The headquarters of mortgage lender Fannie Mae is shown in Washington. The United States filed a fraud lawsuit against Bank of America accusing it of causing taxpayers more than $1 billion of losses by selling thousands of toxic mortgage loans to Fannie Mae and Freddie Mac.

Oh, the ease of blaming others in a crisis

When earthquake experts are sentenced for bad predictions and lenders accused of bad calls on mortgages, society needs a reminder that individuals are responsible for their actions.

Anyone purchasing a car these days does more than kick the tires. Buyers can easily find second opinions, from auto mechanics to Internet reviews. Such diligence is part of being responsible for one’s actions.

Yet that fundamental idea of taking personal responsibility in a risky venture can easily be thrown to the winds in times of tragedy, such as a natural disaster or a financial crisis. Blaming others then becomes the norm.

A few recent court cases illustrate the point.

One is last week’s sentencing in Italy of six seismologists and an ex-official to six years in prison on charges of manslaughter for their alleged failure to predict a 2009 earthquake that left more than 300 people dead.

The seven men were convicted of “inexact, incomplete, and contradictory” information about the risks posed by tremors in the weeks before the magnitude-6.3 quake. No one was charged for not following standards in building houses with quake-resistant materials.

That case is being compared to a string of lawsuits in the United States against banks for allegedly failing to reveal the quality of home mortgages sold to investors as securities.

The latest suit, brought by the US Justice Department, charges officials at Bank of America and its subsidiary, Countrywide, with not providing adequate information to Fannie Mae and Freddie Mac about home loans sold to the mortgage giants between 2007 and 2009.

In other words, Fannie and Freddie, two of the world’s largest financial institutions, were allegedly duped by the bank after deciding not to “kick the tires” – or review the mortgages themselves to see if they might be shaky investments.

In a similar suit against JPMorgan Chase, the biggest US bank, the government claims the bank “failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans.”

These suits have yet to convince a court of outright lies by big banks in reselling bad mortgages, which would constitute fraud. Like the Italian court case, they instead imply that bank officials should have known that they were passing on information about mortgages that turned out – in hindsight – to be hugely risky to the entire financial system.

Wall Street had its own convulsion in 2008 when enough people saw just how many mortgages had been signed by home buyers who likely couldn’t afford them. The financial meltdown has resulted in endless finger-pointing.

Fannie and Freddie themselves are accused of encouraging the easing of mortgage standards during the housing boom. The Federal Reserve, too, is accused of loosening credit too much. Up and down the chain of those involved in home loans, from Congress to home buyers, few people are taking responsibility for contributing to the crisis.

The practical result of this ducking for cover and assigning blame to others is that society finds it difficult to rely on those charged with assessing risk. Experts and officials in charge of problems such as terrorist attacks, natural disasters, or health warnings may decide not to speak out for fear of being sued.

It may be a long time, for example, before seismologists in Italy or elsewhere try to make a best-guess prediction on an earthquake. In the US mortgage industry, banks have become very reluctant to lend for fear of being charged as not being diligent about checking a borrower’s creditworthiness or not providing enough information in the reselling of loans.

When individuals, either in signing a mortgage or buying them in bulk as Wall Street did, don’t take responsibility for due diligence in their choices, it can be difficult to reform institutions or an industry. Fannie and Freddie need major reform, for example, yet they remain in expensive limbo under government care because of wide differences in Washington over who created the mortgage mess.

Many decisions in life require making a difficult call on the outcome. Just ask the recent substitute referees in the National Football League. Yet we can’t let someone off the hook for making a decision that bounces back badly on them. Sometimes assigning blame means pointing a finger back at ourselves.

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