Posts Tagged ‘credit’
I don’t think there was any doubt going in that it was going to be a grilling session during Tuesday’s Senate Hearings on the alleged fraud perpetrated by Goldman Sachs, but could it have gone any worse for them than getting confronted right out of the gate by an internal email describing one of the products they were peddling as “one sh*tty deal?” Yes, it actually went there, and that tasty morsel became the de facto description of Wall Street’s dealings that would be repeated with vigor all day long. Too bad it will live on mostly as the bleep heard ’round Wall Street, but you know it must’ve felt kind of good for some of these Senators to finally get a chance to call a duck a duck, without having to toe the politically correct line, instead toeing the “your words, not mine” line.
Sen. Claire McCaskill got in on the fun too, she conjured up bookies and enforcers in a fashion that would have made Robert De Niro and Joe Pesci proud, almost putting a forearm to their collective throat wanting to know about the “VIG” aka the “Juice.” The casino and betting analogies would also haunt the rest of the day, much to the chagrin of Daniel Sparks, a Goldman Sachs Mortgages Department Head from ’06 to ’08. He tried to get out of that scrum repeatedly, but finally succumbed in the end, under protest of course.
So what did we really learn? We learned that there are ways to talk for hours and say very little of consequence. We learned that Sen. Levin succinctly summed up the day when he said, “You’ve not answered the question as best you can, so let’s move on.”
But a few nuggets did of course shine through. We learned that the words blame and fault were on the never-ever-accept list handed out by their defense attorneys. We learned that a bonus structure that rewards people extravagantly when they do a poor job is not considered unethical in the world of Wall Street. We learned that “Market Makers” can burn the candle from both ends and have no moral problem with leaving everyone else holding the middle when the flames meet - if they can get away with it. We learned that the art of moving and transforming money itself is our biggest American business, while making actual products and realizing revolutionary innovations are quickly becoming a smaller and smaller piece of the American pie. We learned that going forward, Computer Forensics in Manhattan may be a very good business to be involved in, judging by the chaos and accountability all of those “discovered” emails brought to light. We learned that Wall Street definitely needs a new sheriff in town because they are only wrong if they get caught, and we learned that we better get over this self-defeating political showmanship going on in Congress right now and get some new rules of the road in place for the new sheriff to enforce…NOW!
Daniel Sparks did cough up one hard truth though when he was backed into a corner to offer his thoughts about what went so terribly wrong and almost sent our nation and likely much of the world spiraling into a full fledged depression, after several attempts to not answer yet another direct question, he finally yielded “credit standards got too loose.” That’s it in a nutshell folks, and the way out is going to be a lot more painful than any of us really want to accept.
We all know how disproportionately the monetary wealth in America is distributed, very few have most of it and the many are fighting over what’s left. Unfortunately, what’s left is far too often not enough to go around and so, the credit beast was born. This particular beast is insatiable and it is as sinister as anything a nation can ever face. It is when times are bleakest and at their worst that this beast is fed the most, growing larger and more uncontrollable, gaining in strength and ferocity with every scrap thrown its way. But, eventually, and by design, there will always come a point when the beast’s appetite is larger than the meal you are able to provide to placate it. This reality applies to everyone, individuals, small businesses, large corporations and governments. And once a scent trail leads to you, this beast will always return, wrecking more and more of your life until it gets its meal, or your soul, in full.
Containing and controlling this beast and the inherent mind-set that provides its sustenance, more than any other aspect of our economy, is going to be the Herculean task that needs to be undertaken. And yes, it will take some real modern-day heroes to lead the charge, armed with new, stricter regulations on the free-for-all Wall Street has become for starters. It will take heroes leading by the example of deeds and actions, not empty posturing and talk. Taking responsibility will have to start with the hero in our own mirror and wind all the way up the chain to all of our legislators and not stop until it reaches President Obama himself.
In my view, the vicious cycle the credit beast preys on must be finally addressed. Credit can be wrecked in a day and it can take years to repair, magnifying exponentially even the smallest infractions and turning them into the very impediments that keep people from being able to climb out of the hole on their own. If you lose your job through no fault of your own, you normally start out by draining your own savings nest egg, but this time it wasn’t enough. So you may turn to a credit card to bridge the troubled times, but if those troubled times go on longer than your credit could afford, say because of a global financial meltdown or an event like 9/11 that reaches far and wide, you miss a payment. Now crazy fees start to pile up and the minimum payments quickly get even more out of control, compounding the problem, and more payments become late or missed completely. You’ve tried to find a smaller place to tighten your budget, but the renter asks for a credit report and your report now says you are a bad risk, so you have to cross another place off the list and continue getting swallowed by the mounting debt you simply can’t afford right now. This whole time you are looking for a job, but your potential employers also ask for a credit report. Well, guess what, you are too big of a risk to employ now.
Is it really any wonder so many people just finally give up and give in and end up relying on tax payer dollars to survive? If you’re treated like some kind of common criminal often enough, eventually you start to believe that of yourself and your pride and character have taken such a hit, with no path to redeem yourself visible to you, that you just don’t care any more. But, let’s say you managed to get back on your feet through some kind of divine intervention and pay off your debt, does the social stigma and limitations caused by bad credit vanish as fast as they appeared, not by a long-shot. So how about some kind of Wipe-the-Slate-Clean act that would allow for some type of fast-track path to credit redemption. You want to invigorate the credit markets? You want to help whittle down unemployment? Give people a fair shake at getting back in the game, even if life has thrown things like unavoidable illness or joblessness their way. Give them a reason to hope, a reason to try, and a reason to wake up and take on life again with zeal and enthusiasm. This is not meant for the people that live to game the system, but for the honest, decent, hard working folks that just got caught up in an unavoidable circumstance that could really use some kind of break to get on back on their feet and regain their shattered dignity.
But now that I’ve gone off on a personal tangent, let’s get back to the battle at hand. Since a recent Wall Street journal poll showed almost two thirds of Americans unified in anger that Wall Street needs reform, and we couple that with the fact that we have a bill waiting to be debated in Congress that is 80% to 90% percent agreed upon by both parties, what in the world is the hold up? How can anyone dare to stall just having a real debate about Wall Street Reform in the light of day? That is the only way we can all weigh in with our voices to our legislators if we think the solutions they come up with are off track. The beasts we are facing should have been confronted yesterday, but weren’t, so enough with blind political obstruction already, it’s time some real work finally gets done. After all, isn’t that why we elected them?
Whether you personally like him or not, this much is fact, our democracy chose Barack Obama to lead our nation, and barring some unforeseen calamity, he will be in the driver’s seat until at least January 20th 2013. He sold his vision of the future America should strive for on the campaign trail for almost three years and a majority elected him into power to accomplish it. But he can’t do it alone.
If you think we can wait to address anything of real consequence until 2013, be it the monumental tasks of job creation, Wall Street Reform, Climate Change, Renewable Energy, or Immigration Reform, go back and hide under the rock you call home because you must be crazy or ignorant and you certainly aren’t going to be much help to anyone that thinks the future should be met with progress, not stagnation. Just please quit being an obstacle if you are not willing to be part of a solution and let the wheels of progress turn, hopefully with both parties giving it their all to seize the moment and make tomorrow better for everyone, even for those of you wracked by fear of the unknown that need to be dragged kicking and screaming into the 21st century.
The truth is, the sh*tty deals will all hit the fan eventually, and we’ve seen some whoppers already. It’s time to decide if you want to be in front of it, or behind it, when the sh*t hits again. But, if we can all stand together and not bow to the petty personal things that divide us like race, gender and party affiliations, maybe we can finally put an end to the fan-fodder once and for all.
How good would a day like that feel? As pleasing as a cool breeze delivered by a clean fan on a hot day. Much better than the alternative, don’t you think?
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