Originally Posted by Snake Doctor

I think it's amazing how the human psyche has a need for things to be one way or the other.

It either has to be all wall street's fault, or all the speculators fault, or all the republican's fault, or all the democrat's fault.

I voted for Obama, I'm one of the most liberal posters on this board, yet I agree with the guy who wrote this letter and I think the populist outrage over AIG bonuses is a red herring that's keeping people from being able to fix the real problems.

The problem was an inherent flaw in the system, and an inherent flaw in the belief that markets are self-correcting and self-regulating.

Alot of people did exactly what they were supposed to do. The problem wasn't greedy people on Wall Street who took advantage of poor people, the problem wasn't liberals who wanted poor people to be able to own homes.
Mortgage brokers did what they were supposed to do, they got people mortgages. Wall Street brokers did what they were supposed to do, they sold paper. The math guys did what they were supposed to do, they modeled risk. Middle class people did what they were supposed to do, they tried to work their way into the upper class and they used housing as the vehicle with which to attempt the leap.

You can't blame only Wall Street because there had to be someone on the other side of the table signing the papers saying they would pay back the mortgage. You can't blame only the people who bought houses, because housing had always been a sound investment in the past and the banks were willing to give them mortgages with no money down.
Who wouldn't take a bet where if you win you make hundreds of thousands of dollars and if you lose you have to deal with a few years of having bad credit?

The problem was the inherent flaws in the system. The repeal of the Glass Steagal Act, written by Phil Gramm but signed into law by Bill Clinton. (That law passed the Senate by a vote of 90-8 btw..so pretty much everyone has to take responsibility for that)
The Commodity Futures Modernization Act which said that credit default swaps couldn't be regulated as insurance products OR as gambling.
JP Morgan convincing federal regulators that if they bought CDS protection for all the CDO's on their books, that was the same as removing the risk from their books, so they should be able to go out and lend that money all over again.
This is how we ended up with banks and brokerages leveraged 40 to 1 instead of their normal 10 or 12 to 1.

There are a dozen reasons we got into the mess we're in, and there are a dozen different groups of people to blame, so for the sake of intellectual honesty can we please quit blaming "these guys" or "that law" as the sole reason we're all a little fucked right now?