How About a Thank You from Wall St.?

Arrogance and Stupidity: Less than a week after we bailed out insurance giant AIG, executives threw a $400,000 party for its minions at a posh Monarch Bay resort in Southern California. Minutes after leaving a meeting with Treasury Secretary Henry Paulson Monday, executives of Wall Street's major banks escaped out the back door and rushed to their waiting limousines with nary a word to reporters. Industry apologists said we should be grateful for the nine major banks volunteering to accept additional capital from Treasury along with a government guarantee for newly issued bank debt by accepting a dilution of shares and a few harmless restrictions on their operations. Well, excuse me, Mr. Big Shot. Your culpability helped foster the economic crises. If Wall Street was serious that we're all in this together, their executives should have promised not to cut lines of credit to long-standing business customers who have paid their bills on time. They would have pledged not to foreclose on any homeowner who is able to refinance into a government-guaranteed fixed rate mortgage set at 85% current market value. They would have promised not to advise clients to hold on to their investments while they quietly dumped whatever they can from their own portfolios and shorting every security in sight. The leadership role by politicians addressing the financial crises -- despite all the pratfalls that still may happen -- is commendable. The absence of leadership from Wall Street is disgraceful. In the paraphrased words of President Kennedy, ask not what your government can do for you, ask what you can do for your country.

The American Dream: For decades, home ownership has been the only sure-fire way for the Middle Class to gain prosperity. It was based on escalating home values until the bubble burst two years ago. Government policies encouraged home ownership allowing people to deduct the mortgage interest from their income taxes. More recently, government policies lowered borrowing standards to almost nothing in effort to attract additional wage earners into the ownership game to achieve the American Dream. Now that it has backfired, economists are waging a debate among themselves. One argument is when government makes residential investment more attractive, it diminishes investment in other areas that would enhance economic growth. The opposing argument of subsides and tax credits allows more Americans to own homes. They recognize the problem that 95 million are paying far more than 30% of their income for their households and 42% of all Americans cannot afford home ownership. The unrelenting push to slash government regulation necessary for a good mortgage market unfortunately has been replaced by private market "products" and mortgage companies leading us into the current meltdown. The winning argument in this debate falls somewhere in between. As one economist put it: The U.S. will remain a mix between a totally free open market such as Hong Kong where economic growth is unimpeded and France where regulations have stagnated growth and disposable income.