Republican philosophies colliding with reality: Fannie Mae, Freddie Mac and, now, Lehman Brothers.
You hear it all the time from fiscal conservatives: limited government, free market, no corporate regulation. It sounds good. Hey, if these policies actually worked, I’d be all for them. Why would anyone want an unnecessarily large government? They wouldn’t. So, it’s time to acknowledge that Republican policies, when put into practice, do not materialize in a healthy economy. Today is Black Monday, but there will be many more black days to follow because of the George W. Bush economic policies (which McDumbass will continue).
The Nation, a leftie publication, offers a brief, but good synopsis of the evolution that lead to our current economic shitstorm. It’s an informative read, even if you hate italics:
The housing bubble was the result of the Ponzi-scheme antics of those other financial entities: commercial banks, stockbrokers and hedge funds, which were allowed in a GOP-deregulated market to get into the “swap” business. Through the rampant reselling of loans, the obligation to collect on a loan was divorced from the act of selling it in the first place, so who cared if the recipient of the loan was not at all qualified or the appraisal of the property value was inflated, as long as the paper was traded away, or insured, before the moment of foreclosure?
As with any Ponzi scheme, the perps, who included the legislators as well as the bankers who exploited the loopholes they provided, expected to bail long before the bubble burst. The role of the legislators, Republican-led but with far too many Democratic running dogs, was critical to the success of the scam.
The mortgage swaps distancing the originator of the loan from the ultimate collector were made legal only as a result of the Commodity Futures Modernization Act, which former Senator Phil Gramm, R-Texas, pushed through Congress just hours before the 2000 Christmas recess. Gramm, until recently co-chair of the McCain campaign, also had co-authored the Gramm-Leach-Bliley Act, which became law in 1999 with President Bill Clinton’s signature. That gem, which Gramm had pushed for years with massive financial industry lobbying, destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies. Those two acts effectively ended significant regulation of the financial community, and no wonder we have witnessed an even more rapid and severe meltdown in housing values than during the Great Depression.
Not surprisingly, Gramm was rewarded for his service upon retirement as a senator and as head of the Senate Banking Committee with a top position at the Swiss-based UBS bank, which is close to drowning in the subprime mortgage nightmare he helped create. These folks have no shame, as was evidenced when the senator’s wife, Wendy, was named a director of Enron, whose roiling of the energy market had been made possible only through yet another provision of Gramm’s Commodity Futures Modernization Act.
Appropriate regulation is key to a healthy business sector that benefits the entire country, not just just the peeps running the show. Even the Democrats won’t tell you that because they are in big-business pockets as well and uninformed Americans have been duped into thinking that regulation inhibits growth. Not so, as proven by the fact that our economy grows more per capita under Democratic presidents.
Republican candidates and fiscal conservatives repeat the myth of trickle-down economics and oppose regulation, increasing the minimum wage and essentially “looking out for the little guy.” What they don’t share is that unregulated corporations collude, allow greed to motivate business decisions, lack transparency and horde wealth at the top, giving CEO’s outragous wages while the same companies’ bottom-level workers cannot even afford health insurance. These policies increase the wealth gap and weaken the middle-class.
Regulation needs to stop being a bad word. Common sense regulation protects the U.S. economy and Americans themselves. It is not bad for a corporation to profit. It is bad for a corporation to profit at the expense of employees and consumers.