Have you ever watched the show "Are You Smarter Than a Fifth Grader?" Rumor has it, the show was originally going to be "Are You Smarter Than a Congressman?" The networks realized that too many people would win money on this show, so they replaced Congressman with a slightly more intelligent breed of Americans: Fifth Graders.
I was surprised and very disappointed that the bill did not make it through Congress today. Many will blame Nancy Pelosi for turning the issue into a partisan issue during her speech this morning. I personally think at a time like this, there was no reason to take a cheap shot at the "failed policies of the Bush Administration." There will be others who blame the Republican members of Congress who may have switched their vote to 'Nay' because they took offense to Pelosi's comments. In either case, it is the same old political blame game. This brings me to the topic for tonight's post: ACCOUNTABILITY.
Throughout this financial crisis, elected officials have constantly blamed the other party for the problems we are having now. Everyone on so called "Main Street" is blaming Wall Street for the situation we find ourselves in today. Homeowners are blaming CEOs of large Wall Street institutions for the problems they are having paying their mortgages. The fact of the matter is, nobody is admitting that they screwed up and that it is time to move on and fix the errors of the past. Let's take a look at some of the things that have happened over the past few years that have helped lead us into this difficult environment.
-In the late 90s Banks were encouraged to make loans available to middle and lower class people to buy homes because it was the "American Dream." Fannie and Freddie were influenced into buying subrime and Alt-A mortgages. This was done under a democratic administration.
Accountable parties: All members of congress and the democratic administration during that time. Enough of this bipartisan nonsense. Both parties should stop pointing fingers and admit that bad decisions were made. The executives of Fannie and Freddie should also admit that they were wrong. They should have exercised the appropriate due diligence and realized that these assets were not worth the risk in the long term.
-Alan Greenspan's Fed lowered interest rates substantially after our last recession. With interest rates at 1%, people begin taking home equity loans out to purchase second and third homes. Once the real estate bubble popped, many of these lines of credit were decreased due to the declining value of the house that served as collateral for these loans. This was done under a Republican Administration.
Accountable parties: Members of the Fed who should have foreseen the problems that ridiculously easy access to credit could cause. Many might be offended by this, but the people who bought second homes also need to be held accountable. Nobody forced you to buy a house or a car that you couldn't afford. Take some responsibility for your actions and don't expect all of the blame to fall on a few Wall Street executives. I hope people will think twice now about taking out a loan to buy something that really isn't necessary and that they cannot afford.
-With interest rates low, banks lent money to pretty much everyone with a license. Understanding the risk of lending to people with bad credit, they couldn't simply offer fixed rate loans to everyone. Instead, they created products with a teaser rate that adjusts upward significantly after a few years. I imagine the pitch went something like this:
Couple With Bad Credit: "We can only afford around $500/month."
Mortgage Agent: "Well at 2% for the first 2 years, your payment will only be $200."
Couple With Bad Credit: "What happens after that?"
Mortagage Agent: "Well in years 3-5, the payment goes up to $400. After that, it will adjust to 15%, which is around $1,500/month. But don't worry about that. You will be building credit for the next few years and should be able to refinance in a few years."
Couple With Bad Credit: "We really want this house and it sounds like we will be just fine. Let's do it!"
Accountable Parties: The mortgage lenders were obviously at fault for creating and selling products that people did not fully understand. The government was also at fault for not regulating this market. And by government I mean both Democrats and Republicans, so stop pointing fingers. There were members of both parties in Congress at the time and both sides failed to act. The Couple With Bad Credit should also take some responsiblity for their actions. I understand that many were misled into taking out a mortgage. In the end, you have the final decision and should hold yourself accountable for at least part of the problem.
I could go on and on with more examples and the same recurring theme would emerge: there are multiple factors that have led us to where we are and there are many people to blame. Regardless of who is at fault, one thing is for certain. We are in the middle of a financial crisis that needs to be taken care of ASAP. Let's hope Congress can stop bickering like 8 year olds and take some action. I don't know about you, but I want the people that represent me to do what is good for the country, not what is good for the presidential election or their reelection bid that is coming up soon.
One more quick comment regarding Wall Street vs. Main Street. If you think that we should not take action, stick it to the Wall Street firms and let them suffer the consequences of their actions, I want you to do the following tomorrow:
-Look at your 401(k). It probably is getting hammered this year. Then think about the 70 year olds who are retired and have seen their nest egg get clobbered.
-Think about your family and friends who actually work in the finanical industry. The CEOs of these companies will still have a lot of money if they go out of business. But your average Joe/Plain Jane might end up jobless and might have their retirement accounts completely wiped out.
-Think about small businesses who need loans for their day-to-day operations. What happens to these businesses and their employees if the banks stop lending?
The point is, Wall Street and Main Street are totally connected. So please Congress, stop bickering about Wall Street vs. Main Street. And stop the partisan bickering as well. Let's act like adults and get some legislation passed and restore our confidence in the financial system. As we all saw today, time is of the essence.
With all the stress and nervousness in our country today, don't forget to relax a little and find time for a good laugh. The video below always puts a smile on my face, even if we lost $1.4 trillion in market value today.
http://www.youtube.com/watch?v=cwvVh0_ZelI
3 comments:
When I first saw Pelosi's comments, I thought, "What the fuck is she doing? How will insulting Republicans all of a sudden inspire them to vote for the same shit you're trying to pass?" On the same hand, the butt-hurt Republicans who basically said they only changed their vote because of what she said are also idiotic. But hey, what can you expect, it's an election year, and many of these people can't disown their bases by, you know, actually trying to help the MAJORITY of the country. God, I love politics...
Higgins, in regards to accountability - I couldn't agree with you more! Both sides of the aisle, Main St. and Wall St. have all had their hand in this, now it's time to clean up the mess. It's about time everyone stopped bickering, and actually got something done. Pelosi's remarks were absurd, but that is not a reason to vote down the bill- vote down the bill because you disagree with the bill, not because Nancy threw in inappropriate commentary.
The more I hear about the specifics of the bill, the less I thought this specific bill should be passed....however, the fact is that a bill needs to be passed or some solution achieved - whether it's a bailout, stimulus package, or changing the mark to market requirement - some kind of action NEEDS to be taken.
Hopefully Congress can get their heads out of their asses, stop pointing fingers, and come up with a real solution, soon.
By the way, I am thoroughly enjoying your comments! After watching CNBC throughout the day at work, your blog is a refreshing and honest take on the situation we're currently facing. Keep it up! :)
Being in Germany for a week showed me how much our country and system of government sucks. What the Germans have that we don't:
1. Clean streets. They're cleaned every single night. The people who clean them actually take pride in their jobs and are paid well do to them because they're German citizens, not imports that do the job at 50% discount. Ever see what a clean street actually looks like? I haven't. There's trash on every single street I've ever been on in any city in the US. It's disgusting and is the number 1 reason I hate NYC. It's 10 times dirtier than Boston. GO SOX.
2. Efficient, clean public transportation that departs when it says it will depart and arrives when it says it will arrive on the minute.
3. BMWs and Mercedes for cabs. Enough said.
4. A parliamentary system of government, which in my opinion better represents the people of a country. A "representative democracy" allows too little involvement of the people in every day government business. Congress and regulators are NEVER held to the fire for issues unless something big happens - oh wow can you say financial crisis of epic proportions? Anyone been recalled? Didn't think so. At least in parliamentary politics the people have a much greater vested interest in the results because political power can so easily be shifted between multiple groups. The 2 party system is failing us and it has been for as long as I have been able to vote. Every 4 years we are forced to pick between 2 steaming bowls of shit and it's getting tiring. It takes up too much of my energy and in the end, I don't think anyone really gets much out of it except the Congressmen. And the President gets his book deal when he leaves office. Let's not forget that.
Also, Barney Frank should be led behind the wood shed and beaten with a shovel for his blatant abuse of power. He's not the only one, just the worst offender who takes the least responsibility. At least Chris Cox admitted he was a douchebag.
5. Strong national identity. People are proud of where they live and what they do for a living. If they emigrated to Germany, they accept the values of the country and assimilate. They do not wave flags from other countries because they live in Germany. Foreign flags are not welcome. They speak GERMAN, not Spanish, French, Farsi, you get my point. There are yearly festivals to celebrate Germany - not Puerto Rico, or La Republica Dominicana, Haiti, or Italy (yeah I said it).
6. No sense of entitlement. Americans think they are entitled to a college education, a home, a nice car, health insurance...the American Dream. The American Dream has to be earned, and is not an entitlement. It is not anyone's fault but your own if you took out a mortgage that you can't pay for. Give me all the excuses that you want, but at the end of the day it is your responsibility to yourself, AND THE MILLIONS OF PEOPLE WHO INVEST IN THE CREDIT, MARKETS to make sound financial decisions based on proper due diligence. If you're too stupid to do that for yourself, you are too stupid to have credit cards and loans. And you're also too stupid to vote in my opinion because you probably don't read much about that either.
7. Oktoberfest. Enough said.
Obviously I'm pissed off. I'm pissed off because the officials that we, the people, elect to represent us represent special interests and their own wallets more than they do their constituents. I'm pissed off because this country is becoming less and less a united America and more and more a divided us versus them culture. The "melting pot" that we used to be no longer exists because groups that come here now are no longer forced to accept American values and adapt to American ways of life. They want to bring their shitty values here, and we do nothing to stop it. I predict that in 50 years, the national language of this nation will not longer be English if we continue to do nothing to protect our borders from illegal immigration.
Sidenote - Press 1 for English should be banned. Learn it or wait at the border until you do.
I'm also pissed off because no one in this whole goddamn country accepts responsibility for their actions, and still not one holds them accountable either. It's always someone else's fault or they never said that. Examples:
The CIA gave faulty intelligence - George Bush, 2002-present.
The CEOs of Fannie and Freddie insist they are solid, so I think they are good investments going into the future - Barney Frank, July 08.
Sure, I sued American banks and lenders for not giving people loans that couldn't afford them. - Barry YObama.
This took me an hour and I'm still not happy with it but I'm hungry and it's time for breakfast. If anything I said made you angry, good. It should make you angry, that is what happens when people tell the truth. Keep it to yourself though, I don't want to hear about it.
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