Thursday, October 2, 2008

Making the Financial Crisis Worse

Congress did not pass the financial bailout bill last weekend. The sky did not fall. The nation was given by the fates another week in which to come up with a solution. What was that solution?

Add to the bailout of Wall St. Fat Cats a bailout of sundry smaller special interests in an effort to bribe more people to jump on the shaky bandwagon, and use the excuse of a minority's religious holiday for everyone to leave town on vacation. What happened to the separation of church and state? Get this: the sky was supposed to be falling. We supposedly had to pass the bailout bill last weekend or face disaster, so, when it did not pass, Congress went on vacation.

Washington did not try to determine what is wrong with our nation’s financial system. The guilty are not being investigated for punishment. Reforms are not being proposed. Regulations are not being tightened.

  • Fat Cats are not being arrested for endangering national security.
  • Financial officers who created risky investment processes that cost us so much money are not being arrested.
  • Government regulators who failed to regulate are not being chastised.
  • And, of course, the politicians who have been looking the other way for the past decade while all the now well-known fraud and abuse of the mortgage system and Wall St. investment system occurred are not being held to account.
Punishment is not the priority at this point; it might suffice if all the irresponsible players who risked the nation in the mad rush to maximize profits would simply acknowledge their immorality, apologize, and promise to cooperate in an effort to reform the system.

The priority is to figure out what is wrong with our laws and rules and regulatory mechanisms and to start fixing them.

That is exactly the opposite of what Washington continues to insist on doing. The Senate yesterday just stumbled further down the road of pouring bad money after good in a fraudulent effort to evade responsibility. Now the bailout is not just $700 billion; it’s $800 billion. And now they’re on vacation – in the middle of the second week of the crisis, they just all went home. One thing is clear: despite all the noise from Washington, they obviously don’t think this is much of a crisis, so why should the rest of us?

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