Who is really to blame for this economic mess?
According to factcheck.org
The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
In short, everyone is to blame.
It is from factcheck.org. It was the first thing I put down.
I am one of those people who sat on the sidelines. And armed with more knowlege of the bill, I vote NO.
No related posts.
Lots of blame to go around. However, what we do now is vitally important.
Here’s some advice from a leading economic expert:
Looks like you copied that from factcheck.org
George W Bush
Not me, I bought a place that I could actually afford. Imagine that.
I blame the Clintons for the Morgage and SENDING OUR JOBS OVERSEAS
Everyone. Even the people for letting this one go. Currently we shouldn’t play the blame game bu play the fix game.
You basically answered your own question. You cannot pin the blame on one person or one party. The blame pile is big enough to go around.
But we tend to try to find our series of scapegoats to take the blame and forget that other people are just as guilty, if not more guilty than others.
There is a lot of blame to go around, but that’s not the important thing now. We need to pick the candidate we think can best fix the problem. To me, that’s Obama.
Clinton administration, they forced banks to give billions of dollars in loans to people who couldn’t afford them so they could buy homes. So now its backlashing the economy because those loans never got paid.
And the Senate for taxing the hell out of the economy.
Ultimately?… The President of the U.S.
Leadership or lack of is how disasters such as these are spawn. It’s that simple. A leader would have stopped banks from doing what they were doing a flunkie, would have done exactly what our current president did… look the other way, just like prior to 911, look the other way.
The successive governments ,for letting it happen,the bankers ,dealers,etc for their monumental greed and stupity.However,it has worked out brilliantly for those in the know,the faceless manipulators who have made killings,and even those who incurred massive unpayable debts that they had no intention of repaying,now,how stupid is total honesty ?
Almost the entire congress. Only a few members of congress (like Paul and Flake) were opposed to the kinds of regulations that lead to this mess. If congress restricted itself to those powers given it by the U.S. Constitution we would not be in this mess. This bailout bill will only make matters worse by encouraging future malinvestment.
Find out how your two ciminals in the Senate voted on the bailout bill. Here is the roll call:
your list of “everyone” does not include those folks who sat on the sidelines while the bubble in housing prices roared up, bought nothing because they saw it wasn’t safe, didn’t play in promoting unsound lending, and are now being asked to guarantee the debts of the losers who thought they could get something for little or nothing.
And what we say is “NO!”
The people with power should have known this was going to happen. Make the connections. This is not new. Interest rates go down then prices go up. It’s an inverse relationship. There was a lot of money circulating. Our economy can’t handle it. It’s not diversified enough. I looked at those mortgage backed securities and thought how crazy. There was a lot of uncertainty and a lot of faith required to buy them. You really had to be detached from regular people to think they were a wise investment. Risk vs. Reward. But I worked in the industry.
Read the Fabric of America by Andro Linklater. He talks about the history of this country, how our boundaries of the states came to be, and about land speculators. It’s very interesting. We’ve been down this path before. It’s why history matters.
The democrats ignored the warnings over and over again. Please watch this video. Video does not lie.
In this video Barney Frank and several other leading democrats are seen praising Franklin Rains. Rains was the problem and now he is running Obama’s campaign. So you decide.
All of that from fact check is correct but the question I believe is what is wrong. The question is not who is to blame but, what.The answer to this is far more simple. The community reinvestment act. This legislation is the vehicle that caused this issue. All of the things listed above can be traced right back to this act.
The act basically started with good intentions but under this act over time beefing it up has led to millions of dollars being loaned out that otherwise would not have. The act essentially forced banks to loan money to people that would not otherwise qualify and to do this banks had to “get creative” in order to come up with ways to try and make this happen, hence sub prime, interest only, balloon mortgages. Everyone in the sector knew that this was incredibly risky, but under the law it was the best option available. The assumption was that under the best scenario the loans would get paid by increased home values allowing folks to refinance or sell the homes for break even if not a small profit. The worst case scenario was that Fannie and freddie would secure them ie the feds would back them. The problem came with a lack of regulation, this is not to say that we didn’t have enough regulation but instead that the regulators were not doing their job leading to people at the tops of these organization to “cook” the books far worse than Enron ever even imagined. Franklin Raines made over 90 million in his six years atop fannie mae all the while doing nothing more than fraudulent book keeping to grant him and his top executives raises and bonuses, all the while running the whole sector not just his company into the ground.
The Government is DEMANDING the Taxpayers buy nearly a Trillion dollars of BAD LOANS.
A TRILLION DOLLARS!!!
“Everyone fault” my @ss. This is not complicated.
Who MADE these loans & WHY?
“The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families”
Less stringent? What does that mean?
Surely in the land of the FREE, the Government cannot go into our banks and FORCE them to make BAD LOANS. Right?
WRONG.
That, my friends is EXACTALLY what happened.
…
You can prance though the intricacies & greed of Wall Street all you want.
You can broadcast every sin of Bush.
But THIS socialist snafu sits squarely in the laps of Left Wing Liberals like Carter, Clinton, Pelosi, Biden & Obama.
The trail to guilt is SO short and SO obvious how could the media miss this?
They haven’t. The game is to hide the blame by blaming EVERYONE.
But I didn’t make banks make bad loans. Did you?
Bottom line – The MEDIA wants Obama ELECTED, not ARRESTED.
Now to be fair, Obama isn’t THE GUY here, that would be Bill Clinton.
But Obama has been a dedicate soilder in this cause.
This IS what he did as community organizer.
So you MUST appericate the irony of Obama claiming to have the answer.
And you’ve got to love McCain.
Johnny on the spot to out the sins of Bush,
Silent as monk if the ACTUAL reform looks partisan.
And here’s the final NASTY. This ‘crisis’ is a FABRICATION.
It is the classic ‘October Surprise’ from the playbook of partisan politics.
A Trillion in failing loans is BAD. But this has been going on since 1995.
Why is it SUDDENLY a crisis?
Some VERY evil Socialists have precisly popped a bubble they created SPECIFICALLY to get Obama elected.
There is plenty of responsibility to go around. What is necessary is the integrity to master the correction. Industrial and Technical Economics offer infinite solutions to every financial situation. It is the responsibility of “We The People” to learn how the economy functions to demand effective leadership.
“We The People” must step up to the plate. Failure to demand contemporary expertise and knowledge is at the root of government and special interests mismanaging critical resources.
The “Factory Model” of public school education must be upgraded. Critical thinking must be developed to enable the next generation to survive in a global economy. Waiting for experts and special interests has demonstrated the flaw in the current educational structure. People are waiting for the smart people to own up to errors and mistakes. Special interests and government officials are attempting to cover up the debacle with more spending.
Wow.
Value and Integrity must be restored. Stop building houses for which there are no buyers.
The blame for this rests at the feet of Jimmy Carter, Bill Clinton and Barney Frank.
The Bush Administration tried several times to change this but was shot down every time by the Democratically controlled Congress.
This is all easily verified through a little bit of research. Look it up for yourself.
Now the tax payers get to foot the bill for this collossal screw up by the above mentioned names. Nice.
If you want to get further enraged look at what ACORN and the $700 Billion have in common. Have a barf bag ready.
A lot of people are sick of the arrogance and incompetence of our elected officials. In a month we can send these people packing. I hope it is so.
Your Recap is very Good, and your summary that “In short, everyone is to blame.”
Now the question is “Are we going to be responsible, and hold everyone accountable?”
My granddad was fond of saying “There are strings attached to that Free Lunch”
They missed one: the Gramm-Leach-Bliley Act of 1999 repealed part of the Glass-Steagall Act and unleashed the wolves of Wall Street.
The unprecedented spending of the 80′s and 90′s didn’t help, raising the National Debt as a % of GDP from the lowest it had been since 1931:
Can Walt Kelly’s famous Pogo quote be any more applicable than it is today?
“Yep, son. We have met the enemy and he is us.”