Banks

I have been trying to keep on the news, I've been reading the New York Times. Last week I read a few articles about the whole Gates affair, while I found that event interesting because it became a national phenomenon, I am not compelled to write about it.

Two articles I read about banks have made me decide to write. The first is an article about how banks don't have an incentive to help homeowners refinance their loans and stay in their house. In fact, they may have an profit-driven motive to drag the process out for as long as possible, ending with the foreclosure of someones house. The second article was about the billions that wall street firms paid in bonuses in 2008. These two articles are seemingly unrelated but I they are both about the underlying brokenness of our economic system.

If banks can make a profit by selling someones house to their wholly-owned subsidiary while the homeowner is on the brink of homelessness, they can and should, if profit is their motive. A bank is ultimately not responsible to the people that it lends money to, but instead to the investors and the shareholders. Therefore profit has to be the bottom line. Money making for those at the top has to be how they decide to run their corporation. However, when a bank is in the business of financing people's lives this becomes more tricky. Although many people were reckless when they took loans they could not afford, the banks were more reckless in giving them. The bank should be the one that is being responsible, but if the bank can profit from the irresponsibility of homeowners, why should they not ? Banks are not entities with a morality. They are only concerned with making as much money as possible.

The second articles shows a similar theme, profit for the already rich, over the lives of everyday Americans. Individual traders and bankers were paid millions in bonuses last year. In a normal year, I think that bonuses that great are simply rewarding greed and unnecessary. (Can a person even spend a billion dollars in one year?) However, when these banks were given federal tax payer money they should be responsible to the tax payers, not to their already billionaire moguls. Yet, they spent this money that is given by all Americans, who pay taxes, to reward a few people that caused the crisis in the first place. How many workers did these banks lay off over the last year? How many jobs did they indirectly cause the American economy to lose? How many people in the US (and around the world) are wondering where their next meal will come from because their job was lost. Tax payers money should have been used to ensure that as many jobs were kept as possible. How many executive assistants could have kept their jobs for 5 billion dollars? How many janitors? How many para legals? How many people had to lose their jobs so that these people could have the bonuses that the have grown accustomed to having? It is outrageous that these companies continue this way.

To be fair, I found out that the House has passed a bill that would limit this sort of thing in the future. I only hope that it is effective and eventually passes the Senate. These companies have no right to spend tax payer money on their executives like this.

These two articles to me, highlight the absurdity of the American financial system. I hope and pray that this crisis will serve as a wake-up call for all Americans.