The Society of the Owned: Hazardous Morals

[marmar]

from OurFuture.org:



The Society of the Owned: Hazardous Morals
By Terrance Heath

June 13th, 2008 - 11:00am ET


--------------------------------------------------------------------------------

Remember subprime mortgages? They've been nudged out of the headlines by gas prices lately, but they — and the crisis catalyzed by the collapse of the subprime market — are still news.

Bears Stearns (Remember them?) is finally, quietly sold to JP Morgan — to the tune of $2.2 billion, with taxpayers kicking in $29 billion via the Fed, to guarantee Stearns' subprime mortgage assets.

Bank of America has been cleared to buy Countrywide Financial (Remember them?), and apparently still wants to seal the deal. (BofA didn't want Countrywide's no. 2 executive, and it only took them about $28 million to get rid of him.)

Meanwhile, more than 1 million homes are now in foreclosure.

We all heard the outcry when, in the midst of rising foreclosures, our government moved to bail out one of the biggest (and most reckless) Wall Street players in the subprime debacle. We know that president Bush backed the move, though he's sworn to veto the supposed foreclosure relief bill that's heading his way after a Senate deal saved it from oblivion. The treasury secretary defended the Stearns bailout again in mid-May. (A "preemptive strike" in light of the impending final sale, perhaps?)

But do of the defenses and explanations why the Fed had to bail out Bear Stears boil down to "love they neighbor"?

Let me point out that whatever you call the Fed's actions dealing with Bear Stearns, J.P. Morgan Chase Co. and the financial markets and whoever may appear to benefit directly from these steps, the fact remains that everyone (taxpayers and non-taxpayers alike) has a stake in keeping the markets running smoothly.

That said, in my view, it is wrong for the Times (or anyone else) to insinuate that using funds obtained from the general public via tax revenues to help prevent such an important sector of the economy as our financial system from seizing up benefits only a few: it actually helps everyone.

If you don't believe me, just consider what might have happened had Bear been allowed to go under. Although a relatively small player on Wall Street, Bear was heavily involved in the financial markets; its demise might well have brought other firms down as well.

And Wall Street's affliction might have spread to Main Street.

The same holds true for the ongoing decline in housing prices. Falling home values affect not just those who owe more than their home is worth or are being forced to sell at a loss, but everyone who owns a home.

For example, all homeowners in a neighborhood are hurt when many become vacant due to foreclosures. Falling property values will depress occupied and empty homes alike, so all homeowners have a stake in the government trying to avert this.

Now, don't get me wrong; I am no more in favor of the government rescuing people from unwise (or speculative) decisions than the next person. But I do believe that we should try to take care of our neighbors, for, in doing so, we will take care of ourselves

Or does that explanation really just trying to have it both ways? Who was more speculative or more unwise, and aggressively so? Homeowners who acquired loans they couldn't afford or didn't understand? Bear Stearns and other Wall Street players when it came to the mortgage securities market? Or conservative philosophy and political actors who's policy moves made the current crisis all but inevitable? ......(more)

The complete piece is at: http://www.ourfuture.org/blog-entry/society-owned-hazardous-morals