Some say greedy businessmen. They’re right. Some say greedy politicians. They’re also right. It was the combination of greed–businessmen for money, politicians for power–that created this mess. You could say that if the businessmen weren’t greedy this never would have happened, but that would be to ignore that it was politicians who created the incentives for businessmen to exercise that greed. The best summary I’ve heard of the situation to date is this one from Glenn Beck. In simple terms with plenty of references for you fact-checkers, Beck explains how we got here.
But allow me to summarize. Barney Frank, Chuck Schumer, Nancy Pelosi, and others want more power. Power to control people. People who are dependent on government are gold to them, and people who achieve success independent of government assistance, or indeed in spite of government assistance, are their enemy, because it shows that they are not needed as much as they think they are. You would think this means that Frank, Schumer, and Pelosi would target the rich, but they don’t, not directly. They target the poor. Why the poor? Because the poor generally don’t research political issues enough to know what’s going on, lack education, and can be more easily controlled. Oh, and by the way, there are a lot more poor people than rich people, and votes happen to matter to politicians. Why do you think Obama claiming he’ll only raising taxes on those making over $250K? Because there aren’t that many voters making that much, but there are a sure a lot of voters making less than $250K.
So Barney Frank says “Let’s make it so that poor people can buy a home.” Doesn’t that sound nice? You better believe that gets the poor voting for Mr. Frank. It sounds absolutely fantastic to someone who has housing problems. How does Mr. Frank want to do it? By making it easier for poor people to get bank loans. But wait a second, banks don’t like loaning money to poor people. It’s not that they have anything against poor people, except that they don’t have much money, by definition, and therefore might not be able to pay back the loan on the house, and then the bank will have to repossess it and sell it at a loss, and if that happens enough times the bank will go out of business.
“No problem!” says Mr. Frank. “We, the government, will create some government-backed companies to buy those risky loans from you.” They’re called Fannie Mae and Freddy Mac, and whenever a bank makes a loan, they turn around and sell that loan to FM and FM. When you make your mortgage payment, it goes to them. The bank has nothing to do with your loan anymore. They couldn’t care less what happens. They’re just trying to give out as many loans as possible because they get a commission every time they close a loan. In other words, there are a lot of rewards going to people who aren’t taking any risk, because the government is taking the risk. And who is the government? It’s you and me.
Now the rug has been pulled out of the housing market. Things just got out of control with all these risky loans being handed out. It was all well and good while home prices were rising steadily, but at the first sign of them falling, as home prices always do every once in a while, everything fell apart. Yes, the banks are paying a price. A few have been bought out. Some have gone out of business, and many more will. But who’s picking up the tab? You and me, to the tune of $850 billion dollars.
What about those poor people Mr. Frank wanted to help? Now they’re losing their homes. Now their credit is shot. They got a taste of the good life and now it’s being taken away from them. So while Mr. Frank would like to think he’s been helping the poor, has he really, or are the poor worse off than they were before?
If this were Enron, Mr. Frank would be on trial and likely be going to jail. But now he’s coming out and claiming that this was the fault of capitalism and deregulation. But this wasn’t capitalism. Capitalism wouldn’t have created Fannie Mae and Freddie Mac. And if there was a lack of regulation, who was fighting regulation all the way? Mr. Frank. George Bush asked Congress 17 times during the last year to take steps to fix FM and FM. Who said they were fine? Who said nothing needed to be done? Mr. Barney Frank. Now who’s claiming he can fix all this? Mr. Frank. What do you think the chances are we’ll still be fixing Mr. Frank’s problems 10 years from now while he still blames everyone but himself?
It is due to the loss of a moral compass in the people who have the power; the rich, and our elected officials. No longer do these people stand up for what is right but only for their self preservation or status/power, money and ego.