Scoop’s Views

It seems just about half the members of the U.S. House of Representatives have half a brain, or, if not that, then at least the commonsense God gave to individuals fiscally responsible for managing household budgets.

Barack Obama, however, is not among that crowd: he had this strange idea that the very CEOs that got the financial institutions into a mess should receive "reasonable compensation packages." Those CEOs should be paying compensation to the U.S., to the homeowners they helped defraud by giving mortgages to people who never should have qualified for them in the first place.

On July 27, I wrote in the post Where’s the housing relief bill for responsible people? 

… The loans were given to people with a variety of options, but many people who never would have managed to get a mortgage from traditional lenders managed to buy a home. Great. Until the taxpayer-funded bailout.

The banking and loan industry has been crying to Congress over the past few weeks to not change rules as applied to mortgages, saying that fewer people could become homeowners if the rules were changed. Some of these financial whiz kids talked about helping people achieve their "dreams" – through the supposed solid rules applied to mortgages. Obviously, as the current bailout, as well as failure of several lenders in recent weeks demonstrates, the rules are not tough enough.

When you apply for a mortgage with a reputable, traditional lender, there’s a few things that are done, including using a mortgage calculator to help see "how much home" you can afford to buy. What a concept! How much home can you afford to buy without Congress stepping in with an emergency bailout?

…

Since all the irresponsible homeowners are getting a chunk of taxpayer-funded mortgage bailout, including a sweetheart deal of a mortgage rewrite (except for the part that the government gets a cut at time the owner sells their home), where’s the sweetheart deal for all the responsible homeowners who have paid their mortgages on-time and never faced foreclosure issues? Oh, wait! Those people are simply, once again, forgotten and tossed to the side.

I concluded the July 27 post post with something of a sobering thought, but more a slap in the face to those elected officials in Washington, D.C. who felt compelled to reward people for being irresponsible in seeking out sub-prime mortgages. Let’s also not forget the many formerly notable, and sometimes noteworthy – though notable and noteworthy can be used only in negative context today when referencing them – financial institutions that made loans to people who didn’t qualify. At that time, I wrote:

While others grab for their taxpayer-funded bailout, many responsible homeowners in this country will sit back, smiling. They know they have been screwed, yet again, by politicians seeking to be politically correct in helping people pay their bills. What a waste of taxpayer money.

Sadly, in this instance, the responsible homeowners are sitting back, wondering how much harm the actions of tens of thousands or millions of people who managed to get these sub-prime loans, and how much harm the CEOs of the banking and lending institutions have managed to cause for the U.S. economy. Not only are other banks and financial institutions now on-edge, but almost every few days a new financial institution has been seized, purchased during crisis, or saved from impending disaster. Today, Wachovia was taken over by CitiGroup. Which financial institution is going to be swallowed up tomorrow?

For many years, various forecasting tools used by financial institutions, as well as tools available online, such as a moneycentral.MSN.com, to help people figure out "how much home can you afford" would show these people couldn’t afford a home. In the name of the Almighty Dollar, these lending institutions, in bad faith – to their investors, to their customers, and to the nation’s economy – made mortgages available to this class of people who could not qualify for a mortgage.

At the time, who cared? No one, really, it seemed. Fannie Mae and Freddie Mac were there, ready to help out. Besides, if things go sour, whine to the federal government, which gave one bailout, so why not one to bail out investors? While Congress is doling out the bucks, be sure to give handsome compensation packages to those grossly irresponsible CEOs.

Last week, during the televised committee hearings into Wall Street’s crumbling financial institutions, many of the elected pundits were wondering one thing: why didn’t anyone give us warning? Actually, there was plenty of warning. The housing market bubble – predicted since 2002 to be "ready to burst" – yet never did. Home values continued to climb, even to the point that homes were selling for two-to-four times what they were actually worth. Homeowners loved it, and why not? It was a dream-come-true. Until everything went downhill.

While Congress looks for a scapegoat, remember that Congress has responsibility for overseeing finances in this country. Sure, Congress may not run Wall Street, but it does control banking regulations through the Federal Deposit and Insurance Commission (FDIC). It controls investments, securities, and everything else through rules, regulations, and laws. Instead of playing along with this charade in looking for some sacrificial goat, look at all the members of Congress. Everyone in the U.S. House of Representatives and the U.S. Senate is responsible. Each and every member of Congress shirked their duties by not providing oversight.

Sure, someone in Congress would argue they expect people – people, what a lovely, generic, nondescript term – are supposed to report to Congress on matters of interest. Congress also has responsibility to look into matters – and does when it’s in Congress’ best interests – meaning several people or some well-positioned, senior-ranking member – of Congress, such as not wanting to be embarrassed, or when their is a possibility a president had been the recipient of oral sex in the Oval Office.

Well, so much for the local bank or the local savings institution. Today, it’s a national or multi-national conglomerate of organizations that own banks and financial institutions. No longer are you a valued customer. Not at all. Now you’re rated for how much money you could be worth if the institution needed to sell you – your account – to another institution. People years ago said banks treated everyone as a number. Not anymore. Now everyone is merely a dollar sign. Even risky – or high-risk dollar signs – at least until today – were good, because it seemed the federal government jump in and bail everyone out, even the banks.

As I’ve said before, let me say it again, especially as we draw ever closer to the Presidential Election of 2008. Help stomp out crime: Don’t re-elect anyone. Ever. Don’t elect anyone to office who currently holds another office. One-term and they’re done.

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