Wanting it all, without working for it, is hardly new.
What's new is the protection - at our own peril - that we now give to people who 125 years ago were considered Jack Asses...
Andrews' desire to shield his wife is understandable--hell, laudable.
Except that wasn't all he was doing -- he was protecting the coherence and relevance of his narrative and, therefore, the commercial viability of his book. "Family on the brink of financial disaster due to ridiculously lax mortgage lending" matches the zeitgeist and does have a bit of the 'everyman' quality.
But "family driven to bankruptcy by the chronic irresponsibility of spendthrift second wife" doesn't work the same way. Although it does make you wonder if there are any new regulatory opportunities for our ambitious, paternalistic new masters in Washington.
We're apparently going to have new regulations to protect college students from credit cards -- should we also consider new regulations to protect middle-aged men from ill-advised divorces and remarriages? After all, a middle-aged man can get himself in one hell of a lot more life-destroying trouble with child-support, alimony, and a second family than a college student with a Visa card.
And did Andrews really think nobody would dig up his wife's bankruptcy? I mean -- isn't he in the news business?
And did Andrews really think nobody would dig up his wife's bankruptcy? I mean -- isn't he in the news business?
Or... maybe he was just Machiavellian enough to plan for the extra publicity such a revelation could entail.
But no, I'm betting on stupid.
Great post. And why stop at middle aged men? What about just-marrieds who push the envelope a bit and get a major appliance? Or the 30-somethings who decide that they want to visit Paris, finally, knowing full well that it will take them a year to pay back the trip - but they've always paid their bills and are responsible.
There's no denying that the credit card companies are predatory, but there's also no denying that they are predatory because they can be. Not because of regulations, but because such a large percentage of their customers are total fools.
The credit card companies were doing *precisely* what a libertarian would want. If you were responsible and paid on time, you could and would keep your rates low. Heck, typically you'd pay your balances off in full and not even incur interest charges. They made their money via the 3% surcharge they get from the merchant, plus any annual fees they might charge you for the card.
That's more than fair.
It's the people who carry huge balances and don't pay their bills who were getting hammered - but isn't that fair? You didn't make them do something stupid, they did... why should you suffer for them?
Oh, right, "we're all in this together."
I can deal with that when the Nazi's are sinking ships off of our shore. It doesn't play so well when the "this" that we're in together is someone else's stupidity.
For crying out loud can't we send this clown Andrews to debtor's prison and get on with productive discussion?
I have been reading quite a bit lately about the national Debt to GDP ratio and how that effects future growth. A lot of it hinges on what kind of debt, productive debt (i.e. debt used to build things that return more money than the debt) is fine but I think we can all agree that household debt is almost never productive. It does not matter if a few people do it but if enough people load up on debt, it actually hurts our future growth. We often hear people warn that government borrowing can crowd out private debt but few people realize that household debt, or more accurately non-productive (consumption) debt can crowd out productive lending.
I dont know where to go with this, what the answer is, but while it is true that if your neighbor goes deep into debt, it does not effect you, it is also true that if enough of your neighbors go deep into debt, it will hurt your future earnings. This is one of those problems that mass matters, the problem changes the larger it is. It causes me at least to think we should be looking at making credit less available and more expensive.
"Except that wasn't all he was doing -- he was protecting the coherence and relevance of his narrative and, therefore, the commercial viability of his book."
Which is what the NYTimes does with all of its stories.
"family driven to bankruptcy by the chronic irresponsibility of spendthrift second wife" doesn't work the same way."
The details of falling in love with a very big-spending woman and being so besotted with her that he let himself be financially ruined could make a very interesting book.
Andrews, however, probably couldn't write that interesting book because to do so would require the ability to see things as they are and write honestly about them.
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.
To hammer a favorite them of mine again, I have to say this is what happens when you tell banks "Don't worry about how risky your investments are, the U.S. gov't is going to bail you out." If you remove a large portion of the risk side of the risk/reward ratio, the results are entirely predictable: managers are incentivized to make increasingly risky investments.
A free market cannot have players that are "too big to fail." It's just begging for a systemic failure.
Wow, failing to tell the entire story- leaving out pertinent details to fit the desired narrative. With jounalistic ethics like that, Andrews should get a job at The New York Times.
Funny, I was thinking Fox News or the WSJ.
Funny, I was thinking of where he actually does work....
I think the humour in Ward's comment is that the man is, in fact, a reporter for The New York Times.
I get a suspicious feeling Mr. Andrews wrote this book to cash in quick. I know no details, but if I was a writer and was in a spot of trouble and had the wherewithal to pump out a book to help pay off my debts I'd start typing.
By Megan's accounts Mr. Andrews doesn't seem to be willing to acknowledge that it as a two way street of easy money/easy lending. What bugs me about this is that this will provide anecdotal support to all those who like to try to tear down the argument that lenders were actually predatory in some instances.
Even without knowing about the bankruptcies or reading the entire book, it was clear from the excerpt that his wife was financial trouble. Despite asserting that she didn't like to spend on herself (just him and the kids), the first job she takes is a low-paying retail position at Saks Fifth Avenue. Because she is both knowledgeable and passionate about high end clothes. Hmmm. Passionate about expensive clothes, plus knowledgeable (re: discriminating taste), plus employee discount. I wonder where she went wrong.
It's nice that even though she knew about their financial issues, and even though the children requiring their financial support were hers from her first marriage, she chose to follow her "passion" for fashion as opposed to first trying to get a more stable job in a more profitable field. But she's really quite generous, you know. She doesn't like to spend on herself, even! Just her dear children (for whom she has made no effort to secure adequate means of support, other than marrying a man with substantial preexisting familial obligations) and her beloved husband (who is so inept at securing financial security for himself despite being highly educated and having access to people at the highest levels of the business world).
It's really just the American dream thwarted here, isn't it? I can't imagine where Boomers got the nickname the "Me Generation", can you?
And then defaults on the Saks card. That takes some crust.
Is this new credit card law going to force the next wave of foreclosures. This post says the 4th Q may have a record of foreclosures which will also lead to a Dow below 7,000. That seems a little drastic.
http://www.mortgageloanplace.com/blog/2009/05/21/new-credit-card-law-likely-to-hurt-markets/
It's in her DNA, she's from Argentina.
She doesn't like to spend on herself, even! Just her dear children (for whom she has made no effort to secure adequate means of support, other than marrying a man with substantial preexisting familial obligations) and her beloved husband (who is so inept at securing financial security for himself despite being highly educated and having access to people at the highest levels of the business world).
He's too good to take a job in PR and she's was too good to get a job even as she drove her family into bankruptcy.... she's a pice of work.
I think the term "ignorant slut" seems appropirate.
Hey, that's really not necessary.
Sorry :-(
But, I still think she should have looked into getting a job sooner than she did. Mr. Andrews I can understand, her... not so much.
Wow, way to go off the rails in an otherwise decent discussion.
I'd say this whole discussion is off the rails.
Investigative reporting suits you well Megan. Good job.
Awesome scoop, Megan. Nicely done.
I really liked this investigation into the book. Can the banks (or whoever else was stiffed) get after any of the proceeds? It is like a criminal benefiting. Was thinking of the 'Son of Sam' law - but there was no crime.
I filed for bankruptcy six years ago. At the time, I made less than $1500 a month and kept up on my bills, until a car accident which totaled my paid-off 1988 Buick and one ill-advised vacation started the snowball rolling. Before I finally made the decision to file for bankruptcy, to try and pay off my (relatively small) debts, I moved into a smaller apartment in a bad neighborhood, took on freelance work and paid off $3000, took a second job delivering pizza, but still had to alternate which months I'd pay the electric and which months I'd pay the gas. My credit cards had small balances, but if I was one day late, the payment they wanted would quadruple to include fees and penalties, and since I couldn't pay the original payment, that spelled trouble really fast.
When I eventually filed I had less than $5000 in debt. It wasn't the amount, it was that I couldn't pay all the payments at the times they were insisting on having them paid.
After all I went through to solve my financial problems on my own, having never bought anything of significance...frankly, I'm almost offended by people who overextend and charge their whole lives to their credit cards. I have less than $2000 in credit card debt, and it's only that much because I had to buy a new computer. Since my bankruptcy I have paid everything on time and rebuilt my credit score with small loans paid off quickly.
I'm planning to buy my first house next year. There is no force on earth that would induce me to accept a mortgage payment larger than what I currently pay in rent and know I can afford. I don't understand this magical thinking, that somehow the money will be there, because it'll...what, fall from the sky? Materialize magically under the Christmas tree?
(not so)MadLori -- thank you for your tale. It's a succinct counterpoise to Andrews's, reminding us that bankruptcy need not result from either disaster or greed; that even a small snowballing debt can be insurmountable without intervention.
Good work to you too, Lori.
Good luck with that first house, MadLori. I hope you find something you really like. I've bought two houses, and both times (most) sales people were aggressive about pushing me to consider "more house" than I wanted, or felt I could afford. Sounds like you are ready to stick to your guns.
The magical thinking is something that is taught to a lot of boomers/Gen X/Gen Y people: you're American, you are educated, and the world owes you something. So go ahead and stretch your finances to the limit now, because you'll get a raise, you can refinance that house for equity, your investments will do well...
This was a world that many people were raised in and never saw anything outside of it. They thought it was as real and realiable as the leaves on a tree.
It was taught by parents who themselves were too far removed from volatility, by universities that wanted to sell their products, and by a culture who is so self centered...
I know because I fell prey to a lot of the hype myself. All this left a lot of people ill prepared to deal with the (inevitable) fall. We aren't talking about a rare exception -- MOST of the people in the US have no savings to speak of.
Some learn their lessons early. Some more don't get a chance to learn them until later. And some need to go through the learning process a time or two until they get it.
Just chiming in about your house decision--after years of struggling financially, my husband and I are finally ready to buy our first house right now, and we did the same thing you did. We figured out how much we were paying for our rent and our storage unit, and decided we could only pay within $50/month of that for a mortgage. That gave us an amount we could feel comfortable paying for a house, and then we looked at houses only within that range. A lot of people thought we were crazy for not trying to buy something in the range of what we were approved for--at least $50k more than our budget--but I would much rather feel comfortable about paying something I already pay than fret that we can't make ends meet should one of us lose our jobs. We're the last of our friend group to buy, too. It's been hard to rent all this time but until we felt comfortable with committing to a mortgage, we weren't going to make a move.
Good on you for working hard to be able to AFFORD your house instead of expecting someone else to pick up the slack. And good luck in your house hunt!! I'm learning that it's not always a smooth road but in the end I think it'll be worth it. :D
Lordy girl, being a defender of truth against hypocrisy, you make the Irish proud.
I don't understand this magical thinking, that somehow the money will be there, because it'll...what, fall from the sky? Materialize magically under the Christmas tree?
Ms. Barreiro had been married for 20 years and one can only assume she lived rather well during that time. Here is a possible explaination:
Her husband had a high but variable income and things would, from time to time, get tight. Her husband may well have chided her for her profliagte ways. But, he had always landed a new gig soon enough to be able to bail them out of the situation they were in. Until one day he couldn't and things spiraled out of control.
Which is a perfectly reasonable excuse.... for a child. An adult woman with children of her own has no excuse for being profligate when she isn't earning money of her own. It shouldn't be up to her husband to "chide" her for overspending, anymore than it should be entirely up to her second husband to provide for her and her kids. This is clearly a woman who never learned what it means to eat what you kill.
If anything good comes of this absurd marriage and the children who undertook it, it is hopefully that their children will be forced to take jobs in high school and college and learn what it actually is to earn your way in the world.
Eh, what am I talking about. She'll declare bankruptcy, he's got the book deal, their kids will borrow up the ass to attend expensive colleges, and no one will learn a thing.
Going back to the original, original article:
"Patty was brainy, regal, sexy, fiery and eclectic."
Next time, Doofus, maybe you ought to look for a girl who is short, flat-chested, average-looking or maybe even a little chubby, good-natured, hard-working, responsible, and brainy enough to balance a checkbook.
She IS chubby! Didn't you see her on the Today Show?
Nice reporting, Megan, but remind me-- Who wrote, "The second painted a situation where you might arguably do something--ditch your fiancee because she has bad credit--but only if you were a complete creep." Now of course there is another level of creepitude altogether in writing about said situation and hiding the ball... but it's still better than a freecreditreport.com commercial.
It would say something bad about a man to dump his fiancee because she has bad credit, because he shouldn't have asked her in the first place! (Sure - she may have asked him, but if he didn't know that about herhe should have either demurred or said no.)
Ditching your fiance(e) isn't the only option. How about sitting down like adults and discussing conditions and consequences? Making a plan to keep finances separate, or even a pre-nup? There's a whole range of possibilities between jumping blindly off a cliff and throwing someone else over.
Also, this isn't "because she had bad credit," but "because she continues to refuse to be responsible, and when one tries to bring up the subject with her, she plays this passive-agressive game to change the subject."
"Patty had spent much of the two previous decades as a stay-at-home mother in Los Angeles. Her last full-time job, as an editor at a political research company, was back in the early 1980s."
"Patty had a very different dream. “I feel as if I am finally at home,” she exclaimed as soon as we moved into the house. She could settle down and do the things she had always been best at: making a new home, nurturing her children and loving me. One way or another, she figured, we would earn enough money to make good on our glorious gamble."
What I wouldn't give to hear her side of the story - fact checked by Megan!
"making a new home, nurturing her children and loving me" --
For certain people, that translates to spending a lot of money while maintaining the illusion you are doing it for others. Some people redo their dining rooms and claim they do it to make a nicer setting for family dinners. But a lot of people in families, particularly those who are children or men, don't really care about wallpaper and curtains. It's mostly just an activity for the decorator.
My father always called our furniture "Early American Barracks". It involved a fair number of footlockers and two-by-fours, as well as other mismatched furniture bought as needed or inherited, including a few pieces a century old.
We also seldom repainted rooms when we moved into a new house, unless it was absolutely necessary.
Worked fine for us, but then we're just the responsible types that don't expect others to pay our way for us - not fashionable at all.
But if you look at the house in the PBS interview, it's not done up by a decorator or anyone else. Maybe they tried to make it look drab on camera, but I doubt it. I think in LA, she didn't live that high on the hog, and was probably hoping to have a more steady existence with a nice guy with a good, secure job. Not a crime.
Good work. Thanks.
Another "nice job" compliment. One thing I learned at a contract job I undertook for a couple years is that while information may be widely available to most takers, there is still a lot of value in a person who knows where it might be, how to search for it, and is willing to go find it on short notice...and can then summarize it coherently. Call it a good nose, or whatever.
At any rate, both Andrews are clearly in denial about how life works. Twenty years each in a different marriage, and they think they can push the reset button and start over together? Small wonder that their new financial position was untenable (two families broken up with corresponding legal consequences, plus a now-documented history of irresponsibility on her part), and yet they evidently got into this relationship like two teens who are still doing all their thinking with the tiny brains in their pants.
"appropirate": I just love these Freudian misspellings.
"At any rate, both Andrews are clearly in denial about how life works."
I dunno. Seems to me they know exactly how life works. After all, if you can't spot the sucker at the table, then guess what? You're the sucker.
This is how NY Times columnists for years have lived off the moron taxpayers like you who go through life paying your taxes and doing the right thing, like paying your bills.
The way they do it is to max their credit cards to the hilt; never pay taxes and wrack up as large a bill as possible so that the IRS will give up trying to ever collect it.
When the house of cards is just about to tumble over declare Chapter 7 and wash your hands of the hoi polloi.
Then write a bestselling book about your troubles and have your buddy across the hall in the NY Times Book Review write up a nice review. Get yourself on the NY Times Bestseller list.
Voila. What a country!
Andrews deserves to be fired.
He is a disgrace as a journalist. His book is a disgrace. Makes me wonder what else Andrews left out.
How long before we see this clown and his second wife on Oprah?
Megan, can you lay your hands on their mortgage docs? I'm curious if they might have fudged the child support amounts when listing their income.
Okay, Where did Mcardle get the tip from? The ex-wife, ex-husband, some other financial reporter at the Times looking to cut competition in a time of layoffs?
It's been a long time since I found some reporting where the reporter impressed me. Good job.
However, I want more information, can you dig some more? As one of those responsible types, this story has really gotten under my skin. I was so motivated that I joined just so I could reply to the original post about this loser.
Here is my question. He said they bought the house in 2004 and he said that he had two teen age sons. Since he did not say they were twins the youngest they could be and be teenagers is 13 and 14. Since they did the re-fi in 2008, I would expect one of them (maybe both) to be 18. Since I do not know how child support works, I am left wondering when does the child support end (for him) end? Since it is now 2009, I would expect both of the "teenagers" to be 18 or older. If they each cost him $1000 a month then am I wrong to say that he would have the cash back every month?
When I read this story (the original) I thought about it a lot. Since I already developed a dislike for this guy I leapt to the conclusion that he would be paying to send his kids to Exeter rather than pay his mortgage. But I think that about much of the NYT staff.
Again, good work. Keep digging.
I am not sure I get your point. .. are you saying that the if Andrews' court-ordered child support payments were used to pay for a private school for his sons that he should have allocated that money to other financial obligations? Child support has to be paid, a divorced parent can't change his mind about paying it.
As to whether Andrew would have to pay now that his sons are, possibly, both 18, that would depend on his divorce decree. Also, on state law. I don't know which state he got divorced in so I can't know anything about that state's family law. In some states, child support ends at 19th birthday (the kid is 18 until the 19th birthday) but in virtually all states, as part of a divorce settlement, a parent can agree (and then be ordered in the decree) to pay until the kid is 21 or even until the child finishes a certain level of education. You can put just about anything into a stipulated divorce agreement and then once the judge signs off, it is a court order.
People can initial a new, expensive legal proceeding to seek to have their child support obligation reduced if their finances change and it becomes difficult to keep paying but a person can't just decide to stop paying.
And besides the law regarding child support,apsuman, I don't think you make a salient, or cogent, point. Even if Andrews kids were going to Exeter, so what? He had to pay his ex-wife the court-ordered child support no matter what she did with it. That's how child support works. The guy is on the hook for the child support, he can't say 'my new wife would like to keep it"
Excellent job, Megan!
Chris A wrote, waaaay back at the top of the thread:
My best friend's (now ex-) wife is a serial defaulter and bankruptcy filer. It caused the marriage to fail, and even after they separated their finances, he's had to bail her out several times because they have two kids.
Once again, I have to ask: What was this woman doing with custody of the children? She obviously couldn't provide for their needs, and she was being a bad parent by setting a horrible example for them. Similarly, if Patty Barreiro hadn't had custody of the kids from her previous marriage, she would have run up fewer debts and the kids would have been far better off.
And no, I'm not a fathers' rights advocate, nor do I even have children of my own. I'm just struck by the fact that people seem to take this awful policy of "Mom always gets the kids" as The Right Thing To Do when it has such obvious negative consequences.
Chris A here. You summed up my feelings on this. He should have custody. He has not pressed for it because he is gay, something she is aware of. I don't think he has the stomach for having that deployed against him in a court battle, especially if his kids (pre-teen twins) are dragged into it. All that said, the situation is not TOO dark. The bailouts I referred to earlier have set things up so that everyone is provided for, and he sets a good example for the kids in my estimation. As you pointed out though, her example is anything but good.
Props to Megan, also. I left it out in giving my little anecdote, but I'm really impressed with this article though I fear it may get lost in all the commentary on the Obama and Cheney speeches. Well done, indeed.
Murgatroyd, you make an odd point. Have you assumed Patty's ex-husband wanted custody of his children? And have you assumed that he could prove in a court that she is an unfit mother? Being a spendthrift would not persuade many family court judges of a person's unfitness to parent.
You also seem to assume the kids would be better off with their father? Why would you assume that?
You make it sound like people can offload their children when it becomes inconvenient to continue to support them and you almost seem to conflate (deflate, devalue?) her kids into toxic assets. Creepy.
Nothing has come to public light indicating Patty is an unfit mother or that the ex-husband is less of a spendthrift than she. .. have you forgotten, Murgatroyd, that Patty's ex didn't pay his taxes for five or six years? What makes you think he would make a better parent?
She's a spendthrift, not a bad mother. And the ex, the father of her kids, is, for gosh sake, a hollywood producer!!! . . joking at the end here.
Actually, Patty is the one who was responsible for balancing the checkbook in that marriage. In addition, when given a choice, the children went with the father. The youngest is not yet in a position to make that choice. But the others have. And they moved back to Los Angeles to live with the father. He is the one who is ensuring that they get into and attend college.
FWIW, Mr. Andrews just discussed his book on The News Hour on PBS. Shockingly enough, no mention was made of his wife's two bankruptcies.
What a great accomplishment, Meg. You smear the guy's wife because you apparently do not approve of his interpretation. What does her bankruptcy have to do with anything?
Let me put it bluntly. I have more respect for Andrews and Barreiro-I've always admired stay at home moms-than I have for an econo-fascist like you.
You seem to be replying to some other article containing points some other person made.
Megan is an econo-fascist? What term would you apply to people who run up consumer debt and then blithely discharge it? If she walked into J. Crew and had stolen all that clothing right off the rack, would you still defend her? If not, why is needlessly defaulting on her cards any different?
Her obvious hatred for anyone less fortunate than her, tidied up with the occasional expression of pity to cover herself, is what earned her the title. And I'd hardly compare consumer debt to shoplifting
Things happen to people that cause bankruptcy. McArdle obviously doesn't care about that. Add that to her willingnes to drag the guy's family into it, and you get an econo-fascist. Kind of like you KTL.
Here's a blog posting that sums up my opinion.
http://an-expatriate-in-cambridge.blogspot.com/2009/05/megan-mcardle-econo-fascist-of-week.html
"Things happen to people that cause bankruptcy."
Yes, and Andrew was very clear about what those "things" were. Did you even read the article?
Look, I'm a bleeding heart liberal, but even I think this is hilarious.
1. Megan didn't use this as an excuse to call for "no reform," though I'm sure you and she would not agree on the appropriate reform.
2. The guy is a financial reporter to the NYT. He reports on people falling in this hole, and didn't see it happening to himself. It raises questions of his credibility.
3. He brought his family into this by writing the book exposing what happened, and then failed to include legally pertinent information. When you file for bankruptcy, they like to know about previous bankruptcies, because the frequency is controlled by law. Additionally, bankruptcy is a matter of public record; it's not private. Any reporter worth an inch of column space knows that. Her previous bankruptcies were already in the public domain.
Megan's take on things is that people ought to be responsible. If one of the Andrews' unpaid bills was to your business, I'm sure you'd feel that way, too. It might be the difference between keeping an employee and laying them off.
Please. People who don't pay their bills are scum. If you can't afford it, don't buy it. Otherwise it is stealing and you are lucky nobody kneecaps you.
My father, who raised a large family working as a tradesman, was stuck for $4000 or so by someone similar to this. That money was his wages, what he paid his mortgage, food and other totally unjustified trinkets. He pushed for his money. The fellow worked for the government and used his influence to hassle my father through the tax department and other agencies. Nice people, and we should feel very sorry for them. I'll shovel some dirt on their grave. And try not to spit.
Sure banks shouldn't lend money so easily. Or credit cards. And I live in an area where we don't have to worry too much if we don't lock our doors. I suppose that we are guilty of enticing scum to steal.
Derek
The Expatriate = Mr. Andrews.
I mean seriously, is he just a sock puppet?
You have to understand that when The Expatriate uses the term "fascist," he simply means "someone I dislike intensely." He probably also dislikes the government of Italy between 1922 and 1943, but aside from that, there isn't really much connection between his use of the term and the way the rest of us use it.
I know a couple here in California. He manages a car dealership and she stayed at home. They have done the same, strategically planning bankruptcies while living large. It is apparently not uncommon. It is a disgrace, frankly.
That seems like a dangerous game to me. There are provisions in the law preventing the discharge of debt accumulated in anticipation of bankruptcy. Eventually they're gonna run into a judge who rules all their debt falls into that category.
Excellent work, Megan. Demoralizing and depressing as hell, though.
Megan,
I've never read your column before today & what I have encountered in your comments thread is much more disturbing than learning of Patty Barreiro's multiple bankruptcies. How is Ms. Barreiro's financial status related to whether or not she should have custody of her children, if she is a good mother, and/or whether or not Mr. Andrews should have married her, etc.
There seems to be an overly misogynistic and blaming atmosphere in this thread- let's string Patty, Edmund, and The New York Times up for crimes against humanity. Seriously, people. The nastiness expressed here is shameful.
Debtor's prisons? Yeah, I'm sure you'd love 17th century France.
"How is Ms. Barreiro's financial status related to whether or not she should have custody of her children, if she is a good mother, and/or whether or not Mr. Andrews should have married her, etc."
I am not saying I agree with this thought, but here it is: If she can not handle money to the point of having to declare bankruptcy, then maybe she is not a good mother.
As for the part about Mr. Andrews should have married her, I will happily comment on that. Have you see the freecreditreport dot com commercial about living in the basement of his wife's house because of her bad credit? If you listen to Dave Ramsey he routinely tells couples to not get married until they have the whole "money discussion". My parents told me the same thing. Bankruptcy is a statement of failure. There might be some real explanation, like you owned a Dodge dealership and Obama made Chrysler take it from you but not any of the inventory or parts but it is still a failure. Given that you have a woman that lived in a six figure household during the 90's and she could not pay her bills ought to be a red flag. A hold off on marrying her until I get things figured out red flag.
By that standard, motherhood and marriage are just economic decisions.
No offense, dude, but that's the logic of the prostitute.
Hey, now, let's not impugn hard-working prostitutes by associating them with Barreiro in any way.
No. It's common sense.
If your fiancee has a history of drinking and driving and you marry them then you should expect them to continue to drink and drive.
If your fiancee has a history of being really bad with money then you need to know that when you marry them they will be really bad with money.
If your fiancee has four different star trek uniforms and wears them to work and you marry them you need to know that they will wear their star trek uniform to your family reunion.
If your fiancee has a history of violent spousal abuse then you need to know that when you marry them they might abuse you.
If your fiancee executes poor judgment with members of the opposite sex and frequently beds them, then you need to know that when you get married they will probably execute poor judgment with members of the opposite sex and bed them.
In each of the above cases, if you still want to marry them, go ahead.
Funny thing is, that argument works exactly against the point you were trying to make. Both of the Andrews were, in fact, married for twenty years, and not to each other. If marriage and motherhood are more than "just economic decisions", what does it say that they both walked away from those previous commitments in order to evidently re-live an unfulfilled high school fantasy?
Nobody's saying it's sufficient for your spouse-to-be to be financially sensible, but it is(or at least, really ought to be) necessary. If you can't trust them with a credit card, how the hell can you trust them with your children?
I fully agree with you, Madame LaVoix.
Judging others harshly, much like consumer debt, is unfortunately just another American past time.
Apparently, so is writing books that spill all of the vivid details about one's consumer debt, except the ones that completely undermine the narrative.
How did you miss the point like that, but still find time to remonstrate the hostess for doing legitimate investigative journalism on, and for, matters that are in the public record? A little judgmental yourself, perhaps?
"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."
I think what depresses me most is that I had always believed that you could only declare bankruptcy if your income was such that you could never reasonably pay off your debts: that in between interest, fees, etc., you'd pay until you die.
But with an average income of $100k, they could have paid off $200k of their consumer debt and taxes, after downgrading the house and the car. They just didn't want to.
A reader on my blog has posted the mortgage information from public records. They sure did spend a lot of money on taxes during these refi transactions.
"But with an average income of $100k, they could have paid off $200k of their consumer debt and taxes, after downgrading the house and the car. They just didn't want to."
It's not that "they just didn't want to." Look it's BUSINESS. It's not personal.
The rich don't operate the way you do. The rich are rich, precisely because they don't operate the way you do. They're SMART. Why pay when you don't have to? Why pay taxes when if you run up a $200,000 bill, the IRS will cut a deal with you? If you owe $2,000 they are going to get it; but if you owe $200,000 they'll settle for less. It's just smart financial planning. It's nothing personal. It's just BUSINESS.
Emulate them. Stop paying your taxes. How do you think Tim Geithner became a millionaire? Do you think he became a millionaire by giving the government all his money?
Are you THAT stupid?
And let's not forget, since you bring up Geithner, that he actually failed to pay some of his federal income taxes until Obama nominated him. And let's not forget that even after the scandal became public, Obama still nominated a guy who now controls the country's economy who, um, did not pay taxes when he thought no one was looking.
God, what a compassionless group of swine.
Beam me off, Scotty.
What are we supposed to be compassionating here? The intellectual dishonesty of the reporter, or the financial dishonesty of his wife?
I'm expecting "compassionating" will be the word on the Colbert Report one day next week.
=)
Mercy for the guilty is cruelty to the innocent.
Having compassion for people who suffer misfortune is very different than compassion for people who lie, cheat, and steal, and act stupidly, and then suffer for it.
And when they lie to us and ask us for our sympathy under false pretenses, that's adding insult to injury.
Mercy to the guilty is superior to compassion to the innocent. Those who show no mercy to the guilty deserve no compassion themselves, regardless of guilt or innocence.
Mercy is different than a free pass for those who cheat you and society over and over again.
I'm not too religious, but I seem to recall that even Jesus turned over the money changer's table in anger. The second Mrs. Andrews epitomizes the only persona who could elicit rage in the most classic of pacifists.
I hate to be cynical but I am NOT surprised that Edmund Andrews conveniently left this detail out of his book. It seems that these sort of POV pieces--especially those found in the Magazine--are increasingly navel-gazing efforts on the part of NYT reporters. (Case in point: "Her Body, My Baby")
While he purports to be telling the truth, in the end he wants to portray his story in the most digestable, marketable way. Otherwise, the book won't sell.
SIDE NOTE: I am really impressed at the comments in response to this post! Especially by those people who do not hide behind anonymity:)
Uh, Lois, since when is that uncommon among autobiographical works? Everyone who writes about themselves does that. Even Ben Franklin omitted his tendency to sleep with everyone other than his wife from his autobiography.
He's a reporter, covering the foreclosure crisis. Bankruptcy is an enormous part of the story.
He had to know his wife's bankruptcy laws were public record, open to him, to you, to me, or to anyone else to read. There's no privacy about such things; and reporters benefit tremendously from this.
His failure to include this very pertinent fact colors all of his reporting. And with a major news organization behind him and a highly-promoted book out, that's both newsworthy and important to people who read his work to inform themselves.
I do agree there's no excusing the misogyny of some comments.
It makes one wonder whether or not Andrews even knew of the first bankruptcy.
While it is interesting that Mr Andrew's wife filed for BK, the failure of multiple mortgage creditors to perform the necessary due diligence to discover what Ms McArdle did with a few clicks is more relevant. Remember, it takes 7 years for the bankruptcy to drop off her credit. Didn't the loan underwriters notice the 1997 BK when they underwrote the loan(s) in 2004? Mr. Andrews may be a fool for falling for someone with expensive tastes, but I can't blame him when even bigger fools at the bank ignore the red flags about his income...
Would you loan out 500K to someone whose wife filed bk in less than six years ago, and who had absurd ($2700!) child support obligations? I sure wouldn't.
It is very convienent to blame the debtors, but someone still had to be foolish enough to make the loan.
Actually it isn’t that surprising that the bank wouldn’t know about the wife’s bankruptcy.
I worked as a credit analyst for the mortgage company of a major bank as my first job out of college. Our job was to review electronically submitted credit applications for things like credit scores, income verification, debt to asset ratios, etc. The system was highly automated and when the banker inputs the borrower(s) information, it automatically ran a credit report on the primary borrower (the first name on the application who is usually the person providing the bulk of the income that will be used to pay the mortgage). If their bank operated the way mine did, it’s likely that a credit report was only ran on the husband since he would presumably be the one responsible for paying the debt.
While I worked there I discovered that occasionally a banker would input an application where the primary borrower had no income but the secondary borrower did. It usually turned out to be the case that the primary had no income but better credit than the secondary – sometimes the secondary would have a series of delinquent payments or even a bankruptcy in their report. I used to automatically run a credit report on the secondary borrower in any loan application where s/he had the majority of income but was chastised by my manager because she thought it could be a violation of fair lending practices if different analysts treated applications differently rather than reviewing them uniformly. Fortunately the solution that was eventually implemented was to change the system so that it automatically ran a credit report on both borrowers regardless of who was the primary or who had the majority of income.
It may be even simpler than that--it's possible that the house was in his name only. In the NYT Magazine article, he discusses the house and his interactions with Bob the mortgage broker almost exclusively in the first person, singular. Only two times that I saw did he say "we."
Tried looking up deeds (another valuable public record) to see if my hunch was right, but Montgomery County does not seem to have their database online.
As detailed in Andrews' New York Times article, the bank went to considerable lengths to avoid learning anything about Andrews or his wife before giving them (or him) the mortgage. I don't doubt this part of his story at all, because I saw a very similar no-doc normal mortgage + HELOC (now in foreclosure) in a matter at my law firm, and we've all read about similar transactions in the paper. The banks were relying on continued real estate appreciation; they were indifferent to the creditworthiness of their borrowers.
For those who think it's lacking in compassion to be disgusted by this tale of profligacy and double bankruptcy, consider how it looks from the point of view of people like me.
I have been a stay at home wife and mom since my boss fired me for being pregnant with my first child back in 1982 (I'd planned on quitting when the baby was born, he just didn't want to wait, as morning sickness interfered with my job). My husband spent 20 years enlisted in the Air Force, he was in boot camp on our first anniversary. We have seven children (adoption and biological). The youngest is ten and one of our adopted children is severely disabled and needs full time care, which I provide. As my husband has long explains to all his co-workers and anybody else who would listen, I am the one who made it possible for us to get by on one income.
I shopped at thrift shops for clothes, presents, household goods, furniture, and I bought appliances second-hand, discount stores, scratch and dent stores, baked our own bread, cooked everything from scratch, and we've eaten a lot of beans and rice and rice and beans. We lived 18 months with no car, and most of our marriage with one car for the family and that car was never less than ten years old when we got it. I packed my husband's lunches so he didn't have to buy them, and I learned to make our own laundry soap, starch for his uniforms, and household cleaners. We don't have credit card debt. Family vacations were called PSC moves (permanent change of station, or transfers for you civvies). For years we had no mortgage and no car payment (a brutal car accident and a probably bad decision to build when he retired altered that).
I worked HARD at making an enlisted man's salary keep our family clothed and fed because it mattered immensely to both of us that our kids have a parent at home with them. Making a home, nurturing our children and my husband, that's what I do best, too, and I'm proud of it. But I do not ask others to pay for this! Nor are we lacking in compassion where compassion is called for. In fact, along the way we have had other families in need stay with us, sometimes for months. We have helped support single moms. We're hosting a college grad who hasn't found work yet for the summer. In order to help others I've resold used books on ebay and dedicated the funds from that source to specific needy causes. We managed a family of nine on HALF the Barreiro income and less to support ourselves without running up massive credit card debt. We turned down credit card offers and house loans larger than we thought we could afford, regardless of what the bank said we could afford.
And the Barreiro story teaches us that all I really needed to do was spend well beyond our means, eat out all the time, get large loans to buy the cars we might have liked instead of what we could afford, shopped at 'high end stores' also on credit, and we could have declared bankruptcy and kept the cool clothes and other junk and gotten a cool book deal and been wined and dined by New York Elites.
The Barreiro story is one of failure, misplaced priorities, and materialism at its worst. That's reality, not lack of compassion. I think she gives sahms a bad name, and I do not appreciate that.
Thanks for your story -- and thanks for your husband's service (and yours' too!)
I know exactly how you feel. I got laid off just a month after returning to work after our first child was born, in retaliation for taking the job early in my pregnancy. We decided together that it would be best for me to stay at home to raise our daughter. The consequence of that decision was cutting our income in half.
Somehow, we managed to make it work. Our children were dressed nicely, because I would buy their clothes a year in advance, paying half price or less. I shopped the ads at three different grocery stores and was a prolific coupon clipper. When Target had their dollar sale, I stocked up on staples. Going out to restaurants was reserved for special occassions. Our daughter was five before we ever took a vacation, and then it was because a friend of my parents loaned us their codo at the beach - even then, I cooked all our meals. I drove my Mazda 626LX (purchased in more flush times) until the wheels were ready to fall off.
We even managed to buy a nice three bedroom home (that we still live in almost twenty years later) while paying to send two children to private preschool and still never ran up a lot of credit card debt. Yes, it is possible for a family to get along, and rather nicely at that, on a single average income. It just requires living within your means and either doing without the unnecessary extras or waiting until you've saved up for them.
To continue to spend money you don't have and then file for bankruptcy in order to discharge those debts in unconscionable.
Great story. You remind us that the high life is not the only alternative. No, we do not need to live in a house that costs too much. No, we do not need to shop at Sak's Fifth Avenue. No, we do not need restaurant dinners and hair stylists. No, we do not need to go deeply into debt to satisfy immediate desires.
The government's bail-out programs amount to taking money from the thrifty and giving it to the spendthrift. Many of the spendthrift can justify this. I can't.
FWIW, Mr. Andrews just discussed his book on The News Hour on PBS. Shockingly enough, no mention was made of his wife's two bankruptcies.
You know, I'll bet the info Megan dug up never does actually haunt him much. He can go from one sympathetic outlet to another (NPR, PBS, NY Times, MSNBC, CNN) and he'll never be asked a really awkward question -- only those that fit the narrative. The talking points will be how the mortgage lenders were so predatory that even a NY Times financial reporter could be a victim -- but what a brave victim to come forward and write about it! So much good it will do in pushing for needed reforms and for others who might find themselves in similar straits! Yadda, yadda, ... gack
I can already imagine the "Bill Moyers Journal" segment, featuring a talking head blurb from Elizabeth Warren.
To think of this guy pulling down $120K per year, plus what his wife makes, plus what he makes off this book and he hasn't paid his mortgage in 8 months because he thinks he's deserving of a loan modification!
He all but admits lying on his mortgage app to exclude his child support outflow and I bet his wife's name was not on the mortgages because of her BKs (he must know)
But yes, he'll be treated as a victim.
I read "headmistresses" post and think of people I've known over the years who have scrimped and saved (I was an enlisted man in the military and know many families who raised fine children on hand-me-down clothes)
Andrews is disgusting. The more I read, the uglier a picture it is. After my military service I spent 25 years in finance, and the people who are really - at heart - to blame for our financial "crises" that is the 80-90 S&L crisis, the dot-com bubble; and now this grand-daddy of a plop are middle to upper middle class people who think they should get something for nothing.
Their stocks should go up 20% every year; their home value should go up 20% every year; they should be able to get 10% on CD at Skeetiz S&L and suffer no consequences; they should be able to supplement their consumption by tens of thousands of dollars using credit cards and then get a "do over" every few years. It is easy to point to 100 or 1,000 financiers as villans, but the real money, the hundred billion piles of it, is eaten up by the real free lunch crowd - a big swath of the public, and those of us who pay ALL our taxes and ALL our bills pay for them.
I don't think you, Jozef, read Andrews recent piece in the NYTimes. He would like a loan modification but he is not paying his mortgage because he does not have the money to pay it.
Some people just cannot, just cannot, keep their shit together. Doesn't matter how much they make. They will spend beyond their means, and sometimes you can't even figure out where the money is going at all. They could be making 100,000 (in a place where that is a lot of money), driving 6 year old Hyundais and living in a mobile home, and still have to file bankruptcy. Whether they spent it all on blow or My Lil Ponies, somehow or another the money will get spent. Expecting them to be aware of their finances is like blind man to color coordinate his outfits. As far as I can tell money just doesn't make any real sense to them, and they can only tell they are in trouble when its way way past the point of no return.
Yeah, well, now we know why she could sleep at night and chide him for obsessing over all of this: she knew how the story would end, in another bankruptcy.
I was a mortgage broker for 6 years and looked at people's finances and credit reports all day long. It didn't take long to spot the gamers, the cheats and the abusers.
Let's see: Tax deadbeat, check. Unwilling to work, check. Milking an ex-spouse for alimony and child-support, check. Planned, serial bankruptcies, check. Marrying another sucker to get her bills paid and keep a roof over her head, check.
All that's missing from her story is a convenient slip in the post office, some indefinable "soft-tissue and nerve damage" and a perpetual "disability" check from Social Security.
Seriously, it makes you wonder if he knew about her bankruptcies before getting married. His description of her spending habits and lack of willingness to talk about their financial problems like an adult reek of entitlement and irresponsibility.
I don't like Mr. Andrew's side, but at least he owns up to making mistakes and feeling intense guilt and discomfort with his mistakes - unlike his wife who appears to feel no guilt or remorse for her chronically irresponsible behavior.
To folks like The Expatriate who object to Megan's discovery and publication of the backstory to Mr. Andrews' book: You're being disingenuous, at best. It's clear that this guy is going to receive a sympathetic hearing from major media outlets, and that he's story is going to add to the narrative of how the entire economic mess is due to the greediness of the big, bad banks, drowning out what is actually a far more complex, nuanced story of personal and corporate greed by individuals and corporations. And his story is likely to lend more heft to this narrative than most - after all, if even a NYT finance reporter could be duped by an evil mortgage broker, how could the 95% of the population with less education and fewer credentials than him hope to survive?
Given that the above is undeniably true, do you really believe that his wife's multiple bankruptcies and spendthrift ways are irrelevant to his story?
Ah, yes, these words of wisdom from The Expatriate's blog: "McArdle basically uses his wife's financial history, which includes two bankruptcies, one apparently connected to a divorce,. to imply that Andrews, and her, are getting what they deserve, and that we should ignore calls for financial reform."
As if it's not more disturbing to write a book intended to enhance calls for financial reform that is, arguably, deliberately misleading as to the causes of the author's own financial misery, misery which at the level of fundamental causes, has nothing whatsoever to do with any of the problems that supposedly require radical reform. That kind of dishonesty is perfectly acceptable in The Expatriate's world because what's important is not Truth; what's important is The Narrative. And the dirty little secret is that these two are seldom the same thing.
The left has this tactic down pat: they pick out an individual to be the face of an issue, to illustrate why it's such a problem, and then scream foul when people investigate that individual's story to find out that it isn't, in fact, true.
It's mean to question whether the poor person is actually poor; you should just accept it, because the story is, at worst, fake-but-accurate.
David, I'm a liberal. Please don't speak for all "lefties" here, because otherwise, I agree with you.
The left and the right both have subsets of mind-numbing repeaters. But in neither case does that mean the whole set.
There are plenty of people facing both bankruptcy and foreclosure because of job loss, medical catastrophe, business failure, evaporated retirement accounts, etc. Not everyone is an Andrews. And some of those people are sure to be conservatives.
Slocum and Jozef are exactly right. Almost assuredly, Andrews will find sympathetic journalists who will extol his victimization. And my reaction mirrors Jozef's- Andrews made knowingly bad, even deceitful choices.
Finally, great work, Megan.
I find it rather disconcerting that the commenters here seem to be advocating a world in which anyone with a bankruptcy in their past, even if they shared it with their ex-husband, should not only be barred from ever marrying, but should also be forbidden from having custody of their own children (evidently, the similarly indebted ex-husband is a better choice for some reason ...??), and, as far as I can gather, be forced to wear large flashing signs on their heads that say "I ONCE DECLARED BANKRUPTCY! YOU MUST SHUN ME! I HAVE SINNED, AND I WILL INFECT ALL OF YOU WITH MY SIN IF YOU GET WITHIN THREE FEET OF ME!"
For one thing, Meghan refers to this woman as having been a "serial bankrupt" before she even married Andrews, and nobody seems to have caught the error. She had ONE bankruptcy prior to her second marriage - to restate, a bankruptcy which could have had as much, or more, to do with her husband as with her. And we know nothing about the causes of her second bankruptcy. For all we know, they could very easily have been related to the massive legal debts one tends to incur during a divorce, particularly when one's opponent has significantly higher financial resources at their disposal. She also, contrary to what many of you claim, did put a lot of effort into searching or work. The job market has been cutthroat for the past several years. Barreiro had been out of the workforce for twenty years. If anything, I think it's quite extraordinary that she was able to land the kinds of high-profile jobs she did. (In fact, I'd sort of love to know how she managed it - I could use that kind of skill.)
I'm not saying that the above possibilities are what MUST have happened. All I'm saying is that there's every chance that that's what COULD have happened. We don't know. And yet, so many people here seem to have decided that they know everything there is to know about this woman. The facts of the situation could very well have been irrelevant to the story that Andrews was trying to tell. And I still think that, even with the omission, his story was meaningful and important. His wife's bankruptcies don't invalidate anything he wrote about - and the reasons behind them might just be none of our damn business.
On a personal note: I plan to declare bankruptcy myself sometime in the coming months. Medical crisis while under-insured and having just finished school, if you're curious. And the dry-as-a-bone job market. At any rate, after I declare, I confess that I harbor the perhaps childish desire to marry the man I'm madly in love with, and who is madly in love with me. However, according to many of you people, my financial history should induce any potential mate over the course of my lifetime to run away screaming. And, apparently, I'm unfit to bear children as well.
Really ... I would have thought that in this day and age, we would have moved past the Hester Prynne thing.
Ahm. The point of her post is that it's disingenuous to leave out information in your sob story when the rest of the story doesn't exactly support the narrative.
Or as Paul Harvey always said, that's the rest of the story.
As I said, I disagree with the assumption that the facts omitted by Andrews - probably, as Meghan pointed out, to protect his wife - automatically alter the narrative he's presented so much as to render it meaningless. Again, they might, but they might not. We just don't know. I do, however, think that Meghan was right to conduct her investigation and to bring this information to the public's attention, because it does imply a very real possibility that the "real story" differs substantively from what we've been told.
What I disagree with, however, is her editorializing about the character of a woman she's never met, particularly when she's backing up those assessments with information that is flatly contradicted within the same post.
On the whole, however, I thought Meghan was extremely fair-minded and decent in how she wrote this. My post, as evinced by its first sentence, was first and foremost a response to the viciousness displayed by many of the commenters here.
You may have missed Andrews' long human interest piece in the NYT a few days ago, in which he summarized the tale of their woes. Megan linked and commented on it, it provides a lot of context for the current discussion. At any rate, note this detail of the first bankruptcy from Megan's current post:
"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."
The $30k CC debt and $200k back taxes could be explained by business difficulties or an unrevealed serious health condition, but the combination of the $15k private school tuition and "substantial car and mortgage payments" is a calling card of persons living beyond their means, and unwilling to adjust their lifestyle to reflect the real state of their income. The fact that Andrews reveals some continued profligate spending habits after their new marriage in his NYT piece, not to mention the second bankruptcy during their marriage that he chose not to mention, is fairly compelling evidence that such behavior had continued on into their new household.
In short, the combined details of the public record and what Andrews has chosen to reveal in his NYT piece and book, strongly suggest that she has poor fiscal discipline and he has poor judgment, and they managed to dig themselves into a deep hole by living quite wildly beyond their means. In spite of this, he is willing to hold himself up as an example of an everyman who acknowledges that he made a few "aw, shucks" mistakes but ultimately got blindsided by greedy bankers. Uh-huh.
Also, as Meghan pointed out, Andrews was extremely revealing about his own mistakes, character flaws, and role in creating his situation. That's a far cry from a sob story.
You know what amazes me? People who repeatedly can't figure out how to spell "Megan" even when it's staring them right in their face! You probably never needed to file for bankruptcy... you just kept writing the wrong names on the checks! It's MasterCard, not MeisterKord!
"The facts of the situation could very well have been irrelevant to the story that Andrews was trying to tell."
I think that's why we're a little ticked. The story that Andrews is trying to tell is very sympathetic to him and the facts seem to be irrelevant.
I can understand how you could be upset with commenters who appear to be judgemental about bankruptcy. If you were both under-insured and have just finished school, I would guess you are in your mid-to-late 20s. People who are in their mid-to-late 20s are frequently under-insured because most of the time nothing medical happens to them. Their biggest risks are broken bones and pregnancies. You, probably unwittingly, took the gamble and lost. Now in trouble you have to declare bankruptcy. You may be the kind of case bankruptcy was made for. Your story isn't their story.
I would caution you to not waste your empathy on a couple old enough to know better who planned on something magical bailing them out. These aren't a couple of kids fresh out of school with student loans and trouble finding a job. They are adults who made a series of choices that progressively worsened their situation. Every adult poster has pointed out that responsible adults don't behave this way and they are right.
It is fabulous you bring up Hester Pryne. In the _Scarlet Letter_ Hester Prynne raises her child alone because while she has repented, the father of her child has not. The object lesson of the story isn't the letter itself, it is the contrast between the woman who does what she has to do and the man who hides behind her.
Who declared bankruptcy? Andrews' wife. Who did he throw under the bus in the book? His wife. Who is doing the book tour? He is.
What people are pointing out is that he had every reason to suspect his wife could not manage money and he chose to marry her anyway. He bought her the house she had to have, he wrote checks, he paid bills, all for beautiful Patty. Now that it's really bad and time to write a book, everything he did and all the choices he made are someone else's fault. If I were Patty and all of this wasn't some brilliant scheme I would be really upset.
Go marry your beloved. Have beautiful children. Cover your bets. Save for things that aren't supposed to happen, because they do. Buy a Dave Ramsey book and live it. You'll have more peace in your life than granite countertops can bring.
It's not that he chose to marry her, but that he chose to enable her. She spent whatever she wanted, refused to even discuss their financial troubles with him, and his solution was to conspire with an unscrupulous mortgage broker to borrow money he knew couldn't pay back.
Thanks, David Nieporent, for introducing the word enable into this discussion. Andrews enabled his wife. In my youth, people would have been saying the guy was pussy whipped but I guess we can settle for saying he was madly in love and made a bunch of dumb ass choices and now he hopes to cash in as everyman, using his position as a money report for the NYTimes and his putative money expertise.
He is not an everyman who got suckered punched by the economy who might lose his house because it is worth less than he paid for it. He is a chump who enabled a spendthrift wife that he was in love with.
I wish someone would love me like that but if I had an addiction problem (spending other people's money is an addiction), that he would love me enough to say no. They could have rented an apartment they could afford but something tells me Patty would really really really not have liked that. And in his NYTimes expert last sunday, he admits that even when their income was grossly below their necessary expenses, she kept on spending. And he let her. It's enabling, David, you got it right.
The vast majority of us live within our means. I doubt any poster here would go rack up a $700 credit card bill at J. Crew if we were broke. So why is there ANY sympathy for Andrews?
Barreiro had been out of the workforce for twenty years.
Yes, because she is deeply and profoundly lazy.
So every stay-at-home mom is "deeply and profoundly lazy"?
No, just the ones who have families facing bankruptcy with 200k in back taxes and still won't get a job.
Again, I'm amazed at the extent to which some people feel so comfortable in their apparently prodigious knowledge of how the world works, that they don't bat an eye at making blanket judgments regarding the character of people they've never met, and whose life circumstances they know next to nothing about. We don't know anything what was going on in her life during that first bankruptcy. It might have been unfeasible for her to get a job for any number of reasons.
Of course, it is absolutely within the realm of possibility that she is, in fact, deeply and profoundly lazy. But a decent, average sense of humility would probably preclude the sort of immovable certainty that allows for that much confidence in the accuracy of labels like that, or like "ignorant slut."
jmo, don't forget going to beach condos and buying 700 plane tickets. Oh, and spending 3x/month in groceries of what is needed to live well. And refusing to have a civilized discussion about how her spending is dragging her family into financial oblivion.
Tacroy80, I suggest reading the article in detail; even in a very self-favorable tale, Mr. Andrews describes his wife's reckless spending habits even in the face of impending financial doom. But perhaps you have a point that lazy may not be a foregone conclusion; perhaps fiscally incompetent and having a chronic disdain for honoring her word to creditors would be more fair.
Megan,
I just wanted to say great job on your work. I have been reading your blog for some time. I check about 20 different news sites a day because of my job, and I just wanted to say that it has been a long time since I have read something by a reporter who has published something and then actually followed up on their original work with any sense of honesty or integrity.
And for those who want to know where you may/can find information like what Megan dug up, submit a FOIA request to a specific government office or agency. But if you want something about yourself, you need to send a Privacy Act request.
What astounds me is that she and her first husband could go bankrupt with that kind of an income. They were either hit hard by some unforeseen debts and/or bills, or else they were, uh, profligate and financially incompetent. It's not against the law to be financially incompetent, but it's not exactly ethically laudable or admirable ... especially if you have a couple of kids. I'm sure she was a good mom, but she was probably also hit the shops a bit too hard.
As for Andrews, shouldn't someone in the business/econ biz be a little bit more financially aware?
It's about time after all of the gag inducing media coverage of this joke of a book that someone got to the truth. So many of those who "innocently" got victimized in this mess are exactly like Patty.
Is anyone surprised? The article in the NYT left everyone I've spoken to understanding this women has a spending problem and that Mr. Andrews proves that love is blind. I wonder if he had any clue he was marrying someone with long standing money management issues.
Should the book do well it may stave off an early divorce. But I'll bet my last dollar that this marriage will end in divorce and Mr. Andrews will come out of it penniless.
"I couldn’t forgive him or like him, but I saw that what he had done was, to him, entirely justified. It was all very careless and confused. They were careless people, . . . they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made. . . ."
Sound familiar? The main difference here is that it isn't the Andrew's money that they will be retreating into (they don't have any), but more likely, yours and mine. When you are placed in the position of covering other people's losses and paying for their mistakes, you tend to become, well, judgmental. Apologies to those who don't like the tone.
Jay Gatsby? I need to re-read that book.
I can certainly understand the anger and frustration. However, I think people need to cool it on the assumptions and rule-making just a bit. Apparently, many - though of course not all, or maybe even most - commenters here believe that *anybody* with a bankruptcy in their past has no business marrying, and is unfit to raise children. Maybe it's just self-indulgence on my part, but I'd like to believe that an ill-timed tumor shouldn't forever bar me from marriage. And though I don't plan to have kids, I think that lumping people who have financial difficulties for any reason whatsoever in with the horrible abuses perpetrated by truly unfit parents is utterly horrifying.
You might be making some unwarranted assumptions yourself, since the combination of what Andrews has revealed in his story and the public records are highly indicative of serious judgment lapses by both parties. If someone in this thread is suggesting that a single bankruptcy filing makes a person an unfit wife or mother, I haven't read that post yet. However, I do see several people suggesting that under these particular circumstances, the relationship was ill advised and the resulting consequences are the result of bad decision making, not some nefarious victimization of the Andrews household.
I would suggest that the issue isn't a single bankruptcy; it is learning nothing from that bankruptcy and continuing to live a life of profligate spending beyond one's means.
I would posit that most commentors have nothing against someone who makes a mistake, files for bankruptcy, then turns their life around.
good reporting! I read the article on Sunday going, "oh please". Another couple with stupid spending habits, who then want sympathy.
My husband's first wife was a credit card abuser and it cost her her husband. I was raised by parents who lived thru the Depression. I drive a 12 year old van, we live in a soon to be paid off house, with absolutely no other debt. We live a perfectly good life, but we do not waste money.
When I read about people who go broke buying crap because they "have" to have it, I just get incensed. Why do people decide that they have to have this that and the other piece of commercial garbage? Why should I feel sorry for people who have a clothing/shoe/car/stainless steel appliance fetish?
It's one thing if someone is genuinely poor. But middle class is about making choices with your money, not living as if it's a never ending income stream.
There's no question that the two bankruptcies were relevant to the story, both because they suggest something about the kind of financial management going on in the Andrews' home that may have led to their financial crisis, and also because they suggest something about the diligence used by their lenders in deciding whether they were a good credit risk. Telling the story without it is like telling the story of a guy who got an unreasonably harsh prison sentence for some small-time strong-arm robbery, without mentioning his five previous convictions.
The thing about this story that strikes me is that the protagonists are so incredibly, deeply unsympathetic. If I were someone lobbying for harder personal bankruptcy laws and less sympathy for people who got in over their heads, these guys would be my model couple. When some barely-literate Salvadoran construction worker gets in over his head on a mortgage written in a language he doesn't even speak, or when a couple gets into trouble because of an illness or divorce or layoff, it's easy to find some sympathy. It's much harder here. (To be honest, I've made some pretty awful financial decisions in my time, too, though not quite so spectacularly bad. And if I had gone bankrupt from them, I, too, would be a pretty unsympathetic victim.)
I'm with albatross (8:13 AM). I'm about to stop feeling bad about taking pleasure in the current distress of spendthrifts. For well over a decade I've felt like a fool for *not* getting the bigger house, the nicer car, the more luxurious vacation. It's gratifying to see that someone else was the Greater Fool.
A pyrrhic victory if there ever was one. The costs of the spendthrifts' plight will just end up being passed on to the rest of us.
Over the years I've found that it doesn't matter how much money you make, there are people who don't overspend and save (whether they are making $20K for a family of four, or $120K as a single person). And there are people who are always in debt, whether they make 20 or 200K a year.
What is particularly irritating about the current situation is that those of us who do not overspend (whether we are stay at home mothers or 80 hour a week lawyers) will end up bankrolling, through our taxes, the folks who do. Taking care of a family of four trying to make it on 20K sits better with me than someone who overspent on more money than I will see in a year.
This is not about working mothers or yuppie scum or even socioeconomic status. This is about taking responsibility for your life, irrespective of what deals the banks or the credit cards offer you.
This is a fascinating piece -- thank you. But I don't think we even needed the bankruptcy information to know that something was fishy with Andrews' article. The math just doesn't add up.
His mortgage payment was $2,500, yet they were living beyond their means to the tune of $3,000 EVERY MONTH. In other words, even if his mortgage payment was zero, they would still be spending $500 more than they were taking in! His wife is "bewildered" by this, and refuses to cut back on buying fancy cheese.
Then, his wife is offered a $60,000 a year job, which Andrews thinks will solve all of their problems. But the math doesn't add up, as I wrote in the post linked below. At best, they would have been taking home an extra $1,000 a month from that job—leaving them $24,000 in the hole for the year.
The New York Times Magazine editors should have asked these questions and forced Andrews to address them in his piece.
http://monogamoney.wordpress.com/2009/05/17/why-i-cant-feel-sorry-for-edmund-andrews/
For the current problems to arise corruption had to spread throughout society.
mendacious, self serving and corrupt had to be all of the following:
borrowers,
loan officers,
real estate agents,
appraisers,
securitizers,
rating agencies,
accounting firms,
investment banks,
the media
congress.
I hope you find it within yourselves to turn back this tide of evil lest you will be destroyed.
My compliments to Ms. McArdle for some great work here. This is good journalism.
Megan, this is simply excellent investigative reporting. I had similar doubts about the story; too many confusing details did not add up. Why did Andrews agree to pay child support and alimony, far in excess of any state's mandated guidelines? Why wasn't his wife bringing in a roughly comparable amount of child support and alimony? Why didn't she have a house to sell or split in HER divorce?
Contrary to a lot of popular belief, women do not "get a house" in a divorce. For starters, most homes are heavily mortgaged. The most women typically get (unless you are divorcing a tycoon) is the right to live in the house while the children are MINORS. Many times, to simply get that privilege, the ex-wife is forced to buy out her ex-husband share by a certain date. OR prior to any divorce, equity is stripped out of the house and divided between the couple.
Why did Edmund Andrews "walk away" from what we have to assume was ANOTHER half-million dollar home?
What's the deal on his "extra income" from the NYTimes? Is he making $120K a year or much more than that?
Why would someone marry a never-employed SAHM (for 20 years! how many kids did she have anyhow?), and then think that person would immediately adjust to a full-time career, that anyone would HIRE HER and what about her minor children? What about the costs of day care and after care? Surely the cost of day care alone would sink any real benefit from working a sales job at Saks!
I have a feeling that the Andrews would have gone "bust" on a million a year -- or ten million -- or if more like the rest of us, $40,000 a year. They have no common sense; they live in a world of pixie fairies and wishing dust.
It doesn't help at all IMHO, that they seem willing to declare bankruptcy over and over again, getting "fresh starts" and leaving the rest of us with the dirt to clean up and the bills to pay.
This is the germ of the real story, and you are my heroine for digging it up while other publications lazily just went with the book, or NYTimes article. Lazy, lazy and lazier.
Blaming this kind of juvenile refusal to grow up and be responsible for your actions is what caused Edmund Andrews to "go bust" -- not the mortgage crisis, not his loan officer, not "banksters". He is placing the blame on the wrong folks; he and his 2nd wife would have been in the same situation if they had had a conventional 30 year mortgage, and this was the best of economic times. Dude simply can't do math. Blame the schools!
Laurel962, you raised an interesting question:
"Why did Andrews agree to pay child support and alimony, far in excess of any state's mandated guidelines?"
I have no idea what the law is in Maryland, but in my state there are alimony guidelines and child support guidelines. My attorneys told me that the alimony guidelines, unlike the child support guidelines, are not mandatory and are routinely ignored by the courts.
I don't think Andrews would have entered a settlement which called for him to pay substantially more than his attorney advised him the court would order if the case went to trial (very few divorce cases, or any cases for that matter, actually go to trial).
When he and his new wife divorce he will probably have to pay her alimony as well. Many people mistakenly think alimony is now rare. And in some states it is very uncommon. But in many states divorces of couples with this kind of income (he makes over $100k and she makes less than half that) will result in alimony.
Megan:
Wow. Your article is possibly the best example I have read that demonstrates the possibilities of merging blogging, investigative journalism and mainstream media reporting; a picture of what journalism could (should?) look like in the near future.
Congrats.
I don't think Barreiro was on the mortgage at all because they weren't married yet when Andrews purchased the house. I'm also amazed at those people who think the Barreiro's bankruptcies aren't an important part of the story. She not only declared bankruptcy a second time, she did it within a few months of the time she was legally permitted to do so. I also don't understand why criticizing a woman is automatically misogynistic. She's being criticized as an individual, not as a member of the female sex.
I am hopelessly addicted to this story. Instapundit linked me here. Althouse linked me here. Is there anywhere else that might have more information?
I know that since this guy is a member in good standing with the media elite that they would not ask harsh questions. But has ANYONE asked Mr. Andrews what he is going to do? Has he explictly said that he wants a mortgage bailout? Has he said anything about any of his other bills? Has he said that he has been taking the money from not paying the house and paying off other debts? Did he receive an advance from the book?
The most amazing thng abut this entire story to me is that mortgage broker Bob emerges as the least unsympatheric person in the story.
I've had a deep and abiding detestation for the real estate-construction-mortage bank industrial complex for decades. Bob is a primne example of why. But compared to Andrews and Barreiro, he's has at least a scintilla of honesty and self-awareness.
Andrews and Barreiro are they types who think their mid-life crises justify their adolescent self-asorption in breaking up two marriages with children and then acting like spoiled brats who believe their owed something. Christ, they'd already collected good fortune in spades and pissed it away. Just how do you run up $200 k in tax debt on an income of over $100 k a year? Self employed and "forgot" to pay taxes? For how many years? And Andrews lacks the decency to tell the story honestly.
What's ironic (I hate that word) is that Andrews set out top write a story demonstrating how "anybody" could get caught in the mortgage trap by unscrupulous lenders and bad busness practics .... and has wound up demonstrating that no, not just anybody, but in this case upper middle class people with a sense of entitlement matched only by their whinging self-pity and willingness to deceive in order to try to make a score based on their bad behavior. They belong on the cover of People magazine with all the celebs trying to make a buck and a comeback off their drug addiction stories.
I think the clue is the "I make dreams come true" part. Some people have a narrative for their life and can't be bothered to figure out whether the math works out.
It's the triumph of hope over reason.
Not to mention unnaturally low interest rates, RE-bubble profiteering, illogical risk management, and the unfortunate tendency to keep up with the Joneses.
Bob could have never existed and the risky loans he pulled together for Andrews would have never been approved without securitization. If the bank making those loans had kept them on their books, like banks used to do and like credit unions still do, they loans would never have been made. The loans were available because the banks were able to unload them as quickly as they were approved for a nice fee and no skin in the game.
Re: IQVoice
Charming.
I take it you have nothing else to add?
I must admit, you've rather surprised me. Given your obvious pride in both your IQ and your superlative powers of observation, I would have thought you'd have noticed that the bankruptcy I spoke of is in my future, not my past.
If Megan (no 'h') is, in fact, offended that I neglected to double-check the spelling of her name prior to posting, I apologize. I do have a sneaking suspicion, however, that she's bigger than that.
But while the willing lenders amplified the problem, given Ms. Barreiro's history, it seems unlikely they were at the root of it.
The lenders may not be the root of Mr. Andrew's problems. But they are the root of **my** problems as a taxpayer, because I am stuck with paying the bills for the blowback caused by their lousy underwriting.
If you want to author a morality tale, then sure, blame Andrews for marrying a high maintenance bimbette who, if this piece is to be believed, apparently doesn't understand the meaning of restraint.
But if your intent is to discuss economics, then the issue obviously lies at the heart of the banking system. From a regulatory standpoint, we can address underwriting standards and limitations on the types of loan products that are permitted far more easily than we can ever hope to fix the spending habits of millions of people who misuse or abuse credit.
Blaming the borrowers is good fun, but from an economic standpoint, it is really pointless. Good underwriting will forecast the default rate, which is inevitably always going to be something above 0%, and set aside adequate reserves to cope with it.
Obviously, the bankers did as poor a job of budgeting as did our intrepid reporter, but it's much worse for us when the stewards of the financial system fail. They used bad pro formas and jeopardized the economies of whole nations because of their sloppiness. We need to keep our priorities straight here.
"The lenders may not be the root of Mr. Andrew's problems. But they are the root of **my** problems as a taxpayer, because I am stuck with paying the bills for the blowback caused by their lousy underwriting...
Blaming the borrowers is good fun, but from an economic standpoint, it is really pointless."
Not entirely pointless. The bills we have to pay are at this point fluid: will there be more bailouts? How (needlessly) generous will they be? A lot of the needless handouts, even those that seem unrelated to the housing crisis -- like Obama trampling on Chrysler's secured creditors -- are justified because of stories like Andrews'. "We have to prioritize the union, otherwise it's just one more case of the struggling little guy being screwed!" they cried. If we can publicize the way in which this is NOT the true story here, it prevents it being used as ammunition to increase our tax bill.
will there be more bailouts? How (needlessly) generous will they be?
The bailouts are already baked into the financial cake. The price isn't impacted directly by one guy's errant bride.
If you want to prevent a future blowout, then the answer is obvious: regulate the financial system in such a way that the default rate is manageable during the troughs. Wringing our hands over morality may bring pleasure to internet posters, but it does not get to the heart of solving the problem.
Loan defaults are a fact of business life. We need to accept that, and budget accordingly. If a banker doesn't comprehend that default rates are never, ever going to be zero, then he needs to be relocated to his rightful place at Burger King or the DMW, where his talents might be more useful.
The bailouts are already baked into the financial cake. The price isn't impacted directly by one guy's errant bride.
Again, there might be more bailouts, and while the price isn't impacted by the financial benefit one family receives, of course it's impacted if this guy were to go on a media tour lecturing about how even someone as savvy as him was preyed upon. Are you claiming our congressmen don't respond to public sentiment?!
Frankly, KTL, even if what you say about the Andrews is true, and I personally don't believe it is, one case hardly disproves the overall argument for bailouts. A hundred, even a thousand cases wouldn't.
Oh, and if you can say I am Andrews in disguise, can I say you're really Grover Norquist?
Why would I accuse you of being Andrews? I know your real name from your comment about the book on Amazon.
I really don't think this additional information on the family changes the thrust of Andrews' book. If anything it underscores the industry's lack of underwriting standards, which affects all of us negatively. The guy who assisted Mr. Andrews to go deeper into debt is a real piece of work
The "Bob" story (the mortgage guy) doesn't pass my smell test.
Andrews can omit his second wife's bankruptcies, but has a crystal clear remembrance of Bob's wicked ways. Did Andrews take notes when talking with "Bob" back in 2004?
Maybe Andrews isn't at Jayson Blair or James Frey levels of making things up, but I have a suspicion he's in the neighborhood. Wouldn't surprise me in the least if Andrews or some editor wanted things "sexed up".
@RW
You are of course correct.
But I, you and most of our fellow citizens will be laboring into our sixties and seventies in order to pay the enormous debt occasioned by the need to bail out our economy from the consequences of insanely irresponsible, and in some case no doubt criminially negligent or fraudulent, lending, investing and borrowing practices.
I want some entertainment in return for the very high price of that admission ticket. Putting offenders from all categories in the metaphorical public stocks and letting the public take a few whacks at them is a good start. I'd prefer drawing and quartering for some (hello Angelo Mozilo and Walter Noel) but I'll take public derision and scorn for a start, because we sure as hell aren't going to get our money back from any of them.
I want some entertainment in return for the very high price of that admission ticket.
That actually made me laugh, so thanks. Well, if that's all it is, then have at it.
It's politically engaging and personally amusing, just not economically useful. From a journalistic standpoint, I applaud Ms. McArdle for showing the chinks in the author's armor. I am just not convinced that it advances a discussion of economics, which I thought was the raison d'etre of this blog/column/whatever you want to call it.
Apparently you haven't seen the list of top kitchen utensils/appliances. (not that I'm complaining, those are my favorite posts of the year - I even bought an evaporation cooled butter dish on Megan's recommendation.)
Again, I'm amazed at the extent to which some people feel so comfortable in their apparently prodigious knowledge of how the world works, that they don't bat an eye at making blanket judgments regarding the character of people they've never met, and whose life circumstances they know next to nothing about. We don't know anything what was going on in her life during that first bankruptcy. It might have been unfeasible for her to get a job for any number of reasons.
Oh, I think we have more than enough information about this woman to make judgments about her character. Indeed, we had enough information just from the original story, without the added knowledge of the prior bankruptcy.
Disagree with RW
Judging individuals (not banks) matters hugely
As we write (speak) many in Congress and the administration are armtwisting for banks (and Fannie and Freddie) to "modify" mortgage loans
Who gets a modification? A self serving schmuck who is withholding his mortgage payment for 8 months so he and his (double BK) spendthrift wife can go on their happy way? (even as he gets $120k salary, e.g. not unemployed) If Andrew's loan is modified, we pay (either as stockholders of banks, owners of Fannie & Freddie, or by paying more for credit in the future - in "normal land")
We are also being asked to "modify" the obligations issued by major US car companies. Again, should UAW workers and retirees who had ZERO co-pays for insurance, great salaries, and gold-plated benefits be given huge stakes in these companies - AHEAD of OTHER CREDITORS - other creditors being our pension funds and even other retirees who were follish enough to buy their bonds. My in-laws took a bath on GMAC bonds they bought for the retirment they SAVED for (yes, there are people who actually save for retirement).
So, these are exactly the kind of economic questions we should ask. This is an economic debate, not a sideshow and good for Megan M for advancing the debate
Since you all seem to think that family and friends are fair game for discussion, something has occurred to me that would take your logic to its logical conclusion.
Let's say a reporter for a liberal magazine such as The Nation or Mother Jones decided to do a profile on Ms. McArdle, and, taking offense at her views, decided to do an expose on her family background. Digging around, they start examining her court records...and those of her family. They look for evidence of involvement in bankruptcies, whether as filing for bankruptcy or as a plaintiff in such a case looking for remuneration. Lo and behold, they discover she was a plaintiff in such as case. (Note: I have no reason to believe that is actually the case; this is just a hypothetical example.) They even find evidence that several members of her family are employed by the credit industry, and are at risk from increased government regulation of credit. (Once again, hypothetical.) Upon discovering this, they print an article depicting her as a walking talking conflict of interest.
I think most of the commenters here would rightly agree that such an article would be a liberal smear. Targeting someone's family is beneath contempt, whether done by Ms. McArdle or the opposing side.
Furthermore, to answer her point and the points of most commenters, I really have no problem with the idea of people using bankruptcy simply as a means to protect their lifestyle. I would rather a million scofflaws go free than one innocent person get punished. With this I would include people who have debts to me.
I may not use credit much myself, but I am personally sympathetic to people who get in a hole, even if they dug it themselves. If other people don't like that, tough.
I happen to be of the opinion that Ms. McArdle is off base about, oh, maybe 117% of the time. At least.
However, she has a point here, in that this guy has written a tell-all book about himself that apparently left a lot of stuff out that, if she is to be believed, is relevant to the story.
That makes his life and his omissions fair game. If he wants to profit from his so-called subprime life, then he has to live with the consequences of those who sniff around his financial past.
Had she chosen him out of the blue for no reason, then yes, you'd be correct. But he's trying to profit from the story, so a little sniffing around is par for the course.
Now, I do think that it in the context of discussing business, this whole story is really a libertarian-motivated diversion meant to turn bankruptcy into a chest-pounding sanctimonious morality fest disguised as a discussion about finance. However, the guy did decide to air his dirty laundry, so he can't be surprised if he ends up with critics who are looking for stains, now can he?
Apparently you haven't read this blog for long. Not long ago personal aspects Ms. McArdle's private life got dragged out in public with accusations of conflict of interest. She thoroughly answered the questions in a professional, consistent manner when she could have easily ducked.
Given Ms. McArdle's recond, I'd say this is the wrong forum to bring up painting a self-sympathetic portrait while distorting facts. If anything, Mr. Andrews would not be in hot water here if he exhibited a fraction of the forthrightness Megan has shown.
Do you remember Sarah Palin? And her daughter? And Andrew Sullivan?
From a regulatory standpoint, we can address underwriting standards and limitations on the types of loan products that are permitted far more easily than we can ever hope to fix the spending habits of millions of people who misuse or abuse credit.
I agree with this in principle, but the facts of real-life politics mean that bills are passed and political campaigns won or lost based on anecdotes. Punching holes in anecdotes is pointless as an economic or policy exercise, but only because anecdotes are pointless as an economic or policy tool.
Punching holes in anecdotes is absolutely essential to the political project of getting decent policy enacted.
Punching holes in anecdotes is absolutely essential to the political project of getting decent policy enacted.
That's fair. But is everyone honestly really shocked that some borrowers who default had it coming? Seriously?
From a macro standpoint, I would like to see good underwriting and adequate reserves. The core question is how to get these out of the system. Invariably, the libertarian wing rejects every effort to create these sorts of restrictions, even though Finance 101 makes it clear that they are sensible and necessary.
It's this failure to accept this reality that I believe is the real danger. The anecdotes seek to turn exceptions into rules, which leads to bad policy because the problems are misdiagnosed. This crash is a whole lot bigger than just a few people with poor spending habits.
Expat,
If Ms. McCardle decided to publish an article (and book) on the topic of her family's finances, then the efforts of other journalists to gain and disseminate more information about her family's finances would in fact be legitimate. Nobody made Andrews unburden himself of his family's dilemma in print. Since he chose to do, presumably with his wife's consent (she appears in the photos accompanying the article) then further information about their financial history, freely available in the public domain, is absolutely fair game.
If you don't like that, tough.
Targeting someone's family is beneath contempt...
I don't get this. When you write a long book about your family, and are going about on TV talking about your family's sob story, isn't it fair to, you know, investigate whether you've told the whole truth about your family?
It's not like somebody took a presidential candidate and revealed that his son was a pothead or his brother had several bankruptcies; rather, somebody revealed that one of the central characters in the story told by the author himself had a background which was directly relevant to that story.
I'm sorry, but I don't see it as relevant. I am not totally convinced his wife was responsible for her first or second bankruptcies, regardless of McArdle's arguments. Just because someone's family is in a book doesn't mean you get to smear the family.
I still think McArdle, and those who agree, are without honor, without compassion, and undeserving of respect. I wouldn't be surprised if some of those commenting crow over people who commit suicide over debt, although Ms. McArdle has shown herself to be at least slightly above that level, at least.
"I'm sorry, but I don't see it as relevant. I am not totally convinced his wife was responsible for her first or second bankruptcies, regardless of McArdle's arguments. Just because someone's family is in a book doesn't mean you get to smear the family."
Expat,
Andrews smeared his wife. He said that she spend $700 at J Crew. He said that she bought the fancy cheeses. He said that he was the one that was especially frugal, willing to wait several minutes at the metro to save 50 cents. If the wife was smeared, HE is the one that did it.
Concur with apsuman. Recommend going back to the original post, following the link, and reading the excerpt. Publicly available information written in the hand of the accused is a powerful thing.
You are deeply obtuse. I have no prior knowledge of
mcardle and i subscribe to the nation. i read the
NY times article.
McArdle may have a retrograde political view but
i don't and i see the wife's behavior as totally
relevant to the whole story.
This whole story was not somebody doing right and
then falling into a hole, it's about people living
beyond their means and ripping off *their own freaking
sister*. defaulting on your mortgage and then living
free in a nice house for a year may be pure business
in a bad spot due to bad luck, but ripping off your
own family is *NOT* a business decision unless there
is something seriously wrong with you.
There is so much seriously wrong with Andrew's wife
and he has blindly enabled her behavior. She was
not able to budget - does that mean it's at all
reasonable for him not to take that responsibility
either?
Andrew and his family are terminally stupid and the
additional wifes bk's are very material to the
story. Lots of people took much more than they
paid for their houses out with intent to steal.
A was not that bad, but far from innocent. If
you care about political issues around bailout,
A's story is a very false sob story and from
the purely political perspective A totally
deserves to the thrown under the bus. You are
totally obtuse in defending him and his partial
disclosure while pretending to 'tell all'.
But is everyone honestly really shocked that some borrowers who default had it coming?
No, we're shocked that they got f'in book deals and sympathetic interviews out of it.
The anecdotes seek to turn exceptions into rules, which leads to bad policy because the problems are misdiagnosed.
A severe problem indeed, to which I have no workable solution.
And while I'm all for sensible underwriting, you'll never get it past Congress.
Andrews also does not mention that Barreiro stole large amounts of money from many family members and friends. Her second bankruptcy was filed for the sole purpose of getting out of paying back her sister, who co-signed a car lease for her when she was in so-called financial dire straights - sound familiar? She no longer has a relationship with any siblings. Her kids don't talk to her - with the exception of the youngest, who has no choice. Andrews knew exactly what he was getting into. What is dishonest about his story is his linking his problems to the current economic crisis and mortgage meltdown. His situation is entirely the result of his and her financial mismanagement. They had no business renting a house on the beach in North Carolina for a month. She had no business racking up bills with plastic surgeons and dermatologists. (Did everyone see her lips on the Today Show?) She parks her car wherever and whenever she pleases. She has a long history of reckless behavior. All who know (or knew) them predicted this train wreck. If he thinks it will pass because he managed to get a few thousand dollars from a book deal, he is more silly than anyone though possible.
More back story. Source?
First-hand information...
Tita, are there more details of the car lease which you can give us? Perhaps this is immaterial, but I'm curious what type of car Ms. Barreiros co-leased with her sister's signature. Wasn't it in the neighborhood of $20,000?
About this lease -- we all know leasing a car is throwing money away, right? A sane person would have bought an old beater. A person who declares bankruptcy and leases a $20,000 car, or any car instead of buying/borrowing/doing without is disturbed.
The car was a Toyota Camry. It was a four year lease. She claims some kids keyed every panel of the car. The car was recovered while she was working at a clothing store in Pasadena (White House - Black Market). She had parked it in front of the store without feeding the meter. There was a parking ticket on the windshield. The front end had been damaged by someone who had rear-ended her. She submitted the claim to that person's insurance company. She kept the two thousand dollars and did not fix the car. After her sister spent tens of thousands fixing the car, re-painting it, getting rid of the cigarette smell, and getting out of the remaining two-and-a-half years left in the lease, the state of California demanded repayment on sixteen traffic and parking violations - another two thousand dollars. Since Patricia's sister was the primary name on the car, her sister was responsible for paying those traffic violations. When all was said and done, the amount her sister had spent was $40,000.
Many of Patricia's friends had also gone out on a limb for her. She burned so many bridges in Los Angeles, she really had no choice but to move to the DC area, as far away as possible. Ed was the only sucker with a job who would take her in. He will continue to run on that treadmill until he comes to terms with his real mistake: leaving his perfectly wonderful wife for the load that is his current wife...
Camry, huh? The Mustang and the Expedition are the two listed in the 1st filing. So what's the deal with the ex-husband?
Perhaps if the car was in the sister's name and in PB's, and PB was already separated from her husband, or they can claim that they were at the date of purchase, the car is legally not joint property. Perhaps this is why she asked her sister to co-sign with her.
It's interesting that if PB worked at White House - Black Market, a woman's clothing store, then describing her as a SAHM for 20 years, as Andrews does, isn't true. She is working in retail, and we know she had a job at Saks when she moved to the East Coast, so there are two jobs selling women's clothing. She works in retail. Andrews' describes her as a brainy editor who easily brings in $60K, but it's hard to see that belief as realistic. His expectation that she'll be making enough money to afford the house is harder to believe.
What RW, black sea and Rob Lyman said. Greta van Susteren has taken some (not nearly enough) well deserved whacks for her fawning coverage of Sarah Palin without disclosing her husband's relationship with the never-ending Palin promotion machine.
Geez, Edwards is a reporter. Omitting the bankruptcies in a story about your financial problems and irresponsible borrowing/spending is not what I would call covering the story adequately (or turthfully). Cropping out part of the story is reminiscent of the old Soviet practice of cropping the purged from old leadership photos.
Edwards is out there trying to hustle a buck off the story. That's more likely if he appears candid in admitting his mistakes and errors in judgment so that he can earn some sympathy. The core of the story -- two people have mid-life crises, dump their spouses and hook up with old high school friend -- is seedy but banal. The financial angle is what might sell the book and Andrews knows it. But it's likely to sell better as love-struck couple are led astray by ridiculous lending practices and being truthful about the bankruptcies would undercut that storyline.
ANd I'm sure the loving couple's children must be loving this story, it must be sop pleasant for them to face their schoolmates everyday. Whatever Barreiro's faults, at least her's were private. Andrews is flogging his inthe public square, the guy has no shame.
Gene, your posts have been awesome, but for gosh
sakes the author is *Edmund Andrews*.
Please -- nothing to do with the fantastic Mrs Edwards
who also recently published a book and suffered much from
being married to another total d-head dem
politician who in spite of the huge
harm done by willie's uncontrollable willie
still thinks we are in the JFK "screw anybody
you like with no consequences" era.
FWIW I am a dem and a man who thinks Willie should have
been castrated publically but left alone
politically. Actually i believe in karmic
retribution and that he will pay for lifetimes for
the damage he caused the country and the world
in getting GWB elected. Getting castrated in
this lifetime to pay for his sins is something
he should beg for considering what he has
coming. Karmic interest compounds over lifetimes.....
I'm sorry, but I don't see it as relevant.
OK. Key question: What do you see the purpose of the book as being?
If it's just a sort of titillating tell-all (tell-some?) source of entertainment meant to make money to pay off the debts, then sure, backstory has no relevance to the book's point, because the book has no point. All information is irrelevant and can be omitted at will. I certainly don't need to know the financial history of some minor admiral in a Tom Clancy novel.
But if this is meant as an indictment of "banksters" and our financial system, then yes, the financial probity of the main characters (that would be the happy couple, both of them) is absolutely central to the narrative and must be understood.
Yet the bankers and the financial planners and the credit people played a role, didn't they? They didn't have to extend credit to a couple with a history of bankruptcy? Have they never heard of credit reports?
Why do I get the impression that a lot of the people on this blog are members of the financial industry trying to shift all the blame onto borrowers because it's beginning to dawn on them that the American people, and the government, are putting their foot down and no longer trust the industry.
Apologies, KTL, I confused you with holdfast.
Yet the bankers and the financial planners and the credit people played a role, didn't they?
Sure, they were idiots too. Nobody is denying that, and you're right that the bankruptcies cast them in a bad light, too. Which is to say, the bankruptcies are highly relevant and should not be omitted.
Andrews was a guest on MSNBC's On the Money earlier this week - with of course no mention of these issues. Perhaps a few emails to the show's host encouraging a follow-up report? her email is carmen@msnbc.com
The Expatriate asks:
"Why do I get the impression that a lot of the people on this blog are members of the financial industry trying to shift all the blame onto borrowers"
Because it allows you to preen. These comments are in response to a book which attempts to place blame on the financial industry while exonerating the borrowing party. Of course the comments focus on the glaring error.
The one word that gets evoked in my mind time and time again after reading this subject is predator.
. I think first it applies to the mortgage advisor in the Andrews bio, Bob. Can't really fault Bob, too much, in fact he was actually pretty savvy. He did some fancy footwork getting Ed out of the credit card pot and into the refinacial fire. All within the rules mind you and all most likely stamped AAA by Moody's or Fitch.
The second predator is Edmond by using his status as a NY Times writer to pimp his book on this alleged nightmare of selective memory. But hell, the NYT doesn't actually expend too much energy vetting it's writers nowadays so I can't cry for them.
The title of champion of champion predators must go to Patty however. Before she married Ed, she didn't have to work since the early 80's, lived on or near the edge of a decent 6-figure income for 20 years, got a new husband/family after reducing the last poor SOB to a mere shell of a man and most likely will do the same to Edmond in a year or two. Hell and she'll only have to wait another 5 years after that to go bankrupt again. I bet even now she has husband number 3 in her sights already. You go girl!
Have you seen this response from Mr. Andrews? This appears to jibe with a posting on this board about a debt to Ms. Barreiro's sister being responsible for the 2nd bankruptcy:
Ed Andrews Responds to Criticism in the Blogosphere
Ed Andrews
Paul Solman: Yesterday, free-market enthusiast Megan McArdle, who describes herself as "the tallest female econoblogger" but is more often identified in the blogosphere as a libertarian, devoted a post on theAtlantic.com to Ed Andrews, the NYT reporter whose story and book, Busted: Life Inside the Great Mortgage Meltdown, was featured on last night's NewsHour.
McArdle revealed that Ed's new wife, Patty Barreiro, had twice filed for bankruptcy, the second time after their marriage, and thus during his descent into debt.
We asked Ed Andrews for a response. Here's what he sent us.
Ed Andrews: It is hard to believe that anybody would accuse me of trying to airbrush a story in which I recount the cringe-inducing details of my calamitous plunge into junk mortgages.
But Megan McArdle, a blogger for the Atlantic, accuses me of omitting crucial information: namely, that my wife, Patty, was involved in two bankruptcies, one in 1998 with her former husband; and one in 2007, while she was married to me. McArdle says this is "material information that changes the tenor of the story," and then accuses Patty of "serial bankruptcy."
These bankruptcies did occur, but they had nothing to do with our mortgage woes. They were both tied to old debts from before we were married or bought a house. They had nothing to do with my ability to get a mortgage; nor did they have anything to do with our subsequent financial problems.
Since Patty had been so brave in letting me tell our own story so candidly, I wanted to spare her the public exposure on these older woes. But that is now impossible, so here is the story:
The first bankruptcy in 1998, five years before Patty and I got together. It occurred because Patty's former husband, a producer of TV commercials in Los Angeles, didn't file income tax returns for five years. Patty, who was a stay-at-home mom and wasn't earning money, was blindsided. She had been signing returns, but he hadn't actually been filing them. Because her husband's business income was reported on their personal tax returns, she had to join him in the bankruptcy filing.
All that happened in 1998, and it obviously had nothing to do with the story in Busted. It never even occurred to me to mention it.
Patty's second bankruptcy stemmed from a loan she received from her sister, while Patty was still living in Los Angeles. At the time, she was caring for four children, working for very modest pay, and receiving almost no child support from her ex-husband. (Despite multiple court orders, he remains chronically delinquent on untold thousands of dollars.)
When Patty couldn't repay, her sister followed her east and sued her. I offered to pay off the loan by withdrawing money out of my 401k, but I wasn't allowed to because the purpose didn't qualify as a "hardship." Without an alternative, Patty had no choice but to seek bankruptcy protection.
None of this has any connection to our story. It had nothing to do with Patty being a spendthrift. It had no bearing on my ability to take out a mortgage, and it had nothing to do with our financial problems.
Fortunately or unfortunately, Busted is a simple story: we took out a mortgage we couldn't afford, earned less than we hoped and couldn't bridge the gap.
One final note: I tried to return McArdle's call three or four times on Wednesday, but received a busy signal every time. I couldn't leave a voicemail message.
Well, the "simple story" excludes the part where the Andrews' continued to spend beyond their means.
Really the dynamic here is that the lenders offered Andrews a great option -- we'll lend you money even though we shouldn't (on the premise that home prices never fall), and you'll have the opportunity to buy your dream home, should you choose to take it, reckless and irresponsible or not. But he should be appreciative that he was even given the opportunity at home ownership. Similar to subprime minority borrowers who never would have had their raisin in the sun without easy loans.
Unfortunately it didn't work out, and both parties have to bear the consequences. The lender loses money, and Andrews will have to find a new home. But he can't pontificate on lender irresponsibility while shying away on his own. The notion that they "earned less than they hoped" is trying to absolve themselves of their role and responsibility.
This raises more questions then it answers. In the original NYT piece Andrews said Patty hadn't worked since the early 80's before getting a job near DC after they were married. Now he's got her working in LA before they were married...heroically caring for 4 kids and suffering a deadbeat dad (BTW very hard in LA county to be a deadbeat with a notorious DA office on your heels). Me thinks the plot is unravelling....the spinning of a more tangled web. Patty's got him wrapped around her finger. Spineless puss.
I'm trying to be sympathetic for this guy. I'm trying...honest. But Andrews is completely and utterly blind to how stupid he is. He married the wrong person. Period. He spent well beyond his means. And he doesn't even realize that most people actually work for a living and pay their bills on something far less than a $400,000 home. He's so blind he doesn't even see how unsympathetic he is.
Fact check time! Megan, get on the phone company to find any record of a call (can they check busy signals?)
The story isn't credible. The sister loaned her money to help her care for her children, and then sued her for it?
Setting aside the question of why a sibling who was nice enough to loan you that much money would then turn around and sue you for it, why would she bother to sue when you didn't have any money in the first place? Suing an insolvent person is pointless.
I am very eager to hear more from a poster named "Tita" who has more insight into the 2nd bankruptcy being related to a debt to a sister.
What would you like to know?
Tita, I'm curious about the $60K job which Ms. Barreiros got and then lost. I believe she worked for a socially conscious nonprofit. She left Saks for this job. (My memory isn't clear and I don't want to read the NYT story again!) Mr. Andrews was vague about the job's ending, leading a reader to think she was a victim of a layoff. But now that we know she filed bankruptcy in early 2007, I'm wondering if Mr. Andrews has left something out; i.e., if she quit or if she was fired, or failed to pass her probationary period.
Thanks.
She was fired..
And does it make a better story if she remained unemployed? I know the economy sucks and all, but surely the wife of a NYT reporter would be able to scrounge up some sort of sympathy job.
Tita, is there anything about this job that we should know? Do you know the reason she was fired? Can you tell us where she was working?
A polling place. The Pew (?) Research Center. I don't know why she was fired. But I do know she doesn't get along with people. She has never been able to hold a job, even the retail jobs. She has this general sense that rules don't apply to her.
Edmund Andrews has now responded to Megan:
(from http://www.pbs.org/newshour/businessdesk/2009/05/ed-andrews-responds-to-critici.html)
Paul Solman: Yesterday, free-market enthusiast Megan McArdle, who describes herself as "the tallest female econoblogger" but is more often identified in the blogosphere as a libertarian, devoted a post on theAtlantic.com to Ed Andrews, the NYT reporter whose story and book, Busted: Life Inside the Great Mortgage Meltdown, was featured on last night's NewsHour.
McArdle revealed that Ed's new wife, Patty Barreiro, had twice filed for bankruptcy, the second time after their marriage, and thus during his descent into debt.
We asked Ed Andrews for a response. Here's what he sent us.
Ed Andrews: It is hard to believe that anybody would accuse me of trying to airbrush a story in which I recount the cringe-inducing details of my calamitous plunge into junk mortgages.
But Megan McArdle, a blogger for the Atlantic, accuses me of omitting crucial information: namely, that my wife, Patty, was involved in two bankruptcies, one in 1998 with her former husband; and one in 2007, while she was married to me. McArdle says this is "material information that changes the tenor of the story," and then accuses Patty of "serial bankruptcy."
These bankruptcies did occur, but they had nothing to do with our mortgage woes. They were both tied to old debts from before we were married or bought a house. They had nothing to do with my ability to get a mortgage; nor did they have anything to do with our subsequent financial problems.
Since Patty had been so brave in letting me tell our own story so candidly, I wanted to spare her the public exposure on these older woes. But that is now impossible, so here is the story:
The first bankruptcy in 1998, five years before Patty and I got together. It occurred because Patty's former husband, a producer of TV commercials in Los Angeles, didn't file income tax returns for five years. Patty, who was a stay-at-home mom and wasn't earning money, was blindsided. She had been signing returns, but he hadn't actually been filing them. Because her husband's business income was reported on their personal tax returns, she had to join him in the bankruptcy filing.
All that happened in 1998, and it obviously had nothing to do with the story in Busted. It never even occurred to me to mention it.
Patty's second bankruptcy stemmed from a loan she received from her sister, while Patty was still living in Los Angeles. At the time, she was caring for four children, working for very modest pay, and receiving almost no child support from her ex-husband. (Despite multiple court orders, he remains chronically delinquent on untold thousands of dollars.)
When Patty couldn't repay, her sister followed her east and sued her. I offered to pay off the loan by withdrawing money out of my 401k, but I wasn't allowed to because the purpose didn't qualify as a "hardship." Without an alternative, Patty had no choice but to seek bankruptcy protection.
None of this has any connection to our story. It had nothing to do with Patty being a spendthrift. It had no bearing on my ability to take out a mortgage, and it had nothing to do with our financial problems.
Fortunately or unfortunately, Busted is a simple story: we took out a mortgage we couldn't afford, earned less than we hoped and couldn't bridge the gap.
One final note: I tried to return McArdle's call three or four times on Wednesday, but received a busy signal every time. I couldn't leave a voicemail message.
When Patty couldn't repay...I offered to pay off the loan by withdrawing money out of my 401k...Without an alternative, Patty had no choice but to seek bankruptcy protection. None of this has any connection to our story.
OK, so Patty not being able to repay a loan, Ed apparently not having any cash savings to use in lieu of 401(k) withdrawals, the happy couple having no property or jewelery or trinkets they were willing to sell or pawn to pay off a family member, for heaven's sake, and neither of them being able to credibly commit to a payment plan as part of a lawsuit settlement has NOTHING to do with their story, and nothing to do with mortgage woes. Nothing at all. Totally unrelated. I mean, a mortgage isn't even a loan! It's a form of obligation you give in exchange for a loan!
The story on the first bankruptcy is at least plausible, but there's still a credibility issue to get past at this point.
Yeah...but given the 24-hr time frame it wasn't too bad of a spin job. This load of crap is coming apart at the seams. I like the part about "Patty being so brave" to have her story told. Heightens the emotional landscape, as they say
Ed could have easily withdrawn money from his 401K. It's his money, he can do with it what he wants. He would just have to pay the tax penalty. In fact, if he had any sense of decency, he would repay that debt to Patricia's sister, even though she escaped the obligation through bankruptcy. How shameless these people are!
No. Not every 401k plan allows for non-hardship inservice withdrawals.
If you're so inclined, you can look up the NYT's ERISA filings and Form 5500 and related documents , though.
MOAR! tita, you seem to have the inside scoop... we are all dying of curiosity! How did you get the "inside information?" Acquaintance of the family? How much else has Patty stolen (from family members, friends, what-have-you)? Any other details or anecdotes that might be of interest to us that have been left out?
The story is a little strange. If he was truy motivated to make good on the loan from the sister, he could have borrowed from his 401k rather than do a hardship withdrawal. This seems to have happened early in the marriage when paying back the 401k loan shouldn't have appeared to be a problem.
Exactly! So the take-away is: he never intended to pay back the sister. The whole story is based on lies. I hope The NYT is aware of this...
Good job, Megan. That Barreiro filed for bankruptcy TWICE, is kind of a huge detail to leave unmentioned. And Andrews pretending to be surprised by his wife's spending habits after they got married just doesn't ring true. He must have really been very lonely and easy to manipulate. Their picture even looks like a classic nerd + amazon pairing. Even though Barreiro and her first husband had sunk hundreds of thousands of dollars into debt, she still hadn't worked in 20 years, and by Andrews' own admission, had not intended to do so after her second marriage, either -- it doesn't take much to suspect that she probably saw another free ride in him... in addition to their undying love, of course. But it's willful ignorance, if you ask me, and he should have known better.
So, in the end this story is not really about predatory lending, or even about how the small guy gets credit squeezed by unfortunate circumstance. It's about privileged, upper middle class people living irresponsibly, and trying to milk a book deal out of it by telling half the story.
Here is a little more information that is publicly available. If you go to the Maryland courts web site and look up Patricia Barreiro (DOB 10/55 with address listed on St. Lawrence Drive, Silver Spring MD, so it does appear to be the same person), you will find a case filed against Barreiro in Montgomery County Circuit Court by one Elizabeth Carman for $16,000, for breach of contract/unjust enrichment. You would need to check the actual court file to be sure, but this sounds like the promissory note from Barriero's sister to which Andrews refers in his statement to PBS.
Long story short, judgment was granted to the plaintiff in 7/06 for $16,000 plus interest and attorney's fees. Based on another docket entry, Ms. Barreiro failed to pay her own attorney's fees and was sued by said attorney in 1/07 for $7,800 and change. The attorney was granted judgment a few months later, but it appears that enforcement was stayed due to Barreiro's most recent bankruptcy filing.
Again, you would need to review the actual case files to be sure, but that is the story told by the court docket entries.
How sad is it that Barreiro's sister had to sue her to recover the $16,000 she loaned Barreiro, supposedly to help Barreiro support her children? And how did Barreiro intend to pay her attorney for defending her in that lawsuit, given that she and her husband were in such a debt spiral at the time?
How lucky that Barreiro was able include the judgment owed to her attorney in her bankruptcy filing! I would expect that her bankruptcy attorney required prepayment for his/her services.
(Link: http://casesearch.courts.state.md.us/inquiry/inquiry-index.jsp)
Wow. How sad. Sued by your sister. What a piece of work.
Does this woman live in fairy land? Spend money she/husband doesn't have and does not even bother to show up in court!
Judgment Type: AFFIDAVIT JUDGMENT ENTEREDJudgment Date:05/02/2007
Judgment Amount: $7,819.47Judgment Interest:$177.78Costs:$60.00Other Amounts:$0.00
Attorney Fees: $0.00Post Interest Contractual Rate:X Jointly and Severally:In Favor of
Defendant Information
Defendant Name:BARREIRO, PATRICIA
Address:323 SAINT LAWRENCE DR
City: SILVER SPRINGState:MDZip Code:20901
Race:WHITE,CAUCASIAN,ASIATIC INDIAN,ARAB
Sex:FHeight:508Weight:130
DOB:10/1955
Drivers License: B660676020800Issuing State: MD
Charge Information
Charge: Article:TASec:22Sub-Sec:412.3Para:BCode:
Description: OPER. M/V WITH (OPERATOR, OCCUPANT UNDER AGE 16) NOT RESTRAINED BY (SEATBELT, CHILD SAFETY SEAT)
Event History Information
Event Date Comment
KEYP 2007-08-27 TRIAL KEYPOINT 11:14:41 REEL 999999
SUSP 2007-08-27 FAILURE TO APPEAR SUSPENSION;TRIAL OF 082707 SET 060807
Charge Information
Charge: Article:TASec:13Sub-Sec:411Para:DCode:
Description: DRIVING W/O CURRENT TAGS
Location Stopped: NB GEORGIA / 495 SILVER SPRING
Contributed to Accident?: NO Personal Injury?: NO
Fine: 60 Related Citation Number: 0EV25468
Vehicle Tag: 46291BY State: MD Vehicle Description: TOYO
Event Date Comment
KEYP 2007-08-27 TRIAL KEYPOINT 11:14:41 REEL 999999
SUSP 2007-08-27 FAILURE TO APPEAR SUSPENSION;TRIAL OF 082707 SET 060807
Issues Information
Issue: BREACH OF CONTRACT
Issue: UNJUST ENRICHMENT
Judgment Information
(Each Judgment is displayed separately.)
Date: 07/17/2006 Amount: $16,000.00
Debtor: BARREIRO, PATRICIA
Document Tracking
Docket Date: 07/17/2006 Docket Number: 28
Docket Description: JUDGMENT (PARTIAL - CASE NOT CLOSED)
Docket Type: Docket
Docket Text: PARTIAL JUDGMENT ENTERED AND RECORDED IN JUDGMENT INDEX IN FAVOR OF THE PLAINTIFF, ELIZABETH CARMAN AND AGAINST THE DEFENDANT, PATRICIA BARREIRO IN THE AMOUNT OF SIXTEEN THOUSAND DOLLARS ($16,000.00) PLUS ALL INTEREST AND ATTORNEYS FEES ACCRUED.
Yes, I had left the traffic citations out because they didn't seem particularly relevant.
Of course, she could have avoided the traffic court date by paying the tickets, which likely was also the cheaper option (avoiding court fees).
I wonder if the person that tipped of Meg"h"an of the bankruptcy was Patty's sister?
She wants that $16k back, Patty!
Oh man, fantastic point. I hadn't even considered that awesomeness.
It's not $16K, it's $40K! But she settled for $29k. That's the amount that appears in the bankruptcy filing... She stole a lot more than just money. And not just from her sister. She has no family left!
I stand corrected: the traffic tickets above are likely the ones Andrews refers to here in his original NYT article:
"The panic attack hit me around 2 a.m. on Patty’s birthday. It was Oct. 17, 2007, and I was lying in bed obsessing over bills that couldn’t be postponed and the money we didn’t have to pay them. Like many of my predawn fear cascades, this one had its start with a specific unpaid bill: $240 in traffic tickets — $140 for speeding, $50 each for expired tags and inspection. The fines would double if we didn’t pay them in less than a week. The tickets had uncorked the bottle on all the other 'must pays'...."
They really must have had no money if they hadn't paid off the tickets 2 months after the guilty findings for failing to show up in traffic court.
Also note that the first ticket was not for speeding, as he wrote.
(OK, I'll admit that this fact checking is getting nitpicky.)
She filed the 2nd BK in July 2007, and by October, he's panicking again? Or still? Why not just throw the traffic tickets in with the sister, the vet's bills, the library fines, and all the rest of it?
You have to admit his one cool lady.
"Honey, we can always file for bankruptcy. Well, at least you can...so stop worrying!"
Tita aka Deepthroat aka Liz- Tells us more. You have the juicy inside information on Patty.
"When Patty couldn't repay...I offered to pay off the loan by withdrawing money out of my 401k...Without an alternative, Patty had no choice but to seek bankruptcy protection. None of this has any connection to our story."
If they really wanted to repay Patty's poor sister, he could have taken a loan out of his 401k. This guy makes so many excuse and think we're all dumb. You can take a loan out of your 401k for any reason.
Did anyone see this piece of work on CNBC with Carmen tonight?
"We have no luxury except our house."
Hmmm...
1.) $1600 rental beach house
2.) $700 clothes from JC Crew
3.) Airplane tickets for the children
4.) A car which his wife use for speeding and terrorizing people with and not bother to pay tickets
5.) Dental works
6.) And Khaki pants!!!
This guy is delusion. "I just wanted to provide for my family."
Don't we are? But most of us are responsbile and don't borrow and expect a remodification of our loan.
I think they are a perfect couple...2 spendthrift approaching 60's and still in denial about their own reality
Again, not every 401k allows in-service nonhardship withdrawals, nor do they all allow for loans.
He is a professional writer. He can demonstrate hardship if he wants to
I don't believe this is correct. Not all allow for non-hardship loans, but all 401ks allow you to withdraw the money for any reason. It's your money. There may be substantial tax penalties, of course, making it a lousy decision most of the time, but you can do it.
Wow. This is so depressing. As a two income, full time working mom, with teen kids who have to find summer jobs, who herself might need to get a second job because hubby's sale's commissions are way down...these are not the people I wanted to help with a bail out.And we're lucky--we live in an area that has jobs.
I wanted to help laid off truck drivers and factory workers...people who have actual trouble making enough money to live on.The ones hitting the food banks at the end of the month,Who found a minimum wage job to try and scrape by.
These people appear to make plenty enough money to be able to live well.They just threw it away on luxurious living.Too bad they couldn't be forced to live for a year in a three bedroom one bath house less than 2000 sq feet, and drive old cars, eat homemade bean soup or scrambled eggs and toast for dinner. Maybe they would be more thankful for what they actually had, and how well they SHOULD have been able to manage,
No sympathy from me.
Thanks to all who contributed to this very interesting discussion. I read the original NYT Magazine article closely and it "got under my skin" too. Now we learn it was hardly the full story. After reading the excerpt I had questions, too, about the financial facts reported. Well, I won't be buying the book.
Having read more about this, to include a comment left on a blog five days before your post about the bankruptcies, one might reasonably wonder if "getting a tip" was in fact more along the lines of, "I read something on a blog," or "I came across something via an Internet search.
Maybe it's splitting a too-fine hair, but it reads as if you got a tip from a source, one you had established or one who appeared out of the clear, blue sky.
If that's what happened, all praise and credit to you.
If not, sorta funny that one could argue the matter was not represented fully and accurately.
I received an email from a person who has asked to remain anonymous, which contained a number of allegations about Patty Barreiro, including the fact that she had declared bankruptcy. I haven't checked out the other allegations, as they are of a personal nature that doesn't seem related to their financial problems, but I did search on the Montgomery County bankruptcy, found it, and found the case number for the previous bankruptcy.
After I wrote the post and you commented, I gathered from a friend that very similar comments had been left on Steve Sailer's site, which I don't read. But they weren't what led me to this story.
I don't see that this changes anything--I never claimed to have discovered this entirely on my own, and it never would have occurred to me to check the BK records without a tip. But I hope that answers your question.
Hi,
That does indeed answer my question. I'm more than a little surprised and impressed by your taking time to address the matter.
(Perhaps a matter of opinion, but I would see a difference in "getting a tip" being the traditional getting a tip and spotting something on a blog, going from that to seek and find more information--but it's a moot point.)
Good on ya for your work and for being responsive.
All best from Kuwait,
Rob
And on this he is, I believe, substantially correct. However, that he was able to get a mortgage in spite of these bankruptcies is very much the meat of the story.
You've got this backwards. The glaring error the comments should be focusing on is how this guy was able to obtain a mortgage in spite of his history. Yes, on the macro level it is indeed the financial industry that is to blame.
This is exactly right. But why then, is no one talking about it except the people who were making the point long ago that this is about the banksters, and not the individuals?
This strikes me as yet another glaring contradiction in 'conservative' economic theory: you can't go on about the peepul being the ones who know best what they can afford and decry any sort of regulation as an efficiency cost, and then turn around and blame them for this sort of behaviour. You can't even blame the po' folks on this one. Like it or not, the banks serve as gatekeepers to credit. It behooves us to make sure they fulfill their responsibilities as gatekeepers, and not just enjoy the privileges.
"You've got this backwards. The glaring error the comments should be focusing on is how this guy was able to obtain a mortgage in spite of his history. Yes, on the macro level it is indeed the financial industry that is to blame."
Really? The book doesn't address this issue? Why do you expect us to rehash it? The book is being criticized for its omissions and errors (of tone, mostly). There's plenty of blame to go around, but between us only one is excusing one of the parties.
Andrew's not going to find a sympathetic audience who agree that denying his children J Crew clothes, expensive beach vacations, and cross country flights was simply too much to ask. Most of us do without these things when money is tight (always for many), and his apparent belief that these are sacred cows just shows the sense of entitlement that lead him to bankruptcy. I would have loved to live in twice the house I can afford for the last 8 years (coincidentally also in Silver Spring), but instead I lived within my means. The vast majority of Americans decide to live within our means. And taking more of the money I saved by living responsibly to give it to someone who lives in a nicer house than I do is bullshit.
I posted 2 questions to Tita last night, the first about the car lease which her sister co-signed, and the second about the $60K job which Mr. Andrews mentions in his article, saying that Ms. Barreiro 'lost' the job. According to Tita, Ms. Barreiro was fired If this is accurate, isn't this another extremely important detail Mr. Andrews shamefully omitted? And that the NYT didn't feel was worth verifying or explaining? In this story particularly, there is a big difference between being fired and 'losing' a job.
You can find the answers Tita provided by scrolling above.
Last week, I suggested on Salon that Mr. Andrews' NYT excerpt mention of his wife's 'lost' $60K job was very suspicious and should be looked at, and man! Several Salon readers really took me to town for woman-bashing and for hating SAHMs! Woo! And other readers automatically assumed that she had been laid off as a result of 'the economy'; i.e., that she was a victim of the 2006-7 downturn. I'm sure Mr. Andrews phrased his text this way so we'd feel, again, that they were victimized. It would be interesting if more details about this job could be brought to light.
I'd want to know if he encouraged her to not bother with another job hunting effort, so as to make the story better. Surely there's someone who'd be glad to do a favor for the wife of an NYT reporter.
After I watched the CNBC interview, where he says that (a) his hormones made him do it and (b) she has a job, I'm even more confused.
Everyone on CNBC told him he was in denial. They told him he has to look at the worst case scenario, but he kept saying, "I just know she will get a job that will pay well."
Hello? This woman, as you claim, hasn't worked full time since the early 80's!
But what are we to believe? In your response to Megan, you said your wife was working full time in LA to support the kid because of the dead beat first husband. HUH?
I'm a new reader of Megan's so I'm not sure if my questions about Ms. Barreiro's car and $60K job are relevant to Megan's argument. I was interested in why Ms. Barreiro leased, because leasing, as opposed to buying, is a difficult decision for a cash-strapped mother of four (as Mr. Andrews describes her in his letter to PBS) to justify. Leasing a car is much more expensive.
Whether or not these two questions are relevant here, perhaps another writer can use them in furthering this story.
I applaud Megan’s reportage. If for no other reason, it’s part of the American experience and a prerogative and duty of the Forth Estate.
Also, it goes without saying that the Andrews’ were the authors of their own dollar demise.
My problem is that many posters seem to regale in the Andrews family’s financial failure. There’s a German word that expresses this cruel and selfish disposition, “Shadenfreude.” Since I know most Americans are monolingual, you’re going to have to look it up.
I say, let him who is without financial sin cast the first phony Federal Reserve note. I say we are all to blame – cumulative guilt…so to speak.
DR – An American in Bangkok