President Bush is finally addressing the concerns for the economy due to the mortgage meltdown crisis. It isn't much but, again, what to do and to what extent are difficult decisions. How much do you reward bad, risky behavior and to what extent do you allow such risk to undermine the entire economy?
The time for action was back when we all watched the mortgage industry seducing homeowners with promises of easy money, no closing costs, no paperwork, and low interest rates. They were their own worst enemies, taking advantage of a GOP Congress and Administration solely concerned with corporate profits. No one was looking out for the consumers who were getting fleeced. No one warned them these were foolish choices.
Not everyone is savvy when it comes to finance. Most people should understand it isn't smart to use your house to finance your car, SUV, or Christmas lists. People did so however. They were bombarded on television with commercials from Ditech and all the other banks: eliminate your credit card debt quickly and easily with one simple loan. It was stupid but Americans did it to the tune of billions of dollars.
There should have been some regulation to provide disclosures that this was poor financial decision making and what the potential consequences could be: losing your home for that Explorer, plasma TV or vacation. People chose their consumer goods. This wild spending is what fueled the economy under Bush. Without it the recession would have continued and unemployment would have been much worse. As a result he was living to live with the risk that this could unravel and take the country's economy down. Bush bet it would happen under the next president and not be his problem.
Now it's here and the effect economically could be devastating. Housing and construction resonate throughout our economy and will affect almost every segment. It's a result of bad decision making not only by the bankers and homeowners but by our lawmakers in Washington who refused to reign in the madness. Let's remember the bankers who only saw huge profits and leveraged these loans into securities and traded them through hedge funds for huge profits. Let's not let them off the hook.
The tough decisions are where to draw the lines. At what point is saving the economy better than rewarding risky financial behavior? Let's be sure they make the correct decisions.
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