Monday, September 22, 2008

More on the Bailout

I had pretty much worked up some thoughts on the proposed bailout of the financial crisis that had nothing to do with the economic theories involved but on what it tells us about the people that are in charge of our economy, but then I found out that Hilzoy beat me to it with most of my same thoughts: The GOP has lost any right to call themselves the “party of fiscal discipline,” they can’t complain about spending anything on children’s health insurance or public education, and the next right-winger that says regulation is red tape and bad for business — or that it’s all the Democrats’ fault — will get a boot in the butt.

There’s another talking point that’s beginning to make the rounds on the circuit, and that’s the “blame the victim” routine. Over the weekend I heard Andrew Sullivan blame the crisis in part on the people who took out huge mortgages to buy houses they couldn’t afford. The basis crux of his argument was that they should have known better.

Well, I suppose you can make that case were it not for the fact that it was the banks and mortgage companies that were the folks who were out there telling these people that yes, you can afford a bigger house; no down payment, no closing costs, pay interest only for the first three years, and everything will be just swell. And a lot of people bit on it. After all, most people thought that the banks were the places where the grey and humorless lending managers would look over their finances and tell them NO; all of a sudden they were getting Yes! with candy and a stripper. If the banks were behind it, what could go wrong? Besides, it’s part of the American Dream to aspire to have more; “living within your means” sounds, well, un-American. But whatever it was — deregulation, greed, or the knowledge that there’s one born every minute — that inspired the banks to come up with these hare-brained schemes for sub-prime mortgages and E-Z credit, they are the ones to blame and now they’re begging us to save them. Should have known better, right?

Meanwhile, I’m sure we can count on Rick Davis, the McCain campaign manager, to share his insight on how to put some re-regulation back into the banking industry. After all, he was paid so well to take it apart; he should know how to put it together again, right?

We will, of course, end up doing something about it and we — the taxpayers — will be paying for it for years if not generations, but if I had my way, every CEO or CFO of every bank that gets a dime from the Treasury for the bailout should sell off their big houses in the Hamptons or Key Biscayne, be put on a salary that can’t go over $75,000, and that they be required to take some courses in credit counseling.

Oh, and if they’re looking for a house, I know of a 2-bedroom bungalow in Coral Gables that is still vacant.