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Posted on May 4 at 7:50 p.m.
This is where ultimately I think Mr. Barofsky’s book utterly and completely fails. True to his prosecutorial background he hunts “the bad guy” and identifies several. But he’s guilty of playing a game of “Eeny, Meeny, Miny, Moe” with the facts all the while bemoaning how difficult life inside the Washington DC beltway is for a valiant crusader such as himself. He says that the government should “break-up” the largest banks but then ends the book by saying, “You can’t trust the government.”
On Bailout Blues at 2013 Economic Summit
Posted on May 4 at 7:45 p.m.
Mr. Barofsky’s thesis that all of this was created by the banks as some scheme to make more money (out of greed) is too simplistic and partisan to have any merit. The ultimate responsibility for any individual’s financial well-being starts and stops with that individual. I wouldn’t attempt to buy a house or piece of property that in all likelihood I would lose because it would be too much of a stretch to afford. The banks would have loaned me the money; they were mandated to. And if I had thrown my better judgment aside and purchased and subsequently lost said property it would not have been the bank or the government’s fault; it would have been my fault.
That's the key element no one seems to want to mention. Point fingers at banks. Point fingers at Regulators and the Government. But in reality it's the greed of consumers and the "J. Wellington Wimpy Mentality" (From Popeye... you know? "I'd gladly pay you Tuesday for a hamburger today") of the average American consumer that got us here.
I was given a copy of “How Washington Abandoned Main Street While Recuing Wall Street” by Mr. Neil Barofsky, former Inspector General for the TARP Program/US Treasury Department and the keynote speaker of this economic summit. It was a quick read, seeing that I was already familiar with many of the key aspects of the financial melt-down and our government’s scramble to stabilize it. What I got from the 270 pages of his book was a good anecdotal first-person Kalnienk view into the TARP program. In my opinion Mr. Barofsky did a wonderful job breaking down some of the complex machinations of our economy but he completely glossed over many key historical facts so he could preserve his main thesis for the book. This was unsettling for you can’t paint something as convoluted and expansive as the subprime mortgage issue (for instance) in a 3-page broad stroke of black and white. In chapter 5 of his book titled “Drinking the Wall Street Kool-Aid” he lost all credibility with me when in discussing the creation of mortgage backed securities and the problem with the subprime housing bubble he never once mentioned the Housing and Community Development Act of 1977. Most importantly he never mentioned Title XIII of this Act known as The Community Reinvestment Act which from 1992 to 1999 was amended 5 times culminating in the Gramm-Leach-Bliley Act. All of these Title XIII laws were signed into being by then President Bill Clinton who sought to make home-ownership a reachable “American Dream” for anyone with a pulse and the ability to sign their name. This was the creation of Subprime lending. Banks were forced to provide subprime loans and carry a percentage of high-risk, sub-prime loans on their books or face discrimination lawsuits such as the one our current President brought against Citibank in 1995, pressing Citibank to write extremely high risk subprime mortgage loans. – Source – http://www.clearinghouse.net/detail.p... Bill Clinton, upon signing Gramm-Leach-Bliley into law said it, “establishes the principles that, as we expand the powers of banks, we will expand the reach of the [Community Reinvestment] Act" - Source: Statement by President Bill Clinton at the Signing of the Financial Modernization Bill, U.S. Treasury Department Office of Public Affairs, November 12, 1999.Subprime was created by the government and then left to the banks to figure out. Banks are “For Profit” organizations and will look for any way to take the opportunities they are given and profit from them. The Government opened the doors and allowed the tight regulations in place since 1933 to disappear. Source - The Nature and the Origin of the Subprime Mortgage Crisis by Thayer Watkins http://www.sjsu.edu/faculty/watkins/s...