Are we going to hold them accountable?
So, sometime last week Fed. Chairman Ben Bernanke and Treasury Secretary Henry Paulson met with congressional leaders to warn them that our entire financial system was on the brink of collapse. It looks as if this full scale global depression may have been averted by copious federal spending. (read: borrowing) I guess it's too soon to tell if it will work.
But regardless, here's my question: Are we going to hold accountable those who caused this mess? I have no training in finance - ZERO. When I saw those 120% Ditech cash out refi offers on TV, I thought to myself, "Now, that's just stupid. That can't work." Naïvely, it never occurred to me that these stupid financial decisions could hurt the whole economy. But I knew they were a bad idea. And you could pour all of my financial prowess into a thimble and still have room to make tea for a mouse.
The problem, as my boss has so eloquently explained, is that underwriters wrote risky loans that they didn't have to back up. They were just repackaging them and selling on the risks, keeping fat commissions. They bore no risk for these risky loans. So here's the problem - these folks knew what they were doing was stupid and unsustainable. John McCain sounded the alarm several times - most recently in 2005. Lots of people knew these mortgages were junk. But the regulators didn't stop them. Congress and the President did not act. The stockholders of these companies didn't step in and say, "Hey, that's crazy!" Executives lined their pockets. And idiot homeowners refinanced at 120% and went to Cancun or bought jet-skis.
Now, so far, I haven't been affected very much. But folks like me - folks that didn't get risky loans, are losing their jobs and their homes because of others' greed and stupidity.
So, are we going to hold them accountable? Are we going to allow the unscrupulous executives to get away with their golden parachutes? Are we going to allow stockholders to preserve their equity, banking capital gains on government bailouts? Are we going to privatize gain and socialize risk? Are we going to allow upside-down homeowners who got "liar loans" and other ridiculous mortgages to keep their homes? I say, "No!"
Every one of these executives should be investigated and if they broke any laws, we should throw them in federal prison with the maximum sentences possible. Congress should pass laws to CONFISCATE their ill-gotten golden parachutes. Some economists estimate we'll eventually spend 1 TRILLION dollars to bail out these losers and thus, save our economy. I'm going to pay a lot in future taxes for this bail out, and I didn't do anything wrong. A lot of innocent people are going to pay a lot more than me. We should make the people who caused this mess pay a lot more.
