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Laura Rowley Money & Happiness

Laura Rowley, Money & Happiness

'We're All Hosed': A Wall Street Insider on the Economic Crisis

by Laura Rowley

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Posted on Wednesday, October 15, 2008, 12:00AM

Earlier this week I interviewed a veteran banker at a major Wall Street investment firm, seeking an insider's view on what caused the current economic crisis, what life is like for people on Wall Street, and what's ahead for the economy.

On condition of anonymity, the banker provided a blunt assessment of the risks taken, mistakes made, and the toll of the financial destruction. Here are the highlights:

Q: What's the cause of the economic crisis from your perspective?

A: There is an awful lot of blame to go around on Wall Street, in Washington, and in the irresponsible behavior of individuals. But stepping back, the critical error was that everyone [thought] there would not be a substantial, nationwide decrease in real estate prices. The whole subprime debacle was predicated on the fact that people said, "Well, this borrower is not really credit worthy and can't afford the house, but in four years it will be up 20 percent or more."

It was widely believed that if you had bad mortgages from different geographic areas that all those [real estate markets] weren't going to go down together. You had a pool of 100 bad mortgages from borrowers with low income or bad credit, that were each a piece of [expletive]. The idea was you put them together and now it's not a piece of [expletive]. People believed that through geographic diversification you can diversify risk. That was what undergirded the entire breakdown, and this was not a 3-year phenomenon, it was building for 10 years. Fannie Mae and Freddie Mac were absurdities; those firms were recklessly and incompetently run.

Q: What role did the rating agencies play?

A: The rating agencies facilitated this by giving investment-grade ratings to the securities. In the stretch for yield, you could [buy] AA-rated corporate bonds and earn 50 basis points over Treasuries, but if you bought AA-rated mortgage-backed securities you'd get 150 basis points. From the buy side, there was a real breakdown in their fiduciary obligation, because they overly relied on ratings agencies and didn't do their own research.

Rating agencies are incredibly powerful; you can't do debt financing without them. You have to play by their rules. They hold themselves out as these objective providers of ratings advice, but they are human beings, and [rating structured finance deals] was a higher-margin profit [center] for them. But I think [the bad ratings] were more due to sheer incompetence than being bribed.

Q: But weren't these the so-called "smartest guys in the room"?

A: These are not the smartest guys in the room. The ratings agencies don't pay as well, so people working there are using it as platform to get on the Street, or they work there because they're tired after a career on the Street, or they couldn't get hired on the Street.

Q: But wasn't leverage the real problem? Lehman was leveraged about 30 to 1 when it collapsed.

A: The investment banks were imprudently leveraged, but what killed Lehman and Bear was they had bad assets. You can survive a painful downturn -- and believe me, de-leveraging has been painful for everyone, but you can survive. Wachovia was only levered ten times, but had terrible exposure [to bad mortgages] and therefore couldn't raise capital. In hindsight Lehman shouldn't have been leveraged 30 times, but in a bull market having [a leverage ratio] of 25 times is not necessarily crazy. The real issue is asset quality.

Q: What's your view of the government's $700 billion-plus bailout?

A: I think Paulson was well intentioned around the notion of moral hazard, but he was wrong. I think if he could redo it, he would have saved Lehman. The devastation of Lehman failing -- the implication of their failure is hard to predict. I think you're seeing it play out in the stock market and the credit markets; I think you're going to see some hedge funds go out of business. Some of it has already been made public and some will come soon, but there are a lot of implications of Lehman reflected in the capital markets.

Q: What about the move to backstop the commercial-paper market and guarantee money market funds?

A: I think it's unfortunate, but it's one of the situations where the government has to step in. You've got to have confidence in the basic functioning of the banking system. The risk borne by the government is quite small, and the benefits are incredibly high. Unlike industrial companies, where bankruptcy works well, it does not work well at all in the financial system and Lehman is a poster child in that regard. If you're one of the big car companies and you go bankrupt, you can keep making cars; it's an ongoing business. With financial institutions, so much of what you do is predicated on confidence -- business literally evaporates overnight.

Q: What do you say to the taxpayers who didn't participate in the borrowing frenzy of the last few years, who saved diligently and are now paying the price with their tax dollars? And who may have to pay it again when the baby boomers retire and the government raises taxes to bail out people who haven't saved?

A: I also lived very conservatively and did not borrow, and I think we're all going to get hosed. But the reality is it's in our interest that the economy doesn't melt down. I'm a right-wing free market [supporter], and the last person to ask for government intervention, but if we allow a breakdown in the financial system you're going to have a depression. It's like the military -- incredibly expensive, but the cost of not doing it is far worse.

Q: What about the characterization that the greedy Wall Street bankers made their millions in the boom and left others holding the bag?

A: Everyone on Wall Street wants to make as much money as he can -- we're not missionaries. But no one thought, "Let's do this loan because we know it won't blow up for a while, and we can get fees today or get this year's bonus." Because everyone knows his stock position at a firm is worth far more than this year's bonus.

Look at the stock prices and the value of Bear, Lehman, Merrill, Morgan Stanley, Goldman, Deutsche Bank -- that's hundreds of billions of dollars evaporating, and a good chunk of that was owned by employees. For most employees that was the majority, and in some cases all, of their net worth, because of deferred compensation. People read these big numbers that bankers make in good years, but much of it you don't have yet, it's locked up for three to five years; you thought you made $2 million but you actually made $1 million. It's huge value destruction for people who work on Wall Street.

There are thousands of unemployed bankers with no prospects to get a job. And on Wall Street, if you're out a year or two, it's as if you never worked there. There's a real bias toward young people. If you're in your mid- to late 40s and you're shot, and you don't get a job in 12 to 18 months, you may never work on the Street again.

But I don't feel bad for anybody on Wall Street, because we knew what we signed up for when we got the job. No one complains in the good years, and you have to live your [financial] life accordingly. The guys who bought big houses or a second house or who lived a lifestyle they couldn't afford -- some of those guys have a very tough next couple of years, because they'll be caught on the wrong side of the spiral.

Q: What do you see ahead? Should long-term investors be buying equities?

A: I think the equity markets will recover before the credit markets will. I think you're going to see much more cautious lending. The U.S. continues to have the best, most innovative workforce, and the core fundamentals are good. There could be more legs down, but over a long period of time as long as we maintain our free markets and have reasonable capital gains taxes and a framework where risk-taking is rewarded, you'll still get the best risk-adjusted rewards in the U.S.

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  • Deedubyah - Friday, October 24, 2008, 4:56AM ET  Report Abuse

    • Overall: 1/5

    This guy is dumb. he is another half-wit that got up onto the "Street". We are hosed? This isn't that bad yet. we certainly are still waiting for the return of 1929. And we made it through the great depression. So unless our financial troubles today are worse than those of 1929 then we will survive and we will NOT be hosed. here are a couple of problems that will arise from this. 1. The government is pushing a socialist agenda. If Obama becomes president, he will all but ensure that it comes to pass. 2. Responsible bill paying, cash saving taxpayers are going to take the hit for all the stupid people. we are already paying for many golden parachutes as execs are getting ready for the "bailout". All that has happened is that teh government now owns a rather significant amount of the private sector. They own AIG, and are buying stocks in banks, insurance, and with Obama, socialized medicine. 3. any financial guy who speaks doom and gloom is a waste of time. investing is not a day trade sport for most people, and even if it is for you, this would be like surfing in hawaii. amazing waves. lots of gains, and many wipe outs. the market will recover, and when it does, all these clowns will be there saing, i was saying it all along. 4. Dont scare people any further. fear has crippled the market with huge gains and losses. let people calm down and spend their money. Everyone wants to spend money. Simple direct reasoning supporting a market recovery.

  • Yahoo! Finance User - Friday, October 24, 2008, 12:24AM ET  Report Abuse

    • Overall: 3/5

    Some ramblings: Basically, this is again using fear to implement control. The government scared everyone (mostly politicians) into believing the nation would crack without 700 Billion. It's another step towards "Big Brother". We will one day put our money in the national bank, purchase a national car, fly on a national plane, shop at the national grocery store, etc. The plain truth is everyone would have survived. The folks whose home had been foreclosed would then turn around and rent (plenty of rental units available). In fact, they probably could have turned around and rented their McMansion for an even better price than they'll be paying. I believe we will be facing significant inflation and the country as a whole will be in far worse shape. Unemployment will rise to record levels (on a percentage basis, not like the crap they were feeding us about the stock market). Yes, the stock market did break records on a point basis, but not on a percentage basis, which indicated to me things weren't that bad. All of these so called "Bankers" and their cohorts (all the way down to the appraisers, etc) should be prosecuted to the full extent of the law. Should the Law choose to stop turning a blind eye and/or covering up this massive fraud. I bought my home responsibly. Pulled money out of the stock market well ahead of time. And yes, I am incredibly pissed off that groceries cost nearly twice as much as they had less than two years ago. And yes, I am pissed off that I paid and am still paying more for gas than I should be. And yes, I am pissed off that owners of the biggest American companies get paid for driving the companies into the ground. And yes, I am pissed off that MY money has to go to help airlines, Amtrak, banks, car companies, and rest of the people that don't know how to run their company. There is no Free Market when the government is ALWAYS there to help.

  • Yahoo! Finance User - Thursday, October 23, 2008, 9:09PM ET  Report Abuse

    • Overall: 3/5

    1) The responsible consumers will pay for the IRRESPONSIBLE borrowers mistakes for years to come. Being a responsible spender and saving money gets you what - NOTHING, NADA, ZERO, ZIPPO ...---- .2) There is talk that Social security payments will be means tested - meaning if you have any money, you get very little in benefits. ----- 3) Politicians and socialist FDIC ( by the way, since when was the FDIC given the task of carrying the socialism flag ?? ) are falling over each other to forgive loan balances and reducing interest rates ( INDYMAC banks irresponsible borrowers are getting as low a rate as 3% for 5 years and then only 6.5% max for the remainder of the loan as well as loan forgiveness ). Now that the banks are partially owned by govt, it all comes out of taxpayer money. ----4) What WILL THE RESPONSIBLE BORROWER GET - nothing. OTHER than the PRIVILEGE of PAYING FOR THE IRRESPONSIBLE NEIGHBORS McMansion and BMW payments. Thanks you FDIC, thank you govt. Thank you both candidates.

  • David R - Thursday, October 23, 2008, 10:42AM ET  Report Abuse

    • Overall: 1/5

    The smartest guys in the room weren't at the banks either. They were at the hedge funds; the hedge funds were buying the junk-grade CDOs from the banks, but not the AAA-rated CDOs cause they knew it was junk too. Which caused the market for the AAA-rated CDOs to dry up. So what did the banks do? They bought it themselves and put it on their own balance sheets. Idiots.

  • Yahoo! Finance User - Wednesday, October 22, 2008, 8:31PM ET  Report Abuse

    • Overall: 5/5

    An excellent article. But what kind of recovery are we going to have? Are retiring people going to continue risking their savings in this market? Can we see a recovery when the lending facilities are now super cautious? How does this compare to the 1930s? Here's some good reading. http://www.longwavepress.com/Baby_Boomers_Generation_X_SCv1a.pdf

  • StevenL - Wednesday, October 22, 2008, 8:28PM ET  Report Abuse

    • Overall: 1/5

    I really thought the article stank. It only said what any Wall Streeter would say. A lot of pap and repetition of what is being said in almost every news article. The real truth is that this Country is in uncharted waters and could still melt down. Things will not get better very soon and while they are bad the stock market could easily equal the 1932 lows which were 1/8th of the highs. That would bring the Dow Jones Average to about 2000. This sounds impossible, but as one business after another fails there could be waves of selling and then more selling. Remember you do NOT own a company with stock shares, you only own a worthless peice of paper. That peice of paper is valuable while you TRUST the company and its management. Now there is no trust, and management has been provnbe to be dishonest with stockholders. So why hold this worthless paper even if it means you must lose half your money?

  • J - Wednesday, October 22, 2008, 6:25PM ET  Report Abuse

    • Overall: 3/5

    The Drug Dealer - User analogy used before does not in any way represent this crisis. Let me suggest this question - if someone ways a slab of steak over your head, and your starving to death, what do you think your going to choose? Duh. Now, if you were told beforehand that your going to have to pay for that steak later on, do you think you're going to care (remember - your starving)? So who is responsible? The lender or the receiver. Let me think - one has professional training and the other doesn't. By the way, Drug Dealers do the same thing. They give it out for free (especially to the ignorant - like kids) to get you hooked. Then they charge you later on because they know your body needs it or you experience withdrawals. To say that the user is the only one at fault is BS. They both are. Is a child to be blamed for taking something handed to him for free? Especially in this case, they aren't. The only way I can conceive of this analogy being compared to this situation is that the bankers and lenders (not to mention the multimillion dollar self-prescribed bonus executives) knew what they were doing, despite the questionable moral outcome their experience and training should have told them (in other words, it did.) As for Wall Street, they knew what they were getting into when they signed on. The rest of us can see the invisible ink insignia of YUPPY on their contracts. Of course they complain about being left with a minor fortune, their yuppies, remember, poor things NEEDED that extra million tacked on! Yes - we're all going to "get hosed" because a bunch of noose-neck yuppies on Wall-Street pushed their 'dimes and nickels' game too far over the edge of their billion dollar desk. Congratulations to them on on going away with 'only' "$1 million", as millions of people will no longer be able to retire. Excuse me, those criminals on Wall Street (yes, CRIMINALS) are too busy sipping from their virtual paid Pina Colada's on a cruise ship to Cancun to be reading this. I'm only wondering when Americans (as a WHOLE) will actually get 'fed up', stop complaining, and do something proactive about it. (Like not allowing executives to use TAXPAYER bail-out money for $100,000 bonuses.) But remember, they didn't want to use taxpayer money- and they did anyway because many senators and congressmen were facing the possibility of not being able to retire to a four-story mansion in Europe. Deal with wolves and your bound to get bitten.

  • David - Wednesday, October 22, 2008, 5:49PM ET  Report Abuse

    • Overall: 1/5

    What a load of crap. More spin from a guy who should probably be in jail...

  • Yahoo! Finance User - Wednesday, October 22, 2008, 5:01PM ET  Report Abuse

    • Overall: 3/5

    I wonder why nobody out there brings up the possibility that this was a controlled melt down. Gee, the great depression was planned and resulted in the creation of the Federal Reserve. Worked out great for the power elite. What about NAFTA and the Amero, did those two just fall of the map? I doubt it. Not like our media is propaganda or anything. Things like this are planned for a broader purpose. I'm sure just go ahead and ask any of the power figures who attend the Bildeberger conferences, they all know whats going on. I bet you none of those people got fleeced. How bout the fact that option arms have not been mentioned once in anything I've seen. 70% of W Virginia has an option arm that will adjust in the next 2 years.....which means 70% of W Virginia is heading towards foreclosure alone. Ask the Rothchilds and the Rockefeller's how much money they didn't lose. Wake up America, the writing is on the wall of the Denver airport dedicated by the New World Order airport commission. We have an armed military in the US here to militarize US citizens that started in October of this year, we have German style concentration camps in every state, and everything has been cleared by congress to institute Marshall Law in the US.

  • Hunkar - Wednesday, October 22, 2008, 4:34PM ET  Report Abuse

    • Overall: 5/5

    I love you Laura, you are the only one who tells the truth.

  • Yahoo! Finance User - Wednesday, October 22, 2008, 3:09PM ET  Report Abuse

    • Overall: 1/5

    Thank you, rwl10267 - well said.

  • Paul P - Wednesday, October 22, 2008, 2:50PM ET  Report Abuse

    • Overall: 3/5

    Why is not the cost of Bush's failed wars included as a cause of the recession? Literally trillions of dollars thrown away for nothing! That has to have a large effect.

  • wcoastjosh - Wednesday, October 22, 2008, 2:50PM ET  Report Abuse

    • Overall: 1/5

    "[Y]ou thought you made $2 million but you actually made $1 million." Oh its so hard, these poor wall street guys who only made $1 million. HOW ABOUT THE REST OF THE POPULATION WHO MAKES $30-80k!!!!

  • Chris - Wednesday, October 22, 2008, 2:15PM ET  Report Abuse

    • Overall: 3/5

    Alan Greenspan is ON VIDEO telling (I think it was Ron Paul - maybe not) that we did not have to worry about poor credit borrowers, ARMS all that because "rising" home values would cure all. He really blew it - and I don't know if the motivation was not wanting to be a killjoy or that he was actually that naive, but he HAD the power to prevent this (raise reserve requirements, raise rates, restrict loose credit, other banking system regs at his disposal). We don't need new regulations, we need someone with an actual pulse in charge of implementing regulations.

  • Roger Lockhart - Wednesday, October 22, 2008, 1:57PM ET  Report Abuse

    • Overall: 1/5

    An entire Q&A about how we got into this mess, and not one mere mention of the Fed. If the illustrious Greenspan had not sent interest rates South, below the rate of inflation, so that the fed was actually paying banks to make loans, this entire affair could have been avoided. When will we learn that the fractional reserve system based on fiat money and a Fed that is little more than the politicians' banker are the bane of our economic existence?

  • Yahoo! Finance User - Wednesday, October 22, 2008, 1:34PM ET  Report Abuse

    • Overall: 1/5

    Same old story - never trust a wall street banker; this guy is no different; has no clue and does not want to admit that wall street is full of "not smart" but dumb idiots.

  • Auggie - Wednesday, October 22, 2008, 11:34AM ET  Report Abuse

    • Overall: 3/5

    It is way too late and we all are going to be hosed... depended on the Government of Nazi Pelosi and Barney Frankenstein. The end of the Republic, as I KNEW IT. Waiting for the attacks on the homeland by our enemies and the indecision of the KUMBIAH Presidency.

  • zoombag - Wednesday, October 22, 2008, 11:03AM ET  Report Abuse

    • Overall: 4/5

    A good summary piece about the financial mess. Like another commenter, I worked in the mortgage securitization industry, now a portfolio risk manager. Gov't attempts at social engineering via the financial markets is a root cause not often discussed. The gov't wanted to inflate the percentage of home owners above the historical 62-63%. We got to 69% before the blow-up. How? Fannie & Freddie loosen credit and raise mortgage balance maximums. Before 2000, many areas of the country were "red-lined" because people living in those areas had incomes that were too low and credit histories that were too weak to be an acceptable risk for mortgage lenders. Then, between 2004-2007, mortgage lenders were trippig over themselves to finance homes for these same people. If you were a low-income earner who never had any money, and suddenly bankers are dangling $200,000 to $300,000 in front of you, it's like winning the lottery. I blame the bankers much more for taking bad mortgage risks than I do the "Joe six-packs" for taking the money they were offered. Most of the "Joes" didn't even read the mortgage documents.

  • Yahoo! Finance User - Wednesday, October 22, 2008, 10:53AM ET  Report Abuse

    • Overall: 5/5

    I am buying CEFs with remarkable returns right now although that's little consolation for all of my paper losses. I will obviously take some real losses to redeploy what capital I have left. My wish for the future is that some government agency is put in charge of drawing up very, very strict rules concerning derivitives. I'm a little bemused because I was living in Orange County, California in 1990 when it lost $5 B by investing in derivitives through Merril Lynch. Apparently that was not alarming enough to trigger an investigation and stricter regulation in NY or Washington.

  • wgaf - Wednesday, October 22, 2008, 9:10AM ET  Report Abuse

    • Overall: 3/5

    nothing new

  • Rocks - Wednesday, October 22, 2008, 9:06AM ET  Report Abuse

    • Overall: 1/5

    It's the usual drivel from a self-profressed "right winger" who would "be the last to ask for a handout". This is due to a lack of regulation, and dergulation particularly by Phil Gramm. In 2007 the 5 largest investment bank handed out $39 Billion, thats a "B" as in Billion in cash bonuses to itself. I'm so sick of these people blaming this on a few bad loans to disadvantaged people, don't believe it. They are franticly circling the wagons lest their gravy train be derailed. Off with their heads I say!

  • Yahoo! Finance User - Tuesday, October 21, 2008, 8:35PM ET  Report Abuse

    • Overall: 4/5

    Anyone who has been paying attention to the industry knows that the hard core beginning of the end happened in early 07 when the ratings agencies decided to do an about face and drop the rating on all of the non-conforming bonds. Yes, their initial ratings were out of whack, but their downgrades sparked the massive selloff that dropped the bottom out of the market. Nice article... and I appreciate that it didn't have the typical spin.

  • Bob - Tuesday, October 21, 2008, 8:27PM ET  Report Abuse

    • Overall: 3/5

    The soft real estate market which brought about this mess is from a soft job market in early 2000's. It was soft before 911. What bothers me is nobody sees outsourcing as a problem let alone a cause of this Global Economic Slowdown. Now that we way overspent our means as a society, (or should I say say our riches squandered and redistributed around the globe) the government is doing the same thing on a larger scale. This bailout is nothing more than another house of cards like the home equity driven bull market of the last few years. There can not be an ecomic recovery without jobs that pay well enough to support the expense of a home. Thats when real etsate prices will stop dropping.

  • Naots - Tuesday, October 21, 2008, 5:10PM ET  Report Abuse

    • Overall: 4/5

    Good article, the source is most likely as big a douchebag as the incompetent and incapable people he speaks of. I work in the financial industry, though not in concert with Wall St. I had a private meeting with a VP from Merrill Lynch today. 2 of the firms top officers who dealt with and led the mortgage backed securities team told the CEO they had to stop the practice. They were showed the door quickly and new "team players" were brought on board to continue the mess. We reap what we sow, I see everday consumers living beyond their means and they should stop. Wall St. lived beyond their means and we see what has happened. Will Americans never learn? We should all be forced to spend 1 month in a 3rd world country after high school, we might learn clean water is worth more than $1 Billion in equities.

  • Yahoo! Finance User - Tuesday, October 21, 2008, 4:39PM ET  Report Abuse

    • Overall: 4/5

    I work in the mortgage securitization business and have read the actual prospectus supplements containing detailed disclosures to all potential investors in mortgage-backed bonds. In the commercial real estate sector, the investors in the riskiest part of the bonds (the so-called "B piece") did their own due diligence on every asset and cannot blame the rating agencies. The investors that bought the more senior part of the bonds are all institutional investors with a very high degree of investment sophistication (pension funds, hedge funds, insurance companies, banks, private equity funds, etc). Their investment decisions were predicated in part on statistical analysis of historical default rates and potential losses on each defaulted loan (this was the rating agency approach). These investors knew these investments were very risky and that the investors in the lowest rated and unrated tranches of the bond pools would probably lose most of their principal investment, but befoer that they would earn a staggering leveraged yield each year that would recoup their principal investment in 2-3 years. What they did not predict correctly was that the market for trading these mortgage-backed securities would dry-up instantly, like a giant game of musical chairs where there are thousands of players but only a few chairs in which to sit when the music stops. The market was based on the belief that there was such a deep supply of these bonds that there would always be a bid if an investor wanted to sell. The virtually instant collapse of an entire marketplace would have been hard for anyone to predict. I don't feel sorry for any investor in mortgage-backed securities. They fully understood that the subprime borrowers and Alt-A borrowers did not have to provide proof of income and meet traditional debt ratios historically used for many years to qualify borrowers (prior to the development of subprime and Alt-A securitized mortgage financing). These subprime and Alt-A loans were offered to "traditionally" unqualified borrowers in response to liberal government policy encouraging home ownership by lower socio-economic level people. These people just took advantage of a good deal like many of the rest of us would have if the alternative was living in sub-standard or crowded apartment housing in dangerous neighborhoods. The blame should be shared by these unqualified borrowers and home speculators, by the social policy-motivated liberal legislature, by the Wall Street structurers of the mortgage-backed securities (who by-the-way fully disclosed the high level of risk), and by the investors seeking ultra-high yields. The people who don't deserve to suffer are the people with solid, old-fashioned work ethics and family values of saving and sacrificing for the future, and those with modest consumption habits who delayed the big purchase until they could comfortably afford it. Unfortunately these are the people who will suffer the most. It's the worst raw deal I can remember in my lifetime of 50 years.

  • Senthilkumar. - Tuesday, October 21, 2008, 2:15PM ET  Report Abuse

    • Overall: 1/5

    Why does the `veteran banker' want to remain anonymous? When someone does not want to stand behind his statements, there is no value to those statements. For all I know, the whole interview could have happened between the two halves of Laura's brain. These days we see so many news pieces that quote, `a-person-familar-with-the-matter-but-is-not-authorized-to-speak', `reliable-source', etc. Why are those not authorized even giving interviews? Why can't journalists speak to the authorized people? We should stop listening to such unauthorized sources.

  • TheShadow - Tuesday, October 21, 2008, 1:23PM ET  Report Abuse

    • Overall: 2/5

    Good coverage and interview by Ms. Rowley. That said, this mystery interviewee seems to me to be one of these religious free-marketeers. His professions about being the last one to want government intervention ring hollow to me. These guys pretty much dance around the fact that they have been wrong about their laissez-faire practices, yet don't come out and say it. They are financial anarchists and our last lines of defense were rendered impotent by an administration that promotes financial anarchy. You guys that want to shrink the size of government should work harder to reinforce your arguments by showing voluntary prudence, a bit of humility, and some honest self-policing. Didn't happen; Probably never will. That last paragraph shows that this guy has no regrets, as he wants to continue with the same, discredited supply-side crap as got us into this mess. Greed is not good. The only thing that trickles down is of the stuff that keeps Joe the Plumber in work. It's the old plumbers' main rule:" Sh-t rolls downhill." And it has, hasn't it?

  • Yahoo! Finance User - Tuesday, October 21, 2008, 12:42PM ET  Report Abuse

    • Overall: 1/5

    This isn't a terribly clear explanation of the financial crisis. It's closer to a list of one Wall St.er's personal peeves and prejudices with bits of the problem woven in. If any one segment of Wall St. or the banking and mortgage industry had doen their job properly then they wouldn't be using or tax $$$s to bail themselves out.

  • Arlingtonian - Tuesday, October 21, 2008, 12:36PM ET  Report Abuse

    • Overall: 1/5

    He sounds a lot like a McSame flunkie. All we have to do is stop spending $10 billiona month in Iraq and start spending it on infrastructure here and creating jobs so a lot of homeowners that have trouble paying their loans can make their payments. Maybe all the now or soon to be unemployed Wall Street hacks could do, I don't know, sewer repair or lay down some asphalt, or work as labourers building metro-rail projects so people in cities drive less and the price of oil goes down even more...but what do I know?

  • Erin - Tuesday, October 21, 2008, 11:15AM ET  Report Abuse

    • Overall: 4/5

    Interesting comments on this piece. Feel bad for those who invest in the stock market or who were approved for loans they couldn't afford? Not me - someone nailed it by saying there's inherent risk in the stock market. It is also a huge gamble to enter into a financial agreement that you can not possibly pay back - whether on the face of the agreement or if your situation changes. I agree with the Street guy that where we are today is the blame of all involved - including those who swindled $, rating agencies, homeowners and investors, and the politicians who thought they were doing us a favor by creating this borrow now, never pay mentality. It's ridiculous to many, but the failure of institutions and corporations is the underlying truth in our economic structure. These failing banks should not have been rescued. Sorry for the dire news, but we are only prolonging the inevitability of a depression by continuing the practices that got us to where we are today. Finally, re: the stock market and all those who should have invested wisely - just because the stock market is accessible does not mean that there is no risk. Any financial planner, 401k consultant, or really anyone with half-wit would tell all that the stock market is risky. If you are closer to retirement than not, diversify your investments AND risks so you receive the benefit of high returns in good times, but the protection of safe investments in bad times. One last thought: isn't it the savviest investors who say buy low and sell high? Well, here's your opportunity to take a little risk and take a long shot. Just don't cry to me if you don't do your homework on your investments.

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