I've been reading many editorials on our financial crisis, and watching for signs of leadership. I'm finding a lot to read, but not a lot of leadership. Like all Americans, I have skin in this game, and have lost more money than I care to think about over the past 6 months, and even days.
So, because this is the way I process information, I've been looking at the string of events over the past 8-10 years which have led up to this. I've been looking at Glass-Steagall and the signing of GLB by President Clinton. (Oh, how I miss him, really I do.) I've been looking at FNMA, FHLB, FHFA, and FHLMC and how we/they changed their mission over time.
I say that "we" changed their mission over time, because, really we all did it. After the dot com crash, many of us wanted to believe that real estate was different. We wanted to believe analysts when they reported that because real estate markets are all local, there could be no "bubble" in the way there was with technology stocks (or with tulip bulbs.) We all wanted to ignore the speculative aspects of real estate, and also wanted, in our egalitarian way, to encourage home ownership for all--especially for those who fell in the "sub-prime" category. Who among us objected to the goal of making home ownership, "the American dream" available to more people. FNMA had an "American Dream Team" who worked with local Realtors to help low-income families buy the "house of their dream." Some Realtors still have it on their websites. Here's a link to the Texas Department of Housing, and it's not unique.
I can't really blame this crisis on lack of regulation--intentionally under-enforced regulation maybe, but not under-regulation. I blame it on us, and our representatives in DC who wanted to keep the party going at all costs. As a group, American voters don't like to hear bad news. We reward people who tell us what we want to believe.
So, this year we will likely reward the Presidential candidate who tells us we were duped by bad people on Wall Street, and that we are innocent victims of predatory lenders. Voters want to hear that someone can fix the problem, and that we will feel no pain. Only rich people and big bad corporations will pay the price--and they are all suspect anyway. This election will be won by the candidate who dumbs down the issues the most, who promises no pain (again except for those who deserve pain) and who, most importantly of all, exonerates likely voters from their role. Egad. No wonder I'm not enjoying this election cycle. It just keeps getting worse.
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