AOL is featureing one of those pro-activist, really pro-Obama, puff pieces by the Associated Press today. The story is about an "activist group" (the HEROES of the piece) who engage in confrontational, "in your face" tactics to stop loan foreclosures--fighting Goliath lenders like Countrywide (the VILLAIN of the piece). Here is a line fromt he story illustrating the "approach" of the story:
"Years before the rest of the country was rocked by the fallout from aggressive lending"
No one despises banks/morgage companies/financial institutions more than I do. I used to sue them, and the way banks operate is bouth bureaucratically uncaring (when you think about that, think about how much MORE bureaucratic and uncaring the bloated Federal bureaucracy is that so many people want to keep adding to, with--for example--compete contorl of health care) and stupid.
Doesn't matter. The AP story is PROPAGANDA pure and simple. People WANT banks to be "aggressive lenders" when they want to buy a house. Otherwise, many people would not be able to buy the house in the first place. This, despite the despicable Associated Press, is NOT a "fallout from aggressive lenders". It is the fallout from the bursting of the housing "bubble". Similarly, the LOSSES and banruptcies follwing the 2000 dot.com collapse were NOT the result of "aggressive lenders and Wall Street brokers (although such always exist). They were the result of the BUBBLE bursting.
As I was saying, the dot.com collapse (companies bankrupt and a stock market CRASH--with massive losses to stock market investors) was NOT the result of aggressive lenders and greedy Wall Street brokers/financial institutions (common as they are). It was the result of a BUBBLE bursting. The same thing happened in 1929 (Black Friday).
These BUBBLES are ALWAYS the same. They are the result of "irrational exuberance" (the old Greenspan phrase). Everyone gets caught up in the euphoria (in the case of the housing "bubble", both lenders and home buyers). It can't last.
The MISTATKE is to "bail out" the people who made irrational decisions becaue of the "bubble". We did not (gererally) bail out people in the dot.com "bubble" collapse. It just ENCORAGES irrationality in "bubbles" to bail out both lenders and borrowers when these bubbles collapse.
Yes, banks SHOULD work more with people. But this idea the government should "protect" us all--lenders and borrowers alike--from our own irrationality is DANGEROUS. It can sink us in the end.