Wednesday, December 17, 2008

Who's to blame for economy? - Opinion -

Who is getting lumps of coal for the eonomic mess? Lots of people:
Investment bankers

In the war on drugs, the top target is always the traffickers. The same principle is true with the massive implosion of credit markets and corporate ethics. In this case, the traffickers were the Wall Street firms that created bundles of subprime mortgages and other toxic financial instruments, then peddled them as low-risk, high-return investments. These securities, and enormous side bets on them, fueled the housing bubble and infected the global financial system.


In any crisis of confidence or failure of government, it's a pretty good bet that members of Congress are involved. The credit crisis is no exception. Lawmakers from both parties not only ignored signs of trouble but also actively invited irresponsibility in the name of protecting key constituencies. On the Democratic side, members supported virtually any program that provided credit to low-income purchasers and inner cities, regardless of whether this lending was prudent. The banking committee chairmen — Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass. — defended federally chartered Fannie Mae and Freddie Mac from charges that they were taking on too much risk and prodded the companies to back riskier loans. On the Republican side, then-House Majority Leader Tom DeLay, R-Texas, and other members thwarted efforts to rein in predatory lending.
There are a lot of actors involved, but you have to wonder, when the recovery comes (and it will come), will the saviors be recognized as well and will we learn the lessons from the failings of these actors?

Investment banks probably will, Congress probably won't.

1 comment:

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