Needless to say, the current financial system is in a real mess. The bottom line here is that banks & the public both where living beyond their means. Yes I understand that is an easy thing to say. So where do we go from here?
First we need to fully understand what got us here. This is the easy part as we are all to blame. Everyone from the person that wanted a home that they knew they could not afford to the fund managers that made the money possible. If you have a 401K than more than likely unknowingly even you are part of the problem. When we are making money we tend to not watch closely nor care how the money is being made.
We need to stop the blame game. This blame stuff started with banks blaming brokers for the Mortgage Meltdown. This could not be further from the truth as banks made sure that broker loan submissions meet all of the loan requirements. It was the people working within the banks themselves that caused the majority of the problem as internal loan submissions did not have the same scrutiny as broker submissions. The Orange County Register ran a story about this and the link is below. I recommend that you read it.
We also need to try to understand what we are looking at in regards to the credit crunch and how that is going to affect us all. This is not a Democrat or a Republican issue! This is an American issue! Both parties have sat idle and watched this unfold and raised little to no questions. If this does not clearly show you how out of touch our congress men are from the working man then nothing will. Now with that said remove emotion from this issue and think clearly.
How to fix the problem, this is where is gets sticky. The problem here is a difficult one as there is no way to not hurt everyone. The 700 Billion dollar fix is drastic that Paulson and Bernanke have proposed. Once you move past that dollar figure and look at the plan it makes sense. I do share the views of the congressmen in regards to the golden parachute for the current CEO’s but I am not getting that from the current proposed plan. The plan is a reverse auction primarily and this does not support any golden parachute issues. We currently have a business man in place with Paulson so let’s not screw it up congressmen.
Banking committees concerns
- The amount paid will be set by the banks themselves so this amount of paying too much or to little is a waste of time. The Banks know how much money they need for their securities and will not sell it for less.
- There was a concern about private money coming into this auction and buying up some of these mortgage back securities is question. I can not understand this as if private money wants in then taxpayer money is not involved and isn’t that the whole point?
- Our Congressmen need to stop with all of the repetitive questions. Yes we all know they want to be of record as fence sitters so when they come up for reelection they can spin this situation in their favor. Get on with it
This one might be a bit different for each of us but here are something’s to think about.
- Why is Christopher Dodd on the Banking Committee? This man took more lobbyist money from Fannie Mae and Freddie Mac than anyone. This man also got one of the sweetheart mortgages from Countrywide.
- Why is Chuck Schumer still even in Congress? This man single handedly took down Indy Mac Bank. There are currently several other banks in even worse condition that Indy Mac was in and the Fed’s have not taken over them. Is it because someone with power told Schumer to shut up?
- Where was the banking committee while this was playing out?
- The Democrat’s are trying to blame Bush for this and I understand that the current administration will have to wear the blame but this problem started in 2006. The current Democratic Congress came in 2006. What have the Congressmen been doing?
- If nothing is done and the banks have to ride this out then people that bought homes that are a stretch for them are going to lose their homes. All current home owners will lose even more of their equity.
- Fannie Mae and Freddie Mac where clearly mismanaged but they made so much money that the mismanagement was not noticed. Also keep in mind that Fannie & Freddie where ordered by Congress with the first stimulus package to buy mortgage securities up to $729,000 in some areas and the banks where allowed to back date these loans. The two agencies became over ran and that is why they are in trouble now.
Let’s get this bailout over with. Give Paulson the money and setup the oversight committee. This is important as the market is very emotion and needs to see that the Fed’s are stepping to the plate. Just like with Dodge a few years ago, the Fed’s need to show that there is more than enough money if needed. As the money is being spent then the oversight committee show make a recommendation if the current action is working before additional money is spent. So how about a 700 Billion balance with Oversight Committee meeting for every 50 Billion.
Some Things to Think About
We need to police the laws that are currently in place to deal with these issues. We where all making money so no one was asking questions and the people that are supposed to be watching out for us clearly where not. Maybe they where to busy to watch as they where refinancing into sweetheart mortgages or taking Fannie and Freddie lobbyist money. This is why I say this is not a Democratic or a Republican issue. No matter what party you believe in we clearly need a change in thinking at the top.
Why don’t we elect a business man for president and not a lawyer? It is clearly time for our country to be ran by a man with a business background or at least a desire for a truly balanced budget. Wow, what a horrifying thought.