Mark Winston Griffith

Bailout Makes Suckers Out of All of Us

The latest news that the Treasury, Fed and Congress are discussing the mother of all bailouts - a government purchase of distressed mortgages at deep discounts - was inevitable. Not just because there was going to have to be a day of reckoning for all the stinky mortgage paper strewn across the front lawns of American homes and throughout the capital markets, but because, at some point in time, the American public was going to have to pick up the tab.

The problem has always been so much bigger than a rogue group of speculators and careless families looking to nest. So, for everyone who insisted that this was someone else's problem, for everyone who was determined to let millions of "irresponsible" homeowners go under, this is the consequence of our failure to address loan default and foreclosures on a broad scale. So, congratulations. You and I are soon to be the proud owners of countless predatory, should-have-never-been-made-under-the-light-of-day, loans.

The real kicker is that while the struggling homeowners and taxpayers will continue to be on the hook, the assembly line of predatory loan enablers - the brokers, originators, servicers, secondary market, etc. - have ultimately done what they wanted to do all along: Make the loan, strip off the profit, and let someone else deal with the consequences. Although with so many banks and investment firms going under, that wasn't such a clever strategy after all.

But this is not even about reckless Wall Streeters. Blaming Wall Street for being greedy is like...blaming Wall Street for being greedy; making as much profit as possible is what Wall Streeters do. No, the real fault lies with us, the "people" and our government, who, despite warnings to the contrary, failed to establish the regulatory controls and oversite that appropriately limit capitalism's excesses.

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Posted at 8:31 AM, Sep 19, 2008 in Economic Opportunity
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