Lessons From Crash and Resurrection
"The fifth major federal bailout this year--after Bear Stearns, Fannie Mae, Freddie Mac and the American International Group--is now in the works," said The New York Times editorial board this past Saturday. "Taxpayers have every right to be alarmed and angry. The latest plan is not necessarily a bad one, and officials had to move quickly to prevent credit markets from seizing up. But make no mistake, this crisis could have been avoided if regulators had enforced rules and officials had dared to question risky lending and other dubious practices."
Two headlines yesterday add fuel to the fire in my gut. See the hyperlinks below:
"U.S. weighs bailout of foreign banks, too"
--International Herald Tribune, Sept. 22, 2008
"Big Financiers Start Lobbying for Wider Aid"
--The New York Times, Sept. 22, 2008
The Customer Comes Last
The name of this e-zine is "Business Common Sense."
Common sense dictates that while politicians, bankers, regulators, traders, consumers and the media are all pointing fingers at each other, the underlying problem is a sick culture where tens of thousands of sleazy executives in the financial world--and the dirty sales people who did their bidding--created giant business models based on screwing customers, clients, their own companies and their country. Two examples:
* Subprime mortgages. No need to rehash this one. Not only were consumers encouraged to lie about their incomes and net worth to get in on the real estate boom, but when it turned out they couldn't make their monthly payments, those consumers were left to twist in the wind. When my wife, Peggy, and I bought our house in center city Philly, we kept receiving letters from this and that finance company announcing that it was now the mortgage holder and payments should go here rather than there. I never understood it. Peggy, who runs the finances, paid off the mortgage early. We want nothing to do with these creeps.