I just have to weigh in on this issue – it’s too much the elephant in the room for me not to.

Ben Bernake - Image by Justin Fox

Ben Bernake - Image by Justin Fox

I am looking and listening to this tempest brewing around the failure of the banking system, investment houses, and the real estate market and I am not sure that the market is doing just what it should be doing – going through a correction a major one albeit, but a long overdue correction.  I see a great deal of hand wringing and panic in the voices of our leaders and that is the unsettling part of the equation for me.

In my perspective, it began with the slowing of real estate sales and the turning of value from increases to decreases.  We all saw this as a normal market fluctuation.  Now I see it in hindsight as the omen it was.  It probably had other harbingers before that, but this one looks like the first indicator for me (maybe it was my divorce three years prior…)

Then the people holding the mortgages on those houses; these are the people who’s responsibility it was to qualify consumers and grant them credit – they started taking it on the chin. If you have a house today on a fixed rate mortgage, be grateful.

Now as I understand a bank, they accept your money, promise to hold on to it and pay you a dividend interest rate.  They are then supposed to use your money in some responsible way to earn an even greater return so they can cover their costs and pay you the interest due on your account.  Looks like they didn’t use it responsibly.

FDIC Logo at StevenGroves.comThe government set up FDIC in 1933 to make sure that if the bank screwed up, consumers would not be penniless.  the government then also promised to provide more oversight and regulation.  I remember counseling people as a banker that they did not want to exceed the FDIC limit; it sounded frugal then, it sounds smart now.

The banks in turn work with the stock market in further distancing the homeowner, who lives in the house, from the final lender who is expecting to be paid for loaning the money over time.  Enter the mortgage derivative and a whole class of stocks named ‘junk bonds’ for good reason. Our government supported the growth of the housing market disproportionate to the ability for the market to consume it and new we’re over built and under-funded.

So now, on Capital Hill, the legislative branch of our government is being pushed by the executive branch of our government to pass a bailout elephantbill of huge proportion – and to do it without careful consideration and before the current lame-duck president leaves office.  This smack of a sense that GW is trying to get his buddies one MORE big payoff before he leaves office and I don’t like it – not one little bit.

It looks like the laissez faire policies of the administration are biting them in the butt and they can’t get out of town fast enough before the piper comes calling.  they expect the taxpaying public to foot the bill too!

It’s a sad time to be registered Republican.  We look greedy and guilty at the same time – how I need to vote in the general election is becoming clearer and clear, as I knew it would.