And I was Walking Down the Street One Day…

Wall Street Woes

The mortgage crisis is reaching its apex, or is it? Each day companies whose primary business was lending money or jumped upon the lending bandwagon, seem to be going belly up in today's hard economy but why? Because they put profits of today against the wellbeing of the economy for tomorrow, or rather they gambled and everyone lost. Now we have Obama blaming Bush and while he has a right to his opinion, just like everyone else, I'm sorry to say this but he is more to blame than Bush is (as is McCain), after all it's congress that regulates the industry not specifically the white house. They're calling for Alan Greenspan's head on a platter, saying it's all his fault. But who is really to blame?

Four years ago, I worried about the economic future but I was alone in those worries since time and again people told me it wasn't my problem or their problem if the mortgage industry went belly up. We had a huge influx of people getting mortgages for more than house than they could afford. They could put no money down, and pay only the interest for so many years gambling that their house value would continue to rise in value. So that 3000 sq ft, home they couldn't afford, suddenly seemed wonderful and with all the extra money they'd save they could afford to fill it full of furniture and buy that Labradoodle for the kids.

The Blame Game

Fast-forward 4 years and they're in foreclosure blaming the banks; other banks are closing or may close, stock reduced to junk status. So who is to blame in this debacle? I think it's just greed plain and simple. The government (meaning Freddie and Fannie) had NO business getting involved with the sub prime mortgages but people were screaming that they couldn’t get a house despite the low interest rates. Freddie and Fannie took the bait and dove head first into the shallow pool, and after that other lenders thought the same, why not. It was a gamble, a bad gamble, and we all ended up the losers.

The Fallout

So, where do we go from here or will there be a recession, depression, inflation, deflation, or total economic collapse? If you watch any of the cable news organizations that seem to thrive on conflict, not to mention doom and gloom you might believe that you should pull your money out of your bank and put it into your mattress. The argument for that is fairly persuasive.

I don't however think it's very practical but that being said if your bank is in trouble you can do things to minimize the headaches.

• Stop direct deposits
• Research your banking options online.
• Remove funds in order of potential problems, accounts with over 100K and familiarize yourself with the FDIC rules. For example if you have a joint (two account owners) account, you are actually covered up to 200K.
• Market Rate (Money Market) accounts are NOT FDIC insured. Investments are not FDIC insured.
• Certificate of Deposit (CD) accounts are FDIC insured but tend to have hefty penalties for early withdraw. Understand your options.

Most of the larger "safer" banks have "free" checking, so research what their restrictions are, and you can open an account with as little as a hundred dollars. Other questions might include ATM fees, charges for bill pay, and online banking charges.

© 2008 Whimsical Ranter
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