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Every time I turn on the news, which is something I only do when I’ve caught up on my Star Trek Voyager episodes, I hear about the whole ‘financial bail out’ dilemma. I hear people talk about it at work (not so much though) and read about it in the paper. Every time, I hear opinions that are probably far more valued than mine and far more professional. What I don’t hear is the hard-core finger pointing that everyone seems to avoid in order to protect their popularity, or to make more money furthering the financial bickering. What I mean to say is that people are making a whole bunch of money from flapping their jaws (or running their sucks as some of you may understand) spewing out rhetoric that makes either no sense, borderlines on no sense, or makes a lot of sense if you were discussing the metaphysical properties of Kraft Dinner.
Let’s look at this a little bit, and please tell me if I’m wrong.
Follow up:
The companies are going under because of bad debt. Isn’t that what it comes down to? It’s not that every single large company had some Enron scandal that toppled them, but that they made a decision on chance based on data that had been pretty much the same for some years. I think we all saw this coming. My wife brought up to me last week that I made a prediction about 7 years ago that this was going to happen, unfortunately I don’t remember it or else I’d claim it! People were so intent on getting into houses, they started taking on mortgages that they could barely afford and followed that appetizer up with an entree of being poor money managers. 6 months of savings, while always the recommendation, has never been the norm for society. Most live pay check to pay check, and somehow make the vastly foolish decision that owning a house was far more important than the determination whether they could pay for the house. They bought houses like they bought cars, paintings, JC Penney clothing, and now dogs: if they could afford the monthly payment, then they could afford the item. Every one of us could afford a $10,000,000 house if the monthly payment were $100, right? Well, combine that with those new mortgages where you pay interest only or any of those other ways of getting tied into an ‘affordable payment’ but pretty much getting screwed later and you have a disaster waiting to happen. And it seemed that the companies were more interested in getting your name on the line than the repercussions with these new paths to destructive
mortgaging.
Seriously, what did everyone think was going to happen?
We overspent and they overlent, simple as that. But who to blame? Let me ask this which will make it mostly clear for some people. If someone came to your door, not holding a gun to your head, and proposed an excellent deal for you to get what you want even though you most likely couldn’t afford it in the long term, who really has the last say as to whether you sign your name on the dotted line? That’s exactly my point.
Most armchair politicians come home from eking what little blood they can get from a stone for 40+ hours a week and then are spoon fed this us-versus-them crap by the stupid-tube. They are shown the multiple ways the corporations and banks failed them and how the government is providing welfare by saving their butts but that’s not really reality. The government is bailing us out of our bad financial decisions by supporting the foundations of the institutions that we all depend on for our daily bread (or at least depend on for keeping it warm for us).
When will people starting looking at themselves for a solution? Why don’t people simply cut up the credit cards and blame themselves when they can’t afford something? I fear that an issue larger than economic decline will have more negative impact on this country, and that is of the average American citizen’s inability for self-reflection and self-correction.
-Alex125
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In 1995 President Clinton and the Democrats in Congress strengthened the CRA to include a "quota" system in that lending organizations had to make a certain percentage of their loans to people with limited income. Even stipulating that welfare checks and disability income qualified. The strengthened act also required bank regulators and examiners to impose penaltys on banks and institutions that didn't meet these percentage requirements.
From there the rest is history where mark to market accounting led to a bit of greed and avarice to political campaign contributions to a "rush to judgement" bail out bill with no deliberation.
Funny thing, nowhere in any legistation presented for a vote is there a stipulation that the Community Reinvestment Act be repealed.
That, my friends, is the 800 pound gorilla still sitting on your sofa watching cartoons.
SGM highlighted the late 70's Community Reinvestment Act under the Carter Administration. Good point, but the current problem is more recent than that.
In September of 2003 the Bush administration proposed a regulatory overhaul of the housing finance industry. One of the concepts of the proposal would be to create an agency with oversight of Fannie Mae and Freddie Mac, which at that point had issued more than $1.5 trillion in outstanding home loan debt.
The proposal was an acknowledgment that both were misleading investors and had not adequately projected against rising interest rates.
Even though the signs of financial problems were getting deeper for both Freddie and Fannie, the ranking Democrat on the Financial Services Commission said this, "These two entities--Fannie Mae and Freddie Mac--are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on companies, the less we will see in terms of affordable housing."
That ranking Democrat is Congressman Barney Frank, who is now chairman of the House Financial Services Committee.
Isn't it odd that someone who couldn't--or wouldn't--acknowledge the problems of Freddie and Fannie in 2003 is now at the forefront of trying to solve the crisis? It just doesn't add up.
Barney Frank's failure to confront the financial problem prompted billionaire Rupert Murcoch to point the finger directly at him. Murdoch in an interview repeatedly placed blame on Frank and a few others as the root cause of the housing crisis.
Murdoch claims that Frank's plan in the early 1990's pushed Freddie Mac and Fannie Mae to make bad loans to underprivileged families.
It's obvious that Murdoch knows more about financial issues than does Barney Frank and the important committee he chairs.
You can thank Frank, Maxine Waters, William Clay (D-MO), Emanuel Cleaver (D-MO), et al for the so called failed Bush administration financial policies.