The American Dream: How Did America Get Oneself Into The Current Crisis

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What is the AMERICAN DREAM 10/5/2008 How Did America get herself into the current crisis, and how does she get herself out. How did America get into debt, and how does she get herself out? To answer this question we first have to look at the Great Depression. Not many people remember the Great Depression, due to the fact that it was too many years ago, and unfortunatly we did not learn our lesson. On October 29, 1929, the stock market crashed which is also known as Black Tuesday. In the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress put their names on what is known today as the Glass-Steagall Act (GSA). This act separated investment…show more content…
Democrats pushed for riskier mortgage lending, in an ef-fort to expand home ownership. But surely the bulk of the blame lies with the policy makers and regulators who were on duty while the housing bubble inflated and Wall Street went wild— the Bush administration and Alan Greenspan’s Federal Reserve Futures Modernization Act clearly did contribute to the current crisis. While a proponent of deregulation, I do believe that busi-nesses, like people, need rules to live by. If you give our child an inch they will take a mile. Peo-ple are people and while most are good we all know that there are those who will take advantage of others if they can. Such is the case with the current economic situation and let me assure you this will not be over in the foreseeable future. What is happening on Wall Street is tied to the sub prime mortgage mess. That in turn is tied to those in Congress and what went on with Freddie Mac and Fannie Mae. The story is going to be a mess till all is said and done. Deregulation was the root cause of the financial crisis; more regulation is needed to uproot the causes. Greed runs wild. The media is now full of condemnations of greed; for many this is the quintessential source of this financial crisis. What about the lightness of or the absence of any regulation of the ‘shadow' banking sector, made up hedge funds, private equity funds…show more content…
Treasury Secretary Henry Paulson’s urging in mere weeks the act will allow 400,000 homeowners in danger of foreclosure to refinance their mortgages into 30-year fixed-rate loans. The Federal Housing Authority (FHA) will back up $300 billion of these loans. Because all these folks need help, and because the FHA requires down payments of only 3%, those who can refinance actually might do so instead of just walking away. Even more incentive: The FHA allows the down payment to be borrowed, gifted or pro-vided by charitable organizations. The FHA will end up with sub prime and junk mortgages where the borrowers have “no skin in the game,” and no upside incentive. Also, these troubled borrowers will have less incentive to repay. In the end, when those dead-end mortgages are abandoned, we the taxpayers will pay to bail out the FHA. In effect, Congress, the U.S. Treasury and the FHA have elected to take out a sub prime mortgage on the economy’s future – with al-ready strapped taxpayers footing the

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