Once again, it's the economy...

The economic situation of 2008 might remind a person of the collapse of the savings and loan industry in 1986.

It seems that an entire branch of the financial services industry had huge portfolios of investments that were collapsing and leaving them with unmanageable debt. The market had been left on its own by the Reagan administration and the result was a really huge economic disaster that was left to the taxpayers to resolve.

Of course 1986 was an election year for all of the US House of Representatives and one third of the US Senate, so no mention was made of the impending disaster (except for one, and only one, time that Rep. Henry Gonzalez let the secret slip). The year of delay allowed what was estimated to be a $50 billion problem to fester till it was to take $500 billion to resolve.

The Resolution Trust Corporation (RTC), a temporary division of our federal government, was created to find the nonperforming (defaulted) assets, and bill cleaning up the mess to the taxpayers. Then find the remaining, performing assets and create portfolios to be given to surviving financial institutions. The Savings and Loan industry disappeared. In addition to the S&L vanishing act, local ownership of every multi-branch bank in Texas, with the sole exception of Frost Bank, was ceded to out-of-state interests (a financial necessity) privately or by the RTC.

Another part of the RTC's charter was that they were NOT to investigate, or turn over to investigating agencies, any evidence of suspected criminal activity.

Today we find ourselves in the midst of an economic crisis brought on largely by excessive numbers of nonperforming, sub-prime, home loans. It should be remembered that the S&L industry was a home loan providing, financial services industry.

Once again the market is mired in trouble of its own making and the cry has gone out for Uncle Sam to, "save us." The Federal Reserve has cut interest rates so that the market can borrow its way out of the credit problem, it created, as cheaply as possible. Oh, while you’re at it, reduce taxes on the very folks and corporations that were at the helm of the businesses that had aggressively marketed the loans that they knew to be sub-prime; NOT!

It's time to ask the voters to stand, once again, against well vested interests that repeatedly pay for lawmakers and laws that allow them to work behind closed doors, then seek government bail-outs when the market realizes its in serious trouble (of its own creation); without admitting any guilt.

The federal government, Congress and the White House, are stumbling over each other in a race to provide economic stimulus packages. Stop! The economy cycles up and down; always has. Now we’re in a down cycle, made worse because financial services businesses were allowed to market too much credit to too many barely qualified borrowers, at exorbitant rates, hence the ‘sub-prime’ moniker. The Federal Reserve has already lowered interest rates. If one wants to be helpful, make sure that affordable refinancing is getting to the folks who need it.