The LOUDelf speaks!

Though many have seen this coming, the near collapse of our financial system seems to be big news.  Back in ’05, I was deeply entrenched in a blog war in my claim that we were living in a false economy fueled by greed and speculation in the housing market (and it’s related markets).  At the time, I felt that people were looking to housing as a get-rich-quick scheme, and this was perpetuated by some (and I’ll even venture to say, a minority) of mortgage brokers, real estate agents, infomercial blabberheads, and investors.  My fear was that just like gravity, what must go up, must come down.  Unfortunately, it came down even faster than it went up.

Now, we Americans are looking to someone to blame.  We can break this out into 4 main categories of who has responsibility for some portion of the problems we now face.

• The borrowers.  Some thought that ARMs were the way to go, because they would be able to either earn more money, flip the house, or refinance at a later date.  Some thought they would refinance, and wrap their debt into their house – a great idea if they then stopped incurring more debt.  Some did not hire real estate attorneys, feeling that they now were real estate experts after speaking to a realtor and mortgage professional.  Still others just decided to overpay for a property that they would never, under normal circumstances, be able to afford.
• The banks.  They allowed mortgage brokers to sell their loans without forcing these brokers to be licensed, or often prove the validity of the loan documents they were tendering.  They are full of highly-educated people that instead of smelling the rotten goods they were picking up, were thinking that the old ways of banks needed to be rethought, and that this was a new economy.  They then sought to package these loans into Mortgage Backed Securities, and sell them off to buyers for up-front money.
• The government.  We can look to all levels for this mess.  The quasi-governmental bodies like Fannie Mae and Freddie Mac which told banks they would buy this bogus paper.  The politicians who wanted to force banks to lend to people who would never be able to afford the loans.  The politicians who believed that reduced regulations would free up the market, so we couldn’t have massive collapses due to the “magic” of the free market economy.  The politicians currently who took so long to act, or refused to act because of political reasons.
• The public.  Yes, we are all also to blame.  This includes those of us who pay all of our bills on time and have solid credit.  We could have been more diligent in advising others in their idiocy.  We are the ones who allowed these clowns in Washington to steer the already listing ship, right into the rocks.  We are the ones who have allowed these career politicians play dirty pool with a subject of world-wide and historic importance.  We turn a blind eye to Washington, and continue to allow this to happen.

But I am person that while I find it can be therapeutic to blame at first, I believe action is the only way to get things done.  Blamestorming does not help the issue at all, but serves to perpetuate most problems.  People that are blamed, rarely give their 100% in solving a problem, so let’s just put this to rest:  We’re all to blame.

My thoughts:  We know that doing nothing will cause catastrophic collapse and reorganization that will radically change our economic picture.  This is not an option.  We know that politicians can often put ego or party politics in front of doing the right thing.  This too is not an option. 

What needs to happen is we need to create a strong, but simple program that allows all banks, not just the large ones, to refinance people’s loans to avoid foreclosure.  This will allow the banks to continue to make money, and people to stay in their homes, while incurring a more-affordable mortgage.  This program needs to be extended to borrowers who have not had any troubles as well.  Additionally, just like in the cases of Enron and the like, we need to go after the leadership that falsely inflated the balance sheet, or financial picture, and if we prove that their bonuses, severances, etc. were paid out on erroneous numbers, take the money back, and use it to fund this program.

We need to foster a program that will allow banks with the bad paper to write down more of it, thereby allowing them to keep themselves afloat, and remain independent, as having 3 or 4 superbanks nationally will not bode well for the consumer either. 

We need to suck it up and deal with the fact that it will hurt us a little right now to foot the bill for some of these remedies.  Politicians need to forget who bought and paid for them, and focus on fixing the problems… they can go back to their bribes later.  They need to work straight through holidays, weekends, and do this for no extra pay or time off.  They need to stop throwing insults, or reacting to them.  They need to stop talking so much to the cameras, and start focusing on working with sensible experts who can show them realistic solutions for this mess.

As a person who has never missed a mortgage payment, and who has gotten their credit into great standing, pays a LOT in taxes, and saw this coming, I am jumping mad.  But what I can do most constructively, is focus on calling my representative to ask them not only to vote the correct way on these legislative proposals, but to focus on doing the right thing, instead of the political thing.  If not, I’ll campaign for their competition.

Filed under: Economy, Mortgage Crisis, Politics Tagged: | Bailout, Criminal, Crisis, Democrat, Economy, Loan, McCain, Mortgage, Obama, Politicians, Politics, republican, Vote