We are finally beginning to at the very least discuss inequity and the culpability of Wall Street in the current economic mess.
However, the culpability doesn't rest on Wall Street. It rests with the legislators who engage in what some on the right have called "crony capitalism." Washington is the problem, not Wall Street. Wall Street, in the grand scheme of things is all of us who own stock in companies, who invest in our 401K plans, or IRA plans. We all expect to see a positive return on our investments. When we don't, we expect to see change at the top of the companie(s).
Executives of companies have a responsibility to seek value for shareholders. They also have a responsibility to act in an ethical and legal way. We have government regulators to make sure that happens. But who is watching the regulators? We've hired foxes to watch the hen house. Politicians have a responsibility to seek value for Americans. You can't blame all of it, or even most of it on Wall Street. The problem is our government. Our nation isn't great because of the opportunity government provides. It's great because of the individuals who experiment, innovate, invent, and succeed. Individuals who take advantage of our freedom to get ahead, to compete and to excel. The best thing government can do is get out of the way, and maintain a level playing field. Not pick winners and losers.
The entire housing melt down can be traced to government regulation. Even the new HARP loans are B.S.. People who need them can't qualify. What are banks doing? Because the government has required a certain amount of HARP loans to allow people to avoid foreclosure by allowing them to refinance at lower interest rates, banks have to make "X" amount of loans through the HARP program. So the banks are giving these loans to people who don't need them. They are giving them to people who are most likely to pay them back. They have good DTI ratios, excellent credit scores, and then the banks meet the quota, make good loans at lower interest rates and everybody's happy right? Not the people who foolishly got hooked into an ARM 10 years ago. They're still on the hook. It was the government who wanted to increase home ownership. The banks were making loans regardless of someone's ability to pay it back. No problem though, the government was there with Fannie and Freddie to buy the loans. They funded the loans, the banks continued to service the loans until the shit hit the fan. All of a sudden the government wanted a scapegoat and instead of blaming the policy of increasing home ownership without sound fundamental fiscal policy, they blamed the banks, and the investors who initally made loans and bundled these for sale on the open market.
My point is that there is some righteous indignation coming out of the OWS movement. But the outrage is pointed at the wrong direction. It's a problem of government, not business in general.
Let the big banks fail, if they can't manage their affairs. Let the automotive companies close if they can't manage their comanies in today's business climate. Free market capitalism will allow some comanies fail on their own. It will also allow other companies to succeed. All without government intervention. Consumers will get what they want, and the cream will rise to the top.
