Institutional Greed

Looking at the last few weeks . We had the debt ceiling debate , then came the rating of America's credit . The downgrade . The stock market slide .The signs of instability are there . What astounds me is how quick the US government goes to save the people on Wall Street . For those on Main Street it is always the runaround . 

The Wall Street CEO's cry : " But you know what?
I'm sick and tired of hearing how “we” caused this … how, according to the mainstream media, “we” somehow did this to our financial system."

Obama said a whole lot using the blame game . You and I may agree that and  let's remember one very important point: The vast majority of the credit problems we're dealing with right now stem primarily from two areas:

• Institutional greed.
• And a near total lack of individual responsibility to live within our means.

There's no question that the institutions (both corporate and government) deserve the lion's share of the blame here. At a time when the government perpetuated artificially low rates, it also cleverly created new financial instruments to get the yields it was looking for (absent government paper that would achieve the very same objective) and went merrily on its way). Wall Street was only too happy to leverage the proceeds. And the rest, as they say, is history.
Two of the most notable instances where a different action could have led to a different outcome were:

• Former Federal Reserve Chairman Alan Greenspan 's refusal to crack down on questionable lending practices – despite being given explicit Congressional authority to do so in 1994.
• And the reality that Freddie Mac ( FRE ) Chief Executive Officer Richard Syron was repeatedly warned that financing questionable loans threatened not only Freddie's financial health, but the nation's, too, as early as 2004, The New York Times reported . That placed the U.S. economy in an incredibly precarious position. Indeed, fears that foreign central banks in China, Japan, Europe, the Middle East and Russia might stop buying our bonds forced the federal government to bail out both Freddie Mac and Fannie Mae ( FNM ). [For all the details on these deals, look at the Money Morning report: Foreign Bondholders - and not the U.S. Mortgage Market - Drove the Fannie/Freddie Bailout ].

But all of that is really academic.
Somewhere along the way, the concept of personal responsibility died in this country and is probably buried right next to common sense.
Yes, there were predatory lending practices. Yes, there were huge corporations deliberately skirting the rules to pack on billions in additional profits. But at some point, people had to sign on the dotted line.
While I truly feel sorry for the people who honestly didn't know better, or for whom there was no other option, I cannot extend my sympathies to others like my neighbor who spent through his home equity to buy a Hummer, a new boat, two jet skis, and a lavish European vacation.
He's now about to lose his toys – and his home – not to mention his marriage.
Nor can I extend my sympathies to the modern robber barons like the corporate chieftains of Fannie, Freddie and the other bailout candidates – who pocketed millions while shareholders lost billions.
I don't see any of these guys offering to return their bonuses, or to forgo their “ golden parachute ” severance packages, to help their former employers pay off the debts they helped these companies accrue. And forget about them reimbursing the U.S. taxpayers, who are stuck with the bill for cleaning up this mess.
No, instead these ex-boardroom warriors are now lying low somewhere in Old Greenwich, out at The Hamptons , or out on their yachts somewhere – until the storm blows over. Then they'll receive multi-million dollar advances to write so-called “kiss-and-tell” expose books that document the darkest days of the U.S. financial system. Or they'll go out on the public-speaking circuit – at $100,000 an engagement, or more.
No doubt they'll frame themselves as victims, or as valiant warriors in the capitalist struggle, positioning themselves as financial innovators whose efforts were hamstrung by circumstance, or just plain misunderstood. Whatever the path they choose, you can bet your final 401(k) dollar they'll come off as “heroic,” as they detail the all-night meetings, frantic transatlantic phone calls or eleventh-hour negotiations that were part of the attempts they made to bring their companies back from the brink.
That none of these efforts worked … well, in true U.S. fashion, they'll just say it wasn't their fault.
The whole situation is unbelievably galling.
What I'd really like to see is a book about how everyday families are making it – or trying to – despite the overwhelming irresponsibility of a very small portion of our population, and some financial-market miscreants, who have saddled the rest of us with $14 trillion in debt.
A book like that would really mean something.