Sunday, September 21, 2008

The Banking Crisis

Just about everyone has made reference as of late to the financial crisis, so I'm going to put in my two cents. 

Initially, as with everything, people wanted to blame Bush and lenient regulations that were promoted by his administration and party.  Then people started to get it right and blamed the money managers and CEOs of AIG, Lehman's, Freddie and Fannie for overextending themselves into risk averse loan situations without consideration of the ramifications. Then people went back to blaming Washington, which is a generic cop out strategy, to not put the blame exactly where it lies. Many factors were involved. Yes, it involves many greedy bankers, yes it involves the FED, and yes, it could have been prevented. However, I am horrified by the solution.

The US first bails out Freddie and Fannie, then it lets Lehman Brother's go bankrupt. The next day they bail out AIG, and now they have devised a plan to loan 700 billion dollars to ad liquidity and save the entire financial industry in America and the world. What that amounts to is a free ride for these companies. It's like saying, "Well I know you were irresponsible for more than a decade and a half, causing millions of people to lose their money, but we'll bail you out anyway and you can live happily off your 7-8 figure pension or severance." But, this bail out is not just helping American companies. Paulson has included foreign companies who have a lot at stake here as well, because as he correctly claims "It is a global problem." However, that being said, it should be a global solution, not the American taxpayers bailing all these companies out. We are marching towards socialism. We will soon have a completely state run financial system. And, the best part about it is no one consulted the American people. I suppose they didn't have to, but it sure ads insult to injury. 

Who really should get the help from this crisis are all the people who put money into this failed system, not the system. The lenders screwed up royally and can't pay back their debts, so why should we the people who lost our money to them, bail them out? I know some will argue, "desperate times call for desperate measures," but I would have stopped at Freddie and Fannie. 
Oh, and on another note, the former CEO of Fannie works for Obama, gave a load of money and picked his VP.


Anonymous said...

Phil "Nation of Whiners" Gramm, the man more than anyone else responsible for the crisis through the deregulation of the banking industry with the 1999 Gramm-Leach-Bliley Act, is McCain's economic guru and potentially his Treasury Secretary in the catastrophic event of a McCain victory. So I don't think the GOP is really going to be able to try to foist this off on a few heads of GSEs like the Fannies and Freddies when it created the conditions that led to the crisis. Not to mention John McCain's admitted corruption in paving the way for the Saving and Loans crisis of the late 1980s --- heckuva job, Brownie!

On the other hand, you're absolutely right that this unprecedented swindle of the tax payers; the 700 billion dollar bailout has no conditions, no terms attached; the Wall Streeters just want it, you know, because they're MASTERS OF THE UNIVERSE, and we, the PEople, are just supposed to pony up -- it really is outrageous. Of course, the Administration and Sec. Paulson are 100% behind this lunacy, while Obama and Rep. Pelosi have at least suggested that we the taxpayers be given some sort of guarantee that these frauds won't just abscond with our billions. It's as though we had a friend who was in serial car accidents; after totalling his new 'Vette, he wants the keys to another, and no questions asked. Un-be-friggin'-lievable, the gall of these guys. It must be nice to work in an industry where massive failure, recklessness and irresponsibility are so richly rewarded.

Young at Heart said...

I just thought it should be noted that the allegations on Obama working with Franklin Raines (Former Fannie May Exec.) is false. Reported by the Washington Post last week.

It's the second article down.

Mark Hamilton said...

Amen, brother. Amen.

You are just about the only person that has made sense in this mess. I would vote for you in this election.