Predators
Traveling outside the country, as I am, it is surprising how difficult it is to escape the imploding financial markets. The entire globe appears gripped in this drama, man-made and preventable, and the solutions being bandied about have yet to gain real traction or acceptance. I just glanced at a blog from the ever-sharp-eyed Paul Krugman who basically asks, “where’s the beef?” or, in other words, the boat as currently designed won’t float. He’s a good critic, who rarely pulls a punch, so I’ll go with that conclusion.
But what should candidates and public figures be talking about? Clearly, neither of the major party leaders seems willing to peel back the onion. Instead, McCain wants to blame someone, and Obama retires to the high ground of “this must not become a partisan issue.” While I agree with the latter to some extent, both fail the critical test: neither is willing to talk about why this happened.
There is a streak in the amazing American tradition of entrepreneurism that is both ugly and despicable. It is that element for whom greed trumps all other considerations. Think of the sub-prime crisis and how it started. The basic building blocks were mortgages pushed by what ACORN labelled “predatory lenders.” These unconscionable souls designed lending packages that they knew the customers could not repay, and then pushed them like heroin on unsuspecting, often low income and unsophisticated buyers hungry to join the “ownership society” their president talked so much about. The lenders could give a hoot about whether they borrowers could repay, especially after rates adjusted upward and teaser rate periods expired, because they had already sold the mortgage into “the system.” The system then theoretically spread the risk through all sorts of fancy deals that the Wall Street mavens convinced themselves had great value.
We all know what happened when it unraveled, but let’s remember the building blocks when we think about the solution. There were thousands of wing-tip shoed hustlers out there who took advantage of innocent people who will now suffer the most. Obama and McCain should begin talking about this in the terms that really matter. It was immoral. It was unchristian. It was despicable. It was driven by people who wanted to make a buck more than anything. They ought to be treated like drug-pushers. But street pushers are fed by conspiracies of people who create the product, and just because we call them investment houses and they technically didn’t break laws, they were as immoral as the loan pushers.
In the thirties when the banks failed because greedy bankers tried to ride the 20’s boom by taking depostors’ money and speculating with it, and got caught, bankers became the scourge of the time and were literally run out of towns they ruined. For the captains of Lehman Brothers, Merrill Lynch, and the like, that sounds like a far better idea than letting them softly land with taxpayer funded golden parachutes.
And you don’t have to be a finance wiz to figure that out.