Here’s the opening paragraph of a story on the front page of today’s Seattle Post-Intelligencer:
While Wall Street financiers stoked today’s financial meltdown with explosive investing in high-risk mortgage loans, politicians, federal officials and lobbyists shielded them from lawsuits that would have protected borrowers and tempered the frenzy.
Banks and financial institutions have demonstrated that they are unwilling and perhaps incapable of regulating themselves. For years these guys were exceedingly eager to lend large amounts of money at exorbitant rates to people who shouldn’t have qualified for loans:
- Like those low teaser rates? Don’t worry about upward adjustments – you can always refinance.
- Can’t verify employment, or income, or assets? Don’t worry – we don’t need to know.
- Interested in an interest-only loan almost sure to get you financially upside-down? We’ll set you up.
- Willing to assume that the value of your home goes up every year? We are too!
In the midst of mounting piles of financial wreckage for which they are largely responsible, banks are now refusing to loan money to each other, bringing global credit markets to a standstill. They didn’t mind raking in fortunes for themselves by providing millions of people with risky loans that jeopardized our entire financial system. But now they won’t trust others of their own ilk enough to lend them money. And Wall Street panics. As a result, trillions of dollars – how much is that, anyway? – of wealth have evaporated. That represents jobs, home ownership, retirement plans, and college educations that have simply disappeared.
Meanwhile, as the financial crisis deepens and spreads around the globe, the US Treasury is considering acquiring at least partial ownership of banks. And this from the Bush administration – who knew? Many regard nationalizing such institutions as socialism. But would they prefer more of the same practices that led to the current mess? Call me a radical, but this additional step of government intervention actually sounds like a good one. Bankers don’t like the idea of government ownership or interference in their institutions… So what? I couldn’t care less what bankers like or don’t like. They’ve had their say and their way, and they screwed us.
For those of us who are not bank executives, gross negligence like theirs would land us in the unemployment line for sure, and probably in jail. A few things pop into my mind:
- Crank up investigations of bankers and Wall Street financiers, politicians, federal officials, and lobbyists, and bring appropriate action against them.
- Put the houses, cars, bank accounts, investments, insurance policies, jewelry – everything owned by highly-paid executives of failed firms – into escrow accounts. For those who are found not guilty, items could be reclaimed if and when measures to restore value and stability are successful; otherwise they belong to the US Treasury.
- Use a chunk of the bailout money to build prisons for (1) above who are found guilty.
So much for this tirade. I hope that American consumers are seriously rethinking personal patterns of borrowing and spending, and considering how we have helped to create the current economic climate. As for me and my household, we’ll continue to drive our 1990 and 1991 Toyotas (as little as possible). Projects around the house are on hold. More people we know are losing their jobs. Like so many others, we’re looking at other ways to simplify and stretch the resources we have, but that’ll be the subject of another post…
