Theres been so much talk about the economy lately, that I've been digging through stuff, looking for an answer. Out of no-where an old friend of mine sent me an article that was written in 1999 by an economy writer at the NY Times by the name of Steven Holmes. What came out of it was quite interesting.
You see, in 1999 with the foundation of the National Economic Council, under then President Clinton, Freddie and Fannie weren't doing sub-prime loans. But that year the new economic council and the President decided that owning a home was not a privilege but the right of all Americans. While that sounds nice, its just not true. While I believe all Americans should have the opportunity to own a home that does not change the fact that they should have their personal economic situation postured to undergo such a life change.
Instead though, Freddie and Fannie started doing the sub-prime loans. Banks to keep up with one another started giving more and more out, knowing that Freddie and Fannie were right there to buy them up. The caution that this article advised was that during flush economic times this was not a problem. But, if we were to move into much harder times, then it could cause the entire banking and investment industry to go bankrupt.
Since then, there has been general discussion on whether to modify and or put more restrictions back on the lending process and the mortgage exchange process between banks. Unfortunately it was never seriously heeded and never seriously talked about to the point of taking action.
Who's to blame? Well I think that there's enough to go around. Its not just the government. Its not just the lenders. Its not just the CEO's or the individual loan applicants. But more importantly now though, is how do we get out of this mess. Congress needs to pass a bill now. It needs to cover how we are going to fix this, where the money is going, how it is going to be used, what the purpose of it is, and how we are going to prevent this from happening again.
Most importantly though, it needs to be done now.
God Bless America
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