Wednesday, January 28, 2009

Second Thoughts about the Culprits

The Good Witch talked with an old friend from far away today, a lady who is now elderly but active and who has had a good life. During the conversation her friend, who lives in North Carolina, mentioned that she had invested her life savings in Wachovia Bank stock. She has lost it all - $675,000. The good news is that her husband has some money, so they are not destitute. Is this just, as they say in golf, "the rub of the green"? I think not. Bank stock should not tank. The bad guys are getting away with financial murder.

We know what brought down the world economy. People, both individuals and officers in corporations and privately held companies, participated in a giant scam that needed no organization to succeed. The idea was simple: create and sell financial instruments that were worth much less than they were purported to be worth. Shady mortage brokers and bankers gave mortages they should not have given. Companies put together packages of these sub-prime mortgages, rating companies rated them as "investment grade", and brokers sold them to unsuspecting clients. The original offering of mortages to unqualified buyers fueled the real estate boom that went bust, and an unbelievable amount of this junk debt has been written down or written off.

Who did this to our economy? It's not that hard to find out. We know the mortgage brokers who produced the junk mortgages, we know the companies who packaged and sold them, and we know the rating agencies who mis-rated them. It's not all that many people, really. And, I bet most of them are doing really well right now. After all, they were the ones "in the know". They wouldn't be crazy enough to invest in the kind of junk they were producing or selling. While millions of unsuspecting citizens like the Good Witch's friend have seen their savings or retirements melt down, the majority of the perpetrators are likely living large. Why are we not raising hell?

Nobody can convince me that the heads of these banks, like Washington Mutual and Wachovia, didn't know their lending practices were way, way out of bounds. Nobody can convince me that sellers of these debt packages, like Lehman Brothers, didn't know they could be time bombs. And, I've seen evidence that government regulators knew the danger posed by the housing bubble and the junk debts. The only conclusion is that government can't go after the bad guys because government was a major enabler...government just watched this real estate debt train careen down the tracks, and government collected plenty of tax revenue on transactions with no real substance. I'm outraged!

There is no way to put Humpty Dumpty back together again. The economy is in a shambles, and it will be awhile until it turns around. Lots of people will suffer a lot because of the greed and inaction I've described above. But, doesn't it seem strange that our elected representatives are not crying out for the scalps of those who did this to all of us? Doesn't it seem strange that the heads of most financial institutions who made terrible decisions are still in their jobs? It seems to me that somewhere in our millions of pages of federal laws, there ought to be a few that would apply to the scum whose greed put us in this giant pickle. Where the heck is a good lawyer when you really need one?

1 comment:

ThomasLB said...

In the last election, only 63% of eligible voters participated- and that was the highest number in forty years. (link)

Usually the 37% who didn't vote are labeled apathetic or indifferent, but I don't think that's it.

I think government is so much in the hip pocket of monied interests that people don't see any point in casting a ballot any more. Government isn't for them- it's for bankers and CEOs.