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It’s Official, The 2008 Financial Crisis Was Avoidable.

January 29, 2011

It has been three years since the 2008 economic crisis, and Americans are still recovering from it. There are still so many who have yet to get back on their feet. I myself felt the effects of our economic downfall and understand first hand how hard the last few years have been. While looking through The New York Times, I came across an article about how the financial crisis was avoidable according to a recently released report from the Financial Crisis Inquiry Commission.  The commission accuses “several institutions of greed, ineptitude or both…ignoring warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public.” At first I thought, Duh. I was annoyed at the obvious nature of the commission inquiry because are we really surprised that the big wigs at AIG and Lehman Brother’s lied. You mean the mortgage brokers weren’t honest with their clients about the true nature and risks of their loans? That’s crazy talk. As I read further, and learned more about the 576 report, while I didn’t know how much good it would do, I felt like good, finally, make it public knowledge exactly where the blame should lie. Who should all those still trying to find work be mad at? Where do those who lost their homes and savings turn to for answers?

According to the commission report, majority of the fault belongs to two Federal chairman- Alan Greenspan and his successor, Ben S. Bernake. Alan Greenspan, former Chairman of the Federal Reserve, led the central bank as the housing market expanded. Mr.Greenspan is scrutinized for advocating deregulation and the commission points out a “pivotal failure to stem the flow of toxic mortgages under his leadership as a prime example of negligence.” Ben S. Bernake, who played a crucial role in the response to the financial crisis, is accused of allowing Lehman Brothers to collapse after earlier bailing out Bear Sterns and adding “further uncertainty and panic in the financial markets”. Aside from showing a sense of responsibility, no matter how late it came, the report  stood out to me because it said the crisis was a direct result of “human action and inaction”. It wasn’t decreased interest rates or aggressive homeownership goals. Plain and simple, it was greedy people ignoring the impending results of their illegal and immoral actions (harsh I know, but still true). At least now we have some names and facts to go with that cloud of unclaimed responsibilty.Phil Angelides, the commission’s chairman, who assembled most of the report described the banks, credit rating agencies and mortgage security companies to Greek mythology saying, “Like Icarus, they never feared flying ever closer to the sun.”

At GAI (www.gunwel.com) we care more about the lasting relationship with our clients and not the quick dollar. We strive to help you get the most out of your money by handling all your tax and bookkeeping needs. Rest assured that we will only let you fly in the safe zone. Our motto is, You work hard for your money, let us work smart to help you keep it. Give us a call at 212-979-6830 or stop in for a visit!

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