You’ve go that right - it’s all about greed.  While I don’t totally blame the banks/investment houses/mortgage companies for the entire mess (after all, most consumers know if they’re getting in over their heads) I do place much of the blame on them. 

As I said to a friend waaaay back when the housing boom was going on “You know, these mortgage people can talk you into anything.” Turns out I was right. 

Of course, they don’t care as long as they got their cut when all the mortgage papers were signed.  Those loans were already sold by the time most people left the building.

You’re right. The responsibility isn’t entirely with the banks. I’d give them, perhaps, a 5% dispensation.

They’re the ones handing out the money. They are supposedly obligated to make sure that their default rates don’t exceed a certain percentage. Otherwise, heads are supposed to roll. And supposedly that causes loan officers to assess risk objectively and exercise the NO word when prudent. If they had done that, it’s quite likely there wouldn’t have been a housing bubble. Instead the financial institutions threw gasoline on that fire and cheered as they fueled the bubble. In better times I have seen a loan officer or two wind up in the unemployment line for making too many bad loans. But with this practice of bundling up the loans and selling them, default rates became someone else’s problem. And then the greedheads got huge bonuses for their volume of these really stinky loans (including the repeated cash out refinance loans) that wobbled on the edge of default before the ink was dry on the documents. And now “someone else’s problem” is boomeranging on them as the ripples spread. What a surprise.

They’ll do it again if they get a chance. Unless someone clamps down on their greed impulses and exacts some painful penalties.

Re-regulate financial institutions to their eyeballs (while it sounds good) only adds up to bigger government which is where our problems are now.

I read someplace the other day (now I can’t find it) that a Congressman said that pork barrel spending was good for the economy because it created jobs.  It’s that kind of thinking, which most of Congress seems to have, that helped get us into the present situation.

Well, I don’t agree, Richard. The Glass-Steagall Act held us in pretty good stead for a number of decades, until Greenspan started reinterpreting it rather liberally. And, finally, managed to get the thing repealed in 1999 under Clinton (thanks Bill!). There was a reason why the Glass-Steagall was passed and it seriously looks as if human nature hasn’t changed in the interim. So now we’re back to banks being able to create their own securities to trade (in their very own investment houses), with rampant and unfettered speculation and virtually no oversight. Currently made up of America’s homes and the crappy loans financing them. What better role for government than to protect us from banks taking us to the cleaners?

Now those bastions of the free market are begging the government to bail their sorry asses out of the trouble they got themselves and us into. Could it be with our humble tax dollars? Or, more likely, borrowed against our children’s children’s tax dollars? That sounds like pretty big government to me. And how about that stimulus package made up of borrowed dollars to mitigate....not undo...but mitigate the damage these greedy, stupid, and unethical banks have wrought. A little regulation and oversight would have been a heck of a lot cheaper and easier than what we’re facing now.

It took the financial industry less than 10 years of really freeeeeee marketing to sink our economy and probably the global economy as well. That’s impressive. They haven’t earned nor do they deserve our trust. Regulate ‘em.

Let us not forget the Resolution Trust Corp under GHWB, too.  It’s better known as “the savings and loan bailout.”

Last line of a post I wrote in August of last year:

“Moral: do not invest in publicly traded banks; their managers are as stupid as anybody else.”

Oh my yes. The big precedent for bailouts. The concept of moral hazard.

I was going to say we don’t seem to learn from history, but from the banks’ perspective, maybe they did. Make (risky) loans until the banks are grossly under capitalized, sell the loans, invest in the bundled loan securities, then let the government bail the banks out when it all collapses.

That bailout was calculated to cost about $6000 per citizen, wasn’t it? This one will undoubtedly cost us more. Yay us. Our tax dollars hard at work making greed and unaccountability pay. It’s too easy to say they’re stupid...they may act stupid, but they can’t possibly be so stupid that they can’t recognize a bubble or what constitutes risky lending and investment practices. They gambled on margin and lost. I guess maybe that is one definition of stupid. I’m inclined to believe it should be a definition of criminal.

I am so totally fed up, greed is absolutely the reason for all of this and what do we do about it, what CAN we do about it.  Those at the top will continue along their merry ways, while the rest of us poor schmucks will bear the burden on our backs.  I don’t get it........  On another note, Kate, I just sent you an email entitled the legacy of George W. Bush’s Presidency.  All things we know but even more depressing when you see it all spelled out on a couple of pages.  Gross.  I am so pissed off..