How did we get into this mess?
By Frances Marie Smith
Pat Buchanan stated that we must now begin to explain to the America people the details on how we got into this economic melt down. If the media begins to explain this in truth then lets begin in the late 1990s. I happen to attend the Congressional Black Caucus events and the Late Congresswoman Stephanie Tubbs-Jones of Ohio and I were in a discussion dealing with predatory lending. Well, I understood basic economic concepts and principles and realized that her crying in the wilderness would not change the nature of the beast. I said "Congresswoman Tubbs, if Wall Street can't make money they will not lend."
After examining the debates over affordable housing and news reports that focused in on how mortgage companies were taking advantage of the elderly when it came to their only major asset, the rules of the game were change and now Wall Street came out with a product called "Sub prime" mortgages. These mortgages didn't just target only the elderly, who were the first victims of this dilemma, it targeted the masses—rich and poor alike.
Who’s guilty?
"EVERYONE" not just Wall Street on this package, but Congress and other grassroots organizations who didn't have a clue on the mathematics of it all. While in Dallas, TX I have been exploring various development opportunities and I noticed that one area of the City is growing rapidly while other areas are declining. But it all boils down to the same concept; where there is no profit, there is no development. Since, there is no profit in affordable housing folks Americans will only have a "bait and switch game".
Until there is profit in affordable housing, developers, banks and others will not put the time or efforts into making the American Dream - owning a home a reality for many Americans. The party is over, and now many Americans will feel the pain of this entire meltdown. I have seen these types of cycles time and time again and the American public gets "Hoodwink" every time. Until the Federal Government can create the tax-credits as well as municipalities and states begin to streamline some of the bureaucracy then, nothing will change when it comes to homeowner ship.
Examining steps in the right direction now:
The Federal Government can create - Affordable Housing Zones - (AHZ): would create
1) Tax Credits for Developers
then - Municipalities must examine the "Best Use" for the land with a comprehensive plan as well as a master plan approach -
2) Developers must create Communities that allow for a step-up approach in housing
a) lease options and/or bond-for deed allowing the tenant the opportunity to move up
b) step-up provisions if the potential homeowner wants to move up within the Afforable Housing Zone
3) Streamline the Development process so that developers can create well "thought out" communities that include transportation needs, schools, health care and other mix use needs
Other entities
4) Non-profits need to handle home buyer education and training, on going conflict resolution, daycare and other social service needs under one umbrella.
5) Place all of the bad assets in a Trust like that of the RTC
6) Consolidate the banks, mortgage companies and bring back Glass-Speigal Act. - only the strong should survive.
7) Change the mark to market rules now.
Examine the offshore revenues in the insurance industry. The insurance companies will come before Congress but their balance sheets only reflect what is on US soil and not off.
So, we must now go back to the basics in America. Again - Home ownership Education is key. Whenever the herd is coming through the gates you must get out of the way of the stampede. The Economic melt down is a result of what I call the "HERD Syndrome" . The HERD Syndrome allowed any and everyone to take part in the market place no matter what by any means necessary. Many of the speculators and homeowners must share equal blame along with those on Capitol Hill and wall street. My question to you is this… "Who was watching the house folks?" No one! I am not making the case to deny Americans access to building assets but I am saying that we must be responsible and/or good stewards over the assets we are about to receive. The Tale of two dilemmas - Corporate Tale is one of only greed and profits. It’s the "ALL ABOUT ME SYNDROME". Corporations such as banks, insurance companies, Realtors, builders and mortgage brokers get together and literally scheme on how to take your money from you. They go on trips and don't deal with the ethical behavior of operating a business, they only deal with the bottom line which is profits. If the Corporation makes an error then they go to their LOBBYIST, who in turns comes to your elected official and brokers a deal to get a bailout which is UNCONSTITUTIONAL. (please read your constitution folks).
The American Taxpayer Tale -is gullible, sheepish and wants to imitate the Corporate CEO by living large. They don't have a clue to the bait and switch that they are being lured into. Once the American Taxpayer wakes up, then we have "Shay's Rebellion" at the voting booth.
So, until we begin to place ethics back into the way we do business in America, then nothing will change. Americans will continue to fall prey to those in Corporate America and when the deals go down, the American Taxpayer will always be left holding the bag.
Alan Greenspan and Warren Buffet were delusional when they thought that the Corporate CEO was going to back off of their Compensation packages. I listen to both of these men testify as to the CEO compensation packages being way out of line. It’s the board members who are guilty for betraying the trust of the shareholders. Instead of board governance, board members allowed CEOs to get away with bad management. Congress needs to bring the board members before the "Mighty Throne" of Government. Not just the CEO. CEOs can't make decisions without someone placing them in check. The boards of these companies have failed the American people and they need to deal with this dilemma front and center too.
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