In the last couple of days, I have noticed something that has sparked my interest. I work for a prominent communications company in the New Orleans area as an outside technician. This being said, I spend great deal of time behind the wheel of my company vehicle. In my driving I have happened across several city buses with an interesting advertisement. It read, “Now 80% of Louisiana residents can afford to own their own home.”

This ad may seem insignificant to the usual passer by but I thought to myself, isn’t America in the middle of a credit crunch? Are we not in a economic struggle due to an unbelievable number of sub-prime loans that were issued in the last ten years? Because of this I decided to do a little bit of research on the economic background of the Louisiana population as individuals, families and house holds. Here is what I found.

According to the United States Census Bureau, between the years of 2004 and 2006, Louisiana had the fourth lowest Median Income at $37,943. Also, 18% of individual Louisianans, according to the Washington Post, earn less than $10,400 per year. The same source reports that 14.6% of families generate a household income of between $14,000 and $35,600 (the high end taking into account that the household includes eight members). This means that on average, 16.6% of Louisiana live below the poverty level. One last bit of data to present. In April of 2006, this is in the range of the data previously stated; HousingTracker.net reports the 25th percentile of home sale prices were on average $152,500.

With a $152,500 loan at 5.99% interest would mean that the monthly payment on this house would be around $915 in just principle and interest. I would think that this would be extremely hard for these people to afford. Also, you may be asking why I am only talking about 16.6% of Louisianans; by these numbers it is possible for 80% to own a home. The poverty level is just a number. I would suspect that about ten percent live just above these numbers.

How is it that our financial companies can do this? I believe its greed, especially now. If, these new homeowners can pay their mortgage, then that’s great for these institutions. If not, no loss, the government will come and bail the banks out. It’s a win, win situation, while in turn causing the financial meltdown in our economy, both local and nationally. Not to mention the adverse affects on the homeowners future credit abilities.

My question is how do we fix this situation? What can we do to place checks and balances in our financial industry without having to involve the government? These are questions that must be answered in a swift manner.