Wall Street and the Banks got some very terse news today: Congress will not pass any type of "bailout" or "rescue" or "asset recovery" Bill to deal with the present financial crisis. No Bill. No Money. No Help. None. Period.
The simple reality is that all 435 members of the U.S. House of Representatives are up for re-election on November 5. Far too many of them fear being voted out of office if they vote in any way that can be viewed as being in support of Wall Street and the bankers.
Washington wants everyone to think that Wall Street and the Banks got themselves into this financial mess but Wall Street and the Banks know for a fact that the federal government is solely responsible.
You see, back in the 1990's, liberal Democrats like Barney Frank (D-MA) on Capitol Hill decided that minorities needed to own their own homes to improve their lives and do away with crime-ridden public housing ghettos. It was a noble thought but there were problems:
1) Those minorities had little or no credit history and;
2) those that did have credit history, had bad credit.
So the liberals decided they could get around that by THREATENING banks; warning banks they must not use "outdated" methods of granting mortgages. What were those outdated methods? Credit History, length of employment and amount of down payment. The liberals gushed "Waaa Laaa, we fixed the problem." (Proof here in Boston Herald)
The bankers having been warned, - even officially warned, in writing by the federal reserve banks to make minority loans- didn't want to face politically-correct regulator inquisitions over "racist lending policies, red-lining or discrimination," so they let loose with the mortgage money. Hundreds of thousands of mortgages given to people with no down payment and bad credit histories.
This avalanche of new buyers caused the price of houses to skyrocket far above their actual worth, but who cared? The banks were lending, the buyers were buying and the economy steamed along. . . . . . except for one, minor detail: Those with lousy credit weren't paying their mortgages.
Here we are, 15 years later and the chickens have come home to roost. All those bad loans made to all those unworthy borrowers have literally collapsed our financial system.
A lot of people knew this was coming, but the politically-correct fanatics screamed "racist" to silence anyone who raised the issue. Now, the issue cannot be silenced. The financial system is broken so badly by these bad loans, that it can no longer function correctly.
Wall Street and the Banks, knowing that Washington caused this, turned to Washington for a solution. What they got from Washington was the middle finger.
So here we are, with credit markets barely functioning, with stocks markets worldwide suffering tremendous losses in value, all because politically-correct maniacs demanded loans for unworthy minorities and those minorities have stiffed virtually everyone.