Who’s to Blame for the Financial Meltdown (Republicans or Demorcrats)?

Both parties probably have equal blame, but for some reason the current President gets ALL the blame. Let’s not forget that the Democrats have had a majority in the legislative branch the past two years. It would be irresponsible to solely blame them, but face it, what did they do even as they saw the housing market collapse the past two years? They did nothing. Now that it is too late, to stop the bleeding we, the taxpayers, got a 700 billion dollar tax. Anyone who believes that the Republicans are solely to blame because of an unpopular President are being irresponsible and naïve. The housing crisis started a long time ago and some of the fundamental problems that caused the collapse can be uncovered when Bill Clinton was President under a Democrat led government. That was the start of government practice allowing Frannie Mae and Freddie Mac to yield questionable loans to people with sub par credit. Frannie and Freddie are government institutions that got so big, but had absolutely no oversight or regulation. They were run predominately by Democrats and Congressional Democrats did not want regulation. Democrats wanted no regulation of Frannie and Freddie because the felt they were sticking up for middle class America. They wanted every American fulfill their dream of being a home owner regardless of their credit. This pushed Americans to get greedy and live beyond their means. Frannie and Freddie executives felt as long as the housing market kept going up, even if people defaulted on their loans, they could resell the homes at a higher price. However, all this came to an end when the housing market actually declined. It is preposterous to think the housing market would continue to grow at its astronomical rate it has for the past decade. The housing market like any market is suspect to cycles of good and bad times. As Frannie and Freddie led the way, banks followed suit to get a piece of the pie. They too allowed lax guidelines to give out loans to susceptible individuals. Democrats argue that Republicans blocked regulation of Wall Street and financial industry. That is true, but the Democrats blocked oversight and regulation on Frannie and Freddie. It is hypocritical to want Wall Street regulation, but block government regulation. Frannie and Freddie held half of all mortgage notes in this country. If government would have listened to worried Republicans like John McCain they could have prevented half the problem. Now, Congress thinks they are doing us all a favor by passing a 700 billion dollar bail out. It is unfortunate but Congressional bipartisan bickering and blaming is causing the problem. There is absolutely no strategic thinking or planning. The bottom line, Congress, both Republican and Democrats are to blame for the financial meltdown. You can blame the greed and incompetence of the Wall Street brass, but our government led as a poor example.

One thing the government and Wall Street must get under control is the investing in derivatives. Derivatives are risky – they can have great rewards or huge consequences. It seems most of the mortgage loans were somehow wrapped together in derivative investments. Derivatives can show up anywhere. In fact, many people may think they have safe investments, however they can be marred with derivatives.

To make matters worse, the financial melt down just may be the start of a chain reaction. Now, it is almost impossible for anyone with average credit to get a loan. This will force car dealers and other small businesses out of business.