All Fall Down

New York Times ^ | November 25, 2008 | THOMAS L. FRIEDMAN

[Lorianne]

Citigroup as Exhibit A — how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.

So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so.

Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless about the reckless financial instruments they were creating, or were so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it.

These are the people whom taxpayers bailed out on Monday to the tune of what could be more than $300 billion. We probably had no choice. Just letting Citigroup melt down could have been catastrophic. But when the government throws together a bailout that could end up being hundreds of billions of dollars in 48 hours, you can bet there will be unintended consequences

[Jim Noble]

We probably had no choice. Just letting Citigroup melt down could have been catastrophic.

Why?

Catastrophic for whom? More catastrophic than the alternative?

IQs are really dropping fast in DC.

[P-Marlowe]

“Long Beach Financial,” wrote Lewis, “was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking homeowners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, Calif., a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.”

Whoever signed off on the loan documents needs to go to prison.

[ComputerGuy]

Maureen Dowd is off today.

Well, at least the article ends on a happy note.

[21twelve]

After Citi (bank, corp, group or whatever it was at the time) was sued by Obama for not giving loans to low-income folks, I imagine they had got a bit gun-shy on refusing loans. (So send them all to jail!)

[2ndDivisionVet]

"Catastrophic for whom?"

All those Primarica (Citigroup) network marketing sales reps selling term insurance and mutual funds, I imagine... ("Buy term and invest the rest")

[Chet 99]

Allowing Citi to fail might be all that would be needed to generate a true run on the banks.

[singfreedom]

I kept waiting.......and waiting......, but it never came. The absolute ULTIMATE fault lies with the worthless dildos in Congress, those who had the responsibility to regulate these entities, but, instead, defended these despicably dishonest practices because they suited their perverted political ends.

Mr. Freidman makes no mention whatsoever of those individuals, Dodd, Franks, Meeks, Watters, etc., who with the usual skill of Dem bureaucrats, forcefully drove our economy into failure.

[ari-freedom]

banks are one of the most regulated industry in the country. Congress, on the other hand, is not transparent at all.

[Mr Ramsbotham]

Government makes huge amounts of cheap money available to lenders, then insists that poor people be given huge loans, and they’re blaming the public for the results.

[Gator113]

How will justice come and when will it begin?

[org.whodat]

Bailing out rich people, incompetent rich people who should be at the iron bar hotel.

Next week Rush will be asking for tax cuts for these Rich sob so they can keep more of what they have stolen.

[DeaconRed]

Thank GOD for the Second Amendment.
When this whole thing comes crashing down (and it will) it is going to be utter chaos.
Our politicians are taking our money and giving it to their friends, and padding their own pockets.
OK nothing new here.
The amount is new. They have been stealing our money for years now the amount is staggering.

[jazzlite]

I certainly agree with you that those responsible for these crimes against America should go to prison..However, as I see it, most of them and their cronies are assessing this situation and participating in a “solution” for the problem and through cronyism, are still looting the nation via the “bailouts.” Any money handed out should be given to suffering Americans, not to the looters of our economy.

[gotribe]

Exactly. And they are doing it again with the bailout. Here’s some free money, go and issue more credit card and auto loans to people who may not have jobs next week. It’s nuts to releverage against the market. We’ve gone from tax and spend liberalism to borrow and spend liberalism.

[Dick Bachert]

[GeneralisimoFranciscoFranco]

And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless

This cannot be repeated often enough or loudly enough. Mention this crooks name every time you have a conversation with anyone about this mess.

[junta]

Don’t blame mangagement (that would be class warfare), but blame a UAW worker for taking home a $2200 a month pension for destroying the country.

[central_va]

The whole home appraisal process is a sham.....

[Lorianne]

Suprising to see Freidman mention Rubin in connection with this mess.