Thursday, September 25, 2008

Investment Banking Wall of Shame

With all of the house cleaning/unpacking that needs doing here at Steingruebl World Enterprises, I've had a lot of time to listen to radio coverage of this whole "save the planet by throwing money at investment bankers" mess. It is an understatement to say that I'm angry. Livid. The de-regulators, the greedy investors, the greedy bankers, the irresponsible mortgage peddlers and the overreaching mortgage acquirers. Why is this my problem? How is stuffing the front end of this ridiculous gravy train going to help the rest of us? Yeah, I'm mad.

Let's start with the de-regulators. The initial goal was to make money cheaper so that more people could afford to buy their own homes. Admirable, I suppose. But did we need to make it so easy as to encourage irresponsible borrowing? Not likely. Astute readers will recognize a lot of the names in this fabulous article about our deregulating deregulators.

Next, I would like to point out a few CEOs who, along with their impressive salaries, should be held personally and publically responsible for some of this. I've linked to articles with pictures of each of these goofballs. Not just the guys currently in charge, but also their predecessors who ran their companies into the ground before bailing. Feel free to memorize each of their faces so you can shun them if you get the chance.

Stan O'Neal, Merrill Lynch CEO emeritus
John Thain, Merrill Lynch
Martin Sullivan, AIG CEO emeritus
Robert Willumstad, AIG (refuses his golden parachute)
Dick Fuld, Lehman Brothers
James Cayne, Bear Stearns CEO emeritus
Alan Schwartz, Bear Stearns

And, a shout out to mortgage brokers. Fannie and Freddy, Countrywide, and others. For shame. All the creeps making money off lending more than they knew people could reasonably afford. Just because there is no risk to you doesn't mean it's right. A guy from Countrywide pre-approved us for a ginormous mortgage several years ago, but it looked too financially risky so we stayed renting. A talk with another, independent, mortgage broker confirmed the wisdom of our choice. Not everyone was lending irresponsibly. It's not an excuse. Shame on you.

Finally, I would like to stamp my foot and point my finger at people who who borrowed and bought beyond their means. You knew how much money you made. You knew the terms of your mortgage. You bankrupted yourself and blighted your neighborhood. The fact that "everyone was doing it" is no excuse. Not everyone was doing it. Some of us have showed restraint and for our trouble we get to live with your mess. Once you're done feeling like a victim in this $700 billion crisis, go ahead and feel a little personal responsibility.

I would like to point out that all of this crazy cheap money lying around is largely to blame for the cost of housing. If massive mortgages weren't so readily available, so many people wouldn't be paying so much for so many houses. (Duh!) Now that prices are artificially high and money isn't cheap (or even available) we're in a mess. It's not just these junky securities that need a write-down in value, it's everyone's houses. We're not as rich as we think we are. And because nobody has done anything Wrong, we're all poorer. Capitalism isn't necessarily a synonym for social irresponsibility, we just manage to interpret it that way. Ironically, we let the unscrupulous prosper and then socialize the risk. And the results.

So there you have it. My finger-pointing on the mess for which I'm going to spend the rest of my life (as will my descendents) paying. Not amused.

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