The Fair Weather Friends on Capitol Hill

The Fair Weather Friends On Capitol Hill

Public sentiment has clearly turned against Wall Street during the painful escalation of the global financial crisis. As government officials across the world pointed fingers at the “Wall Street Fat Cat Predatory Lenders” who were purportedly the cause of this unprecedented financial system meltdown that is threatening to give the Great Depression a run for its money (no pun intended), the golden-parachuting CEOs on Wall Street that collect million dollar paintings and own more houses than John McCain have been under increasing scrutiny.

However, why have we failed to scrutinise the Fair Weather Friends on Capitol Hill and across the globe when they were the first ones to encourage subprime lending and the first ones to run the other direction as things showed imminent signs of collapse? Why have we failed to place at least some of the blame on the ones who actually took out those subprime mortgages and are now opting for bankruptcies that further undermine our entire economy?

When Lehman Brothers and WaMu were on the brink of bankruptcy, why did the US government single these two institutions out to fail when every other failing and flailing company was ‘rescued’? The US government needed a scapegoat and unfortunately, Lehman and WaMu became those scapegoats. There is no doubt in my mind that the bankruptcies of these two companies could have been avoided. However, the Federal Reserve and the US Treasury were amongst the first to panic by failing to provide additional liquidity to the markets. If the Federal Reserve had increased Lehman and WaMu’s liquidity levels, then Lehman and WaMu would not have opted for bankruptcy. People across the world wouldn’t be blaming the US for dragging them through mud.

But most importantly, if the ones who had actually taken out subprime mortgages had made on-time payments in the first place, then we wouldn’t even be in the middle of this crisis now. This article from the International Herald Tribune gives a good overview of the root cause of the subprime housing crisis. The government officials and lobbyists that were fuelling the subprime housing bubble benefitted financially from the whole ordeal as well. They should step up to the plate and own their responsibility in the catastrophe.

For the past few years, we have been building our economy on a shaky foundation. We have been fighting a multi-trillion dollar war that we should not have gotten into in the first place. We have neglected to invest in our infrastructure and are falling behind in the global economy. The US government is becoming increasingly corrupt and increasingly socialist. Almost every law that is passed entails pork barrel politics. The most appalling example: the $700 billion TARP bailout plan that couldn’t be enacted without serving up an array of bacon and ham on the side.

We are labelling people on Wall Street ‘Fat Cat Predatory Lenders’ and lauding the equally irresponsible people who took out subprime mortgages – the ones who are now opting for bankruptcy just because their property isn’t worth as much as it used to be – as ‘victims of greed.’ Meanwhile, the government that ignited this fire is ‘rescuing’ Wall Street. Where is the justice in this?

It’s time for our government to step up to responsibility or forever be known as the Fair Weather Friends On Capitol Hill.

And some of the ways they can do this:

1. Invest in our country’s future. We have become so caught up with policing the world that we are neglecting our own country. We need to pump money into improving our infrastructure, and this includes education, roadwork, and alternative energy. And with particular regard to education, we should definitely include compulsory financial management courses as part of the core curriculum in our schools. Investing in the education of our children is the only way to bridge the growing income gap in America.
2. Politicians have been arguing about healthcare for such a long time. The focus of the debate has been on insurance companies and the increasing premiums that people need to pay. I think the real problem is the cost of healthcare itself and not necessarily the insurance companies. If we nationalise the burden of healthcare, I am positive that the US government will go into further deficit. Therefore, the solution must come from the private sector.
3. Pay off the national debt. Unfortunately, debt has become a way of life for many Americans, myself included. However, it is time we clean up the slate the old-fashioned way – with dignity, with hard work, and with time.
4. Get rid of social security. Every individual should be taking their own financial responsibility. We have opted to live in a society where individual liberty is the most important value and the foundation stone of our community. Why do we even foster a socialist notion like social security? The American people have entrusted their future to the US government, but based on the way that things are moving, I am quite certain that the US government may have to do away with social security in the near future and I am in favour of getting rid of social security sooner rather than later. Just imagine. We are paying so much in social security taxes today. If the US government comes back to us thirty years from now just as we are reaching retirement age and says that they will no longer be able to pay us social security, we would have been ripped off big time. I would rather they refund our social security taxes and allow us to save for retirement on our own. Social security isn’t even inflation adjusted.
5. Deregulation has been labelled as one of the key reasons for the global credit crunch. However, if we are to leave regulation to the Fair Weather Friends on Capitol Hill, just how will things be different? Do we really think that our government is equipped to handle the challenges of the 21st century when they have already failed us so much by leaving us a multi-trillion dollar deficit? They will just create even more catastrophe if we give them the power to regulate the markets some more. Moreover, deregulation was not the cause of the problem. Government meddling was. All of today’s problems could be traced back to the Great Depression, when the US government first started meddling with the free market. Fannie Mae, Freddie Mac, and the social security system are all vestiges of the Great Depression. They are all elements that are weighing our economy down today.


Let’s establish a new long term vision for the US – one that will not leave the next generation bankrupt; one that will create new opportunities for people who never had any – not by handing out money, but by encouraging them to take responsibility and action for their own future.