American Dreamin'

There’s an ongoing crusade to blame the poor for the worldwide financial fiasco.

Just recently Goldman Sachs came out and said the problem with the mortgages was the mortgage companies. But who’s gonna believe that when Alan Greenspan testified that Fannie and Freddie were responsible for this sub prime mortgage fiasco? Actually, Fannie & Freddie got into the game late, after the major Banks had been profiting for years on the rule changes.

According to the book “It Takes a Pillage”, in July 2008 the Kansas City Federal Reserve calculated that nationally, in 2006 the sub prime loan origination alone was as high as 38 percent of the market.

This occurred in large part due to the to repeal in 1999 of financial rules like Glass Steagall (which deregulated separation of deposit banks and risk taking banks from merging). Six weeks later Treasury Secretary Robert Rubin went to work for Citigroup in the same industry he just helped to deregulate.

Henry Paulson championed to repeal the rules on how much banks could borrow against their capital before he became Treasury Secretary. This led to investment banks who over-leveraged themselves by 30 and 40 to one.

In 2001 former Senator Phil Gramm said “some people look at sub prime lending and see evil. I look at sub prime lending and I see the American dream in action.” Now the former Senator no longer sees us as a nation of dreamers but as a nation of whiners.

By singling out Freddie Mac and Fannie Mae as the sole proprietors for this sub prime mortgage failure, they’re letting the real crooks off the hook, the bankers who for decades hammered politicians to set up the conditions for the lawless financial times which enabled those same bankers to take advantage of the masses desire of achieving the “American dream“. After all, it wasn’t the poor or the “dead beats” who rewrote the banking rules.