Tuesday, May 31, 2011

From the Archdiocese of MIami "Let's Talk"

Don't blame the poor for financial crisis

The government, along with businessmen and ordinary people, are all trying to find the causes of the financial crisis of 2007-2009. Should we blame the government for what went wrong? And if so, in what way?

In December, the Republican minority within the Financial Crisis Inquiry Commission (FCIC) determined that the misguidede policies of government, designed to increase the number of homeowners among relatively poor people, pushed too many people to get subprime mortgages they could not afford.

This information pleased representatives in the House, especially those with an eye on the 2012 elections, but do these members of the FCIC have any evidence to back their claim? Are poor people in the United States responsible for causing the most serious global crisis in more than a generation?

No, definitely not, and we in the Society of St. Vincent de Paul, who work directly with the poor, know that perfectly well. It is true that some poor families have lost their homes and many have been unable to pay the rent; but during our visits to those in need we have noticed that they are more likely to have belonged to the middle class, with good jobs which they lost due to the crisis, and that they could not only pay their mortgages but also send their children to private schools.

Agreeing with our "no" are highly knowledgeable people such as Daron Acemoglu of MIT, who spoke in January at the annual meeting of the American Finance Association, as well as writers such as Simon Johnson, former chief economist of the International Monetary Fund. They do not agree that the poor of the United States were the cause of this crisis that is still affecting us and causing more people approach us for help - families who never thought they would be in such a dismal situation.

If someone is to blame we need to look to large private companies, monstrous mortgage lenders like Countrywide, Ameriquest, and many, many more who were backed by large investment banks within and outside the United States. Many of them received government bailouts after the crisis, money that was not given to those who had taken those mortgages and were indebted, and who in the end lost their homes.

It is true that those who accuse the government of responsibility for what went wrong are correct, because there were many years when financial regulation was lacking, and politicians took advantage of this to give boosts to these large private companies and banks. Wall Street especially benefitted from the housing boom. Without their complicity, no poor or low income families could think of owning a home, even with the invented jobs and fraudulent paperwork created by mortgage brokers. I personally worked as a realtor for many years, and I could not qualify any person for a mortgage if that person did not have enough income to ensure repayment of the mortgage - something that later was done without shame.

Those who are now suffering the most are people with a low educational level who are earning lower wages, who have lost their homes, their jobs, the ability to send their children to private schools, their cars - in short, everything. I assure you these people have not created this crisis. Nevertheless they are paying for it, and the saddest thing is that we have no resources with which to help these families in their grief.

For information about the St. Vincent de Paul Society, go to www.svdpusa.org or call 305-474-9010 or 305-762-1125.
Donations may be sent to:
St. Vincent de Paul Society
P.O. Box 431232
Miami, Florida 33243

Victor Martell
St. Vincent de Paul Society
Monday, May 30, 2011

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