Will our new president follow that path or will he truly offer change and move away from that progressive propensity?
by Tina Grazier
Jimmy Carter, Bill Clinton, Barney Frank, and others in the Democrat Party set up the perfect scenario for financial meltdown by going to extremes in regulating and monitoring financial institutions. (they called it deregulation…”what a crock as Bruce would say!) Extreme meddling in the financial sector ended with a complete global meltdown and inevitably impacted other sectors continuing in a domino effect. The consequence is a great deal of uncertainty and loss for people all over the world. The answer is waiting in the wings for debut…what happens next?
** Washington – President-elect Barack Obama said on Sunday he would put strong new financial regulation at the center of his economic recovery program to force more accountability on the banking industry. *** ”Banks, ratings agencies, mortgage brokers, a whole bunch of folks (will) start having to be much more accountable and behave much more responsibly. We’ve got to have transparency, openness, fair dealing in our financial markets” – Reuters **
As per usual, our new presidents plan is long on context and short on specifics. It will be awhile before we know whether he will follow the usual Democrat line. How will he create fair dealing for instance? It seems to me that an attempt to make things fair is what got us into this mess in the first place. What exactly was it that allowed institutions to be unaccountable…I mean, dont you have to tell the truth about that before any meaningful solution is possible? Well just have to wait and see what the proposal actually entails.
Meanwhile, anyone who has purchased a home in the last fifteen to twenty years has already faced a mound of paperwork, much of which has nothing to do with the loan. Instead this paperwork has to do with regulations. Make work to assure regulators and overseers that certain things were explained to the buyer and that they were understood. The lender is required to explain the cost to the buyer for making the loan, whether or not there are prepayment penalties, the amount of money the buyer will actual pay over the course of the loan, how interest rates work for ARMs, etc. Its difficult to imagine what more will be required of lenders if they are to le3nd resposnibly.
Will Obama create workable regulation and will these regulations solve the problems? How will he handle breaches in current regulations that apparently occurred with Democrat Congressional approval? What will he do about politicians and executives who exploited lending institutions, either for political reasons or for their own personal gains? Investigations are ongoing but so far none has been prosecuted or censured at least not with any fanfare. Barney Frank has kept his chairmanship, for instance, even though his refusal to heed warnings from the President resulted in failures at Fannie Mae and Freddie Mac. Community organizers and political operatives have been allowed to intimidate lenders with impunity forcing them to choose between threatened lawsuits and risking meltdown by making bad loans to unqualified buyers.
I hope for the sake of the country our new president is reasonable and wise as he tackles these and other more complex problems. Regulations that support sustainability and profitability are just as important as those that protect consumers. Insisting on transparency makes sense but will only work if those keeping an eye on such things dont play politics and are also held accountable. It may be obvious that some things need to change but I have a feeling that what needs to change has more to do with ethics and unreasonable demands than with sensible business practices. If Obamas propensity is to go to extremes, as his predecessors have, wewill find ourselves in deeper trouble as we move forward.