Who Gets to Pay?
The Senate majority leader, Harry Reid, just completed an interview wherein he blamed the subprime-initiated fiscal meltdown on Republicans and exonerated Democrats. For once, Reid is half right. Existing data clearly show both Republicans and Democrats share blame.
Reid isn't the "lone ranger" when it comes to hypocrisy. In that regard, the U.S. Congress is beyond the pale. Both Republicans and Democrats do theater on an hourly basis as they work the process to "rescue the economy," all the while pontificating their concern, first and foremost, for the taxpayer.
As a taxpayer I ask, where was their concern when the seducers, also known as lobbyists (representing the banks, brokerages and insurance corporations) dispensed $300 million targeted to get the congressional support needed to deregulate the financial system?
Phil Gramm (R-Texas) led the effort to deregulate. Democrats got on board once they received assurance that minority loan provisions in the Community Reinvestment Act would be protected.
President Clinton signed into law the Financial Services Modernization Act of 1999. Total deregulation was in place, and the bomb started ticking. The fuse for the bomb was provided by another government agency, namely, the Federal Reserve.
Alan Greenspan's Fed, over an extended period of time, held interest rates at the lowest level in 50 years. The requirement for an initial low-interest home mortgage came to be something like "Can the applicant fog a mirror?"
From this point on, a series of purposeful missteps by Wall Street employing the flexibility provided by the deregulation of the industry and driven by greed continued until the bomb went off.
Guess who gets to pay for the cleanup?
Michael J. Keogh
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