It Is Time to Fathom the Collective Folly that Triggered Foreclosure Crisis
It was a collective folly that triggered the foreclosure crisis – the root of the economic slump. The players in the game were lenders, borrowers, investors, brokers, credit firms and regulators. The elected leaders were not above the blame. It is time to fathom their offense that led to the crumbling of the economy like a house of cards. In a weak defense the offenders are now saying that they did what everybody else. It sounds like school children caught doing something mischievous.
The collateralized debt are so complex that even Alan Greenspan (former chairperson of Federal Reserve) said that he found them confusing and bewildering. It is not just these debts but also the collective folly and individual gambles that pulled down the economy. These were not harmless schoolboy’s pranks but it has cost millions their houses, jobs and even old age savings. Three documentaries (PBS stations) focusing on the blame game has gripped the nation on the television. Since the first bailout was announced so much has happened and is happening that it is difficult to keep track of flow of events.
One documentary is named “Inside the Meltdown”. It looks back with harsh reality at what the treasury secretary of that time Henry Paulson did and how he failed. In those September days the economy was on the verge of vanishing into thin air.
In “Frontline” the documentary shows how by refusing to help Lehman Brothers, Paulson was instrumental in starting off the international credit freeze that has since then solidified into hard recession. The investigations made by CNBC, draws a pattern including in it the Wall Street bigwigs, the first time nest builders and the brokers of the mortgage world. Even the mayor of a Norwegian fishing town has not been left out. Nobody has been singled out as the sole culprit but the blame has spread out near and far. However a remorseful Greenspan takes on the blame. This second documentary is more compelling and convincing of the two.
‘Frontline’ builds up brick by brick a convincing case against Paulson relying mainly on facts and analysis given by academics as well as reporters. There is the dramatic shot of a black limousine pushing up to Capitola Hill highlighting the most dramatic moment of the play when Paulson gave out warnings to leaders of the Congress that without a jumbo bailout the financial system would collapse. Senator Dodd (Democrat) recalled, “There was literally a pause in that room where the oxygen left”.
