Well, you are correct on one level. The bailout basically says that borrowers are innocent. But we have screwed this country up so bad between CRA, F&F, Wall Street going along with F&F, Greenspan keeping rates TOO LOW for TOO LONG, etc.
We need to rethink the Fed model. I contend that Fed intervention policies is a major cause of our current down business cycles. E.g. Greenspan and Bernanke kept the Fed Fund rate target too low for too long. Thus, we created too excessive credit, induced a speculative “bubble” in the housing market. All this has resulted in an abnormally low savings rate (and too much spending by borrowers).
The party is now over.
You’re right. Hasn’t the Prime Rate been at 5.00% for about 8 months now? There was something about the Glass-Stegal act which Greenspan was against back during the Clinton years.