That mythic creation of the go-go ’80s, the character Gordon Gekko in the film "Wall Street," said it is. I would beg to differ.
I started thinking about this when a friend from California found this in her inbox:
"Remember the (congressional) election in 2006?
Thought you might like to read the following:
A little over 16 MONTHS ago:
1) Consumer confidence stood at a 2 1/2 year high;
2) Regular gasoline sold for $2.19 a gallon;
3) The unemployment rate was 4.5%.
Since voting in a Democratic Congress in 2006 we have seen:
1) Consumer confidence plummet to the lowest point in over 75 years;
2) The cost of regular gasoline soar to over $4.50 a gallon;
3) Unemployment is up to 5% (a 10% increase);
4) American householdshave seen $2.3 trillion in equity value evaporate (stock and mutual fund losses);
5) Americans have seen their home equity drop by $1.2 trillion dollars;
6) 1% of American homes are in foreclosure."
Wow, the Democratic Congress did all that? It had nothing to do with overextended credit and house prices rising to the stratosphere? It had nothing to do with the whole thing being a house of cards with no support? Really?
I’m not sure how correct all those numbers are, but let’s assume they’re correct. I will then leave it to you to decide if those problems were caused by Democrats or Republicans. That’s politics and opinion. What I would say is those problems were caused by GREED. Rampant and pure.
Here we are today, watching the Lehman Brothers investment firm circle the drain; Bank of America poised to swallow Merrill Lynch; Washington Mutual in potential trouble; Bear Stearns gone. What’s the common denominator? The sub-prime mortgage crisis. And how did we get into that mess? I submit it’s because we partied long and hard, with no parental control. In other words, firms got greedy and government turned a blind eye. Lenders devised ever more creative (read: crazy) mortgage "products" (and don’t you know you’re in trouble when it’s called a "product"?), required less and less verification of the people seeking those loans, and in some cases even falsified information so they could make the loans to otherwise unqualified buyers. Were there home buyers who fabricated information? Yep, often with tacit approval from mortgage companies. Known to insiders as "liar loans." Wink, wink, we know you don’t make that much but we’re not going to check because that might spoil the fun of you getting a house and us making more money. So they all winked and pushed the paperwork along. Then rates began to rise and people started losing their homes.
I ask, whatever happened to the days when you had to have your income verified, your checking account, savings account, investments, credit report, assets, liabilities — everything – thoroughly vetted? What happened to the 30-year fixed mortgage? What happened to the days when an "exotic" mortgage "product" was a bi-weekly loan payment — the sole purpose of which was to help you pay off your house early? What happened is that lenders got greedy — they wanted to make loans because loans made money and they could bundle and sell those loans as investments, known as "securitizing" them, so that others down the line could make money, too. That’s when the music stopped and a lot of people were left without chairs. Or houses.
You can decide for yourself whether that is a Democratic or a Republican problem. I say it’s an American — and increasingly — a global problem. And what got us there is greed.