Wednesday, March 05, 2008

Froma Harrop on the Subprime Mortgage Fiasco

Froma Harrop is right: Henry Potter was, at least, an up front, mean rotten banker: "Nowadays, it's impossible to watch the 1946 holiday movie 'It's a Wonderful Life' and not feel a twinge of respect for Henry F. Potter, the villainous banker played by Lionel Barrymore. Potter was not above drawing the last drop of blood, but at least borrowers knew whom to hate. And if they were late paying, they knew where to crawl."

Froma Harrop nails the problem when she describes the true culprits of our mortgage market meltdown: the brokers who make the big commissions and leave others to pick up the pieces. Good old fashion bankers had to live with their creditors and had a real interest in their making it.

Harrop also names that unindicted co-conspirator too, Alan Greenspan himself: "Former Fed Chairman Alan Greenspan had cheered on the housing bubble that raised home prices to ridiculous levels. And despite the warnings, he ignored the recklessness and downright cons that would inevitably push mortgage market into crisis."

1 comment:

Anonymous said...

This is an interesting article comparing the current situation we are in to the plot in "It's a Wonderful Life."

The most disturbing part of the article and the entire housing market situation is that the federal government and corporations both thought it was ok to put profit margins above common sense and American values.

Selling houses that citizens with poor credit can't afford on their salaries was incredibly irresponsible and now everyone is paying the price.

The only real solution is for everyone; business, government, and citizens to take personally responsibility and make decisions that are economically sound as opposed to decisions that boost their ego, whether their ego is boosted by profit margins or number of full baths in their house.