The foreclosure news just keeps getting worse. Home foreclosures have been at record highs – this is no surprise to anyone following the news. What is most surreal in the whole calamity is that those who are most responsible seem to be the ones getting bailed out.
When something of this magnitude happens, there is plenty of blame to go around. And it starts from the top – the government induced policy changes and support of Fanny Mae and Freddie Mac that led to such mediocre lending practices. Certainly the blame must start there.
Then comes the Banking and Lending institutions in general. We seem to forget that companies are first and foremost accountable to their stock holders. In other words, they are in business to make money. Often times “making money” is in direct conflict with doing the right thing. Corporate greed clouded the judgment of many financial CEO’s and, we, the average consumer are now paying for that greed.
We have a long standing history in the US of lending practices that are secure. Typical home mortgages haven’t really changed in 40 years. Sure there have been a few different alterations, but nothing like what was introduced in the past few years. We went from 30 year fixed rate loans with 20% down, to zero down programs and even 125% refinance options with insane interest only multi-year payment options. And that doesn’t even begin to touch on the issues of variable rate loans and just how out of control they became.
Take a look at how popular search terms like “foreclosure” and even the oft miss-spelled “forecloser” have become and you will see that this is an epidemic at this point in America.
I am a die-hard capitalist and believe whole-heartedly in the capitalist system that the United States of America was built upon. But where is capitalism when failed management policies are not allowed to “fail”? Do a search on “ms foreclosure” and you’ll see just how bad it’s gotten. As a small business owner, I know that if I ran my business the way the banks ran theirs I’d have been bankrupt a long time ago. And I don’t think there would have been anyone trying to give me money to stay in business.
Why have these CEO’s not been held accountable for their actions? Don’t get me wrong, I have no problem whatsoever with multi-million dollar executive incomes – none at all. Our capitalist country has always rewarded those who have done well. Bring me a CEO that creates $200 million in profits for a company and I have no problem whatsoever in that CEO being rewarded with a $2 million bonus at year end. However, we have become a society of “entitlement” views. Lose the big salaries and give performance based bonuses – isn’t that really what the capitalist system is about? Performance?
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