This morning, as reports of major financial institutions faltering were piling up, Americans were left looking for answers. The deepening crisis is best explained in last week's Financial Times, by the Republican who chaired the House Financial Services Committee as the crisis developed:
‘Mike Oxley … blames the mess on ideologues within the White House …
‘The critics have forgotten that the House passed a … reform bill in 2005 that could well have prevented the current crisis, says Mike Oxley, now vice-chairman of NASDAQ.
‘“All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”'[9/9/08]
This year, the Democratic-led Congress enacted the largest reform to the housing finance system in a generation--a key to helping our economy recover.
But America needs leadership going forward that understands the depth of the problem.
Senator John McCain's public statements don't offer much confidence:
- “I believe, still, the fundamentals of our economy are strong…”
- Sen. John McCain [9/15/08]
Sen. McCain admitted in December that the economy isn't his strong suit:
- “The issue of economics is not something I've understood as well as I should... I've got Greenspan's book.”
- Sen. John McCain [12/18/07]
Perhaps Sen. McCain should have watched former Federal Reserve Chairman, Alan Greenspan, on Sunday's ABC News This Week…
- “I can't believe we could have a once-in-a-century type of financial crisis without a significant impact on the real economy globally, and I think that indeed is what is in the process of occurring.” - Alan Greenspan, Former Federal Reserve Chairman [9/14/08]
…Or read some of today's news reports:
Nouriel Roubini, chairman of the consulting firm RGE Monitor
“It's clear we're one step away from a financial meltdown.” [9/15/08]
Lars Christensen, emerging market strategist at Danske Bank
“We thought some of the central European countries were going to get in trouble on their own with their large current-account deficits…If the biggest financial institutions in the world can't cover themselves in this situation it is much worse than we thought.” [9/15/08]
Brian Bethune, chief U.S. financial economist for Global Insight
“The bankruptcy of Lehman Brothers will put further deflationary pressure on financial markets and the economy at a time when such pressure can be ill-afforded.” [9/15/08]
Joseph Brusuelas, chief U.S. economist at Merk Investments
“There is a concern about the basic stability of the market going forward.” [9/15/08]
Henry Herrmann, president and CEO of Waddell & Reed Financial Inc.
“Fear is in charge…This blows another hole in the banking system's ability to extend credit.” [9/15/08]
Peter Dixon, Commerzbank
'Problems today are not focused on individual firms but are systemic, and whilst it is probably not the time to say anything concrete on the long-term future, there is a sense today that the financial landscape has changed irrevocably.” [9/15/08]
“The Federal Reserve added $70 billion in reserves to the banking system, the most since the September 2001 terrorist attacks, to keep bank borrowing costs low after the bankruptcy of Leman Brothers Holdings Inc…” [9/15/08]
“US authorities were on Monday fighting a fresh fire in the crisis on Wall Street, throwing a $20bn lifeline to AIG, one of the world's largest insurers, just hours after the collapse of Lehman Brothers, and Bank of America's $50bn rescue takeover of Merrill Lynch…” [9/15/08]
“Stocks tanked Monday, as investors reeled amid the fallout from the largest financial crisis in years after Lehman Brothers filed for the biggest bankruptcy in history and Bank of America said it would buy Merrill Lynch in a $50 billion deal…” [9/15/08]