Sunday, July 20, 2008

AMERICAN CAPITALISM AT WORK ...

There's an excellent article in today's NY Times that discusses the "great divide" between bankers and borrowers in America.

The article points to two developments that are contributing to this divide: (1) Borrowers who are in trouble on their mortgages are offered little or no relief from their government, while (2) Banks and the executives who ran them into the ground are quickly deemed worthy of taxpayer bailouts. More specifically, the American taxpayer is being ...

... asked to stand by with money to inject into Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants, should they need propping up if loan losses balloon.

The message in this disconnect couldn’t be clearer. Borrowers should shoulder the consequences of signing loan documents they didn’t understand, but with punishing terms that quickly made the loans unaffordable. But for executives and directors of the big companies who financed these loans, who grew wealthy while the getting was good, the taxpayer is coming to the rescue.
So, this is what we're moving to in America: The homeowner-taxpayer has to suck it up and bear personal responsibility for their actions. The "too big to fail" crowd, who signed off on the shady loans and contracts, gets the government to save them from their poor decisions. And the homeowner-taxpayer pays for it at both ends.

There's something about personal responsibility that's not right here.

- Mark

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