aTypical Joe: a gay New Yorker living in the rural South

Saturday, April 05, 2008

The financial crisis: do you understand it?

I’m betting you don’t. I know I don’t. And I’d be skeptical of you even if you claimed that you did understand it. But I’d want to pick your brain. And I’m sure I’d enjoy the conversation.

I found Thursday’s Fresh Air interview with University of Maryland Law professor Michael Greenberger on the sub-prime mortgage crisis, credit defaults, and the shaky future of other types of loans to be particularly enlightening.

He was not very hopeful about what we can expect from the U.S. financial markets in the near future. I recommend we all listen up.

The passage I choose to quote is about our lack of understanding:

If Franklin Delano Roosevelt were president right now, we would understand… There would be a fireside chat. We would make it so that the American public understands it. And it’s important that the American public understand it because, even as we speak, the Wall Street interests who have all the money in the world to hire lobbyists are lobbying 24 hours a day, seven days a week, 365 days a year, 366 in leap year to keep this market what we began our discussion with, a shadow market that nobody understands.

And what they tell Congress is, `Look, these are complicated things. You are not smart enough to tell us what to do.’ But the fact of the matter is, what we have seen is these guys aren’t smart enough to be able to carry this thing off without regulation. They’re losing money hand over fist, and, of course, the saddest fact in all this is that when these CEOs lose the money, they’re fired, but they walk away with hundreds of millions of dollars in severance packages. And when Bear Stearns collapses, the Fed is prepared to have taxpayer money thrown in to rescue the institution, but no money or relief goes to the person whose mortgage has been foreclosed.

RELATED: You might guess that Greenberger is no fan of Phill Gramm. Co-chair of John McCain’s campaign, Gramm’s also the man most responsible for the repeal of Depression-era banking regulations that have led directly to much of today’s economic mess.

Over at The Moderate Voice, Shaun Mullen calls him McCain’s Terrorist In Pinstripes.