In Plato’s ‘Decline of the Ideal Society’, he describes plutocracy with these words: ‘as the rich rise is social esteem, the virtuous sink.’ A rather broad statement of ideals, one that counters the principles by which the United States was formed, yet a statement that I would contend accurately describes the state of our nation. The modern colloquialism being, “the rich get richer and the poor get poorer”, which can be seen as reference to the vanishing middle class. Philosophical discussions are all well and good, but does little to address the reality of those individuals and their families that are affected. Perhaps, however, it is the place to start, a place to focus government away from the corporate view to those of the everyday ordinary citizen. The role of the United States government is to protect it citizens from the abuses that otherwise stand in the way of ones God-given right in the Pursuit of Happiness. Sadly to say, government does run government, corporations and their lobby’s run government. This view is neither left nor right, conservative nor extreme, rather it is the true reality.
This letter is intended as an emotional plea to any government elected official to recognize that the solutions to the current economic situation do not even come close to the core of the problem. We place our trust in high educated individuals to find solutions, yet as they pump billions of dollars into the very financial institutions that caused this mess, they fail to see, for whatever reason, what is painfully obvious to the ordinary citizen.
I have noticed recently that the business, banking and financial media outlets are revving up the spin away from their sector and laying blame on those who ‘got in over their heads”, or those “that were not credit worthy”. Increasingly it is being said that these people should “suck it up and take responsibility, take the foreclosure and learn from it.” They are creating a stereotypical view which if allowed to continue will become discriminatory, and in the long run making life harder than it already has become for these people who have lost all.
I find this extremely offensive as I am one of those “uncreditworthy” individuals. My family was forced into the sub-prime market, not because of the allure of a teaser rate, rather because an incident that we had with a US Bank refinance that they made a shambles of in turn draining all that we had in stocks and savings and in the process destroying our credit because of their negligence. We reached out to the OCC for assistance and rather than review our claim and send notice, as they are supposed to do, they admonished us for sending them so much documentation, bundled it all up and sent US Bank everything we given to the OCC. In essence they gave US Bank a free ride. I am quite sure that our situation is not exclusive and many others found their way into sub-prime by experiences similar to ours, and are equally as bitter.
The fact of the matter, all spin aside, is that the sub-prime market opened the doors to the Amercian dream to those previously shut out and with that we, as a country, experienced historical economic growth. Unemployment was at record lows in areas and the country prospered. Now, for a minute, let us suppose that their was no sub-prime market and a persons interest rate was not based on e few bad marks on a credit report that linger for years and years, or a person who is self-employed and charged higher rates as a result of a stated income. Would the economy still be at the doorstep to collapse, as it is now. I contend that this economy would still be going strong.
The sub-prime allowed for a level playing field for people whose punishment for having credit problems in the past or for being self employed was deferred by a couple of years. I suppose the intention of all, as was ours, was to take that period to repair the credit and than refinance before the fixed rate period expired. Speculative, perhaps, but you give someone a chance to buy into the dream, they are going take it with the thought of repairing their credit or whatever needed done during that fixed low interest period. The goal being to refinance and fixed that rate or get a lower one. Unfortunately, the system collapsed upon itself, and as we see now that did not happen. Again, to reiterate, these people had no problems affording their American Dream during the fixed period, and economy prospered.
The downfall boils down to greed and perhaps a handful of MBA’s that derived this sub-prime scheme. They were not foolish, they bundled and sold on speculation that higher returns would follow over the next few years. In essence they, took the money and ran, and are long gone by now, millions if not billions in hand. The Fed shores up the banking, brokerage and lending institutions and their response is to tighten the credit market, so no one with the exception of those with 720 credit to get any sort of loan.
President Bush outlines a plan to assist those threatened with foreclosure to be able to obtain FHA loans at lower interest rates, the stipulation being one must have good credit. Have officials become that disassociated with reality to think that is going to be cure. A person facing foreclosure already has bad credit or else they would not be facing foreclosure. The notion that these tax rebate checks are going to kick start the economy is total fantasy. Gas and food prices are going through the ceiling and it is catching up to peoples budgets and cutting into them resulting in some payments being missed. The tax rebates are going to be used by people to pay on late credit card, mortgage, or car payments, and that does nothing to stimulate the economy.
The solution is quite simple, give everyone the same low rate, and throw out the credit reporting. The economy grew greatly when it was overlooked for those getting sub-primes. Can no one recognize that simple fact. Credit reporting only serves as a wealth generating machine for the corporations that run this country. Ironically the same system that has allowed them to rape the public with high interest rates are finding themselves against the wall unable, or unwilling to loan to those without perfect credit.
The credit reporting agencies at one time served a great purpose, but nowadays they are exploited and not to the benefit of the consumer. Afterall where is there fairness in charging two families who earn the same income level yet one pays a low interest rate the other a much higher rate, and for what, because one family may have had issues related to medical bills, or perhaps a layoff, or any other number of reasons. There are very few bad apples out there and majority of people are hard and honest working people who for one reason or another had problems in their lives, yet they pay for it with higher interest rates, generating wealth for those charging it. It has gotten so out of hand that in some states insurance rates are based on a credit rating. Yet we wonder where is the middle class going……poor that’s where we are going