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Hello. Come on in. The daddy writes about current events, literature, music and, once in a while, drops something on you from back in the day to make you pause and ponder, stop and stare, and begin to wonder. Who knows? You may start to pace the floor, shake your head from side to side, then fall down on bended knees in a praying position and cry, "Lawd, have mercy! What is this world coming to?" Check yourself! But this blog is NOT about the daddy. It's about you: your boos, your fam, your hood, your country...our hopes and dreams of a better tomorrow. So let's make a pact: the daddy will put it on the track if you'll chase it down and hit him back. Together, we can definitely take it to another level. Shall we?"

Tuesday, October 7, 2008

The Financial Crisis: Time to Do No Harm

"James K. Galbraith, a professor of business at the University of Texas at Austin, said: "Deregulation has been the public faith of the financial sector since [Ronald] Reagan. Under Bush II, waves of predatory finance in housing were aggressively promoted by Alan Greenspan, by McCain's closest economic adviser Phil Gramm, and by so-called regulators who systematically subverted the public interest...Deregulation was the theme song of the Ronald Reagan presidency, epitomized by his assertion, "Government is not the solution, government is the problem."
--Trader Markets


The daddy will continue to discuss solutions to the final crisis, but today he is feeling a short but very important that was just sent to me. It is written by Verna, who is getting her doctorate in a few moments in Psychology, specializing in business ethics. The article is about the tendency of pundits and financial analysts to blame today's financial crisis on democratic presidential for encouraging the markets to provide mortgages to low-income and middle-income people. Check it out:

The Financial Crisis: Time to Do No Harm
by Verna Monson

In following the recent financial crisis and inevitable blaming, my stomach is roiling. The idea that Democratic presidents – going back to Jimmy Carter – are to blame, and not Republicans and business executives, for pushing through policies to make home ownership a reality for more lower- and middle-class Americans is a cheap political barb. The analysis runs something like this: Anyone foolish enough to have taken out a $300K mortgage with no down payment on a limited income shares equal blame with financial executives who instituted the policies permitting subprime loans. What is hard to stomach about this? Isn’t this also greed -- the same greed that Democrats have tried to pin on Wall Street executives and Republicans?

One could say it’s a simple matter of caveat emptor, buyer beware. Entering into a long-term financial contract where more than half of one’s monthly earnings go to pay down the interest on a mortgage is questionable judgment. But it takes two to close a risky deal. Highly paid and degreed individuals structured the financial policies behind these loans. What is their responsibility in this mess? If the well-known tenet of medical professionals ‑ “do no harm” ‑ undergirded the field of business and finance, could the subprime mess have been avoided?

We need to raise expectations of our nation’s business and political leaders. We want professionals capable of assuming greater responsibility – for more than just the business bottom line. We want professionals who can account for the impact of business on citizens and society – present and future. It is time for us to demand more from those whom we entrust to help us live well, throughout our lives, by safeguarding our investments. It is time for business executives and politicians to recognize the privilege that society has accorded them. With that privilege comes the duty to do no harm.

5 comments:

Cheri T. said...

I agree wholeheartedly with Verna, and it is time to demand more from political and corporate leaders. Unfortunately, while we can demand more, the fact remains that you work for whomever gives you the biggest check.

We all know that money has grased many a palm in Washington and on Wall Street. If there's any chance of affecting change it will have to begin with more strict oversight on the exchange of money. The real question is how can we accomplish this when those put in positions of oversight are usually part of the shell game?--Cheri

rainywalker said...

"Lord thundering Jesus, my son," [a Canadian saying] someone who has the truth in mind and understands what the Founding Fathers tried to envision.

MacDaddy said...

cheri: I've just watched the news; and they said that, upon hearing that they would be bailed out, AIG executives went on a $445,000 health resort, playing golf and getting expensive massages, manicures, and pedicures.

Where is their responsibility?
rainywalker: Yes! Right now, I'm looking at the fact that we need to go back to basics and recognize that the people leading this bailout are the either the same people or the political sons of the people that got us into this problem in the first place and that we shouldn't expect them to do any thing more than come up with decisions except those centered around their privileged positions on Wall Street. Second, our blame for this bailout should fall on politicians: Republicans and Democrats, but especially Republicans. Third, I'm looking at politicians who voted against the bailout and what I'm finding that they are offering bottom-solutions, non-privileged solutions, to a problem created by the people from the top down, from Reagan to the present Bush. Fourth, I'm finding that it's not just the solution but the approach to the solution that will be the key in getting out of this mess. More on this on my posts.

Cheri T. said...

Macdaddy:

Yeah, I just saw the reports about AIG and was in the process of writing an article about it right now. This is criminal and we need to find a way to not only prosecute them, but make the execs pay the back the half-million dollars they blew on the resort gala after they knew the ship was sinking.

This is why I'm not in favor of the bailout. I think Wall Street should have to figure out how to get itself out of the mess it's gotten us all into.

I'm also not sure I buy the Chicken Little "sky is falling" stuff that the mainstream media pushed in the days leading up to the bailout vote in Congress.

Truth be told, we are so deep in this mess that it will take generations to recover.--Cheri

Anonymous said...

Cheri and Rainywalker, Thanks for your affirming comments about my essay.

Cheri, I wish I knew the answer to your shell game question. I think one of the ways we can raise standards is in higher education. In my opinion, a lot of degrees being granted are really narrow and vocation -- not professional. The MBA degree is a good example. Although it is a lucrative credential for many, the end "product" is not on par with a professional degree, such as law or medicine. MBAs do not have to pass a bar exam or take board exams. They also do not have a code of ethics, as most professions do. This is where "do no harm" came to my mind.

It's hard not to look at George Bush as an example of the MBA. While he may have been well prepared to lead a company, in my book, that did not qualify him to be president.

Maybe we need to develop criteria to qualify one to run for public office . . . "must have excellent verbal and written skills."
v