This week we saw Wall Streets answer to Obama’s stimulus plan…NOT! On Tuesday the Market dropped 380 points after Treasury Secretary Geithner unveiled his new plan, appearing on television.
Here is what is amazing about Wall Street. Congress did not create the collapse. Taxpayers did not create the collapse. Small investors did not create the collapse. Who created this economic downturned collapse? The big boys on Wall Street.
And being the big babies that we know they are, now they are crying in their milk, demanding Congress and the taxpayers and smaller investors to bail them out. Demanding, not asking, demanding.
They did not like Geithner’s proposal. He wants full oversight. He wants reduced executive pay. He wants audits to determine if the institution can even survive with TARP money. What does Wall Street want? Obviously they don’t want Geithner. For the week the Market was down big time and closed below 8000. That was the Market’s answer to Geithner.
If Geithner had said, “Hey boys, here’s another 350 billion…it’s business as usual, go do with it like you want”, just like Henry Paulson did, the Market would have ended up positive, while they burned through more of the taxpayers hard earned funds.
Did you see those bankers testifying in front of Congress on Wednesday? We’re good guys, we’re loaning the money, what’s the problem? This week I spoke with a Bank of America loan officer. His statements were priceless…indicative of the problems facing the economy today. He told me the public does not understand about loaning the money. He said if they have good credit, we are making loans. If their credit score is low, we are not making loans. He said it with a smile, justifying his statement and patting himself on the back.
How absolutely near-sighted of him, Bank of America, and bankers in general. Today is not 2006, 2007, or even the beginning of 2008. Today is 2009, where 10 trillion dollars of wealth have vaporized. Today, those in need don’t have credit scores like they did in 2006-2007. Today needs have changed. But bankers can’t see that. Credit scores need to be completely re-evaluated. It’s bankers working at places like Bank of America that can’t see the forest through the trees. The economy cannot recover because their standards are still set for years earlier, and they refuse to wake up and see reality.
Those homeowners being foreclosed on will not have 700 credit scores. It just won’t happen. Yet those people being foreclosed on are the ones that need the help most. If you judge them with 700 credit scores, you can completely justify why you don’t make loans — they don’t qualify. You can sit in front of Congress and say, “We’ll loan the money…huh, to the right people who can qualify.”
It’s bankers who put the world into this mess and unfortunately, its bankers who have to get us out. Until they wake up and smell the roses, don’t expect the Market, the economy, or the homeowners to recover too soon.
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