Two weeks into Occupy Wall Street protests, movement is at a crossroads

Their job is to decide whether their bank can afford to loan you money and they evaluate your ability to do so only in that context (to protect them, not to protect you).

Their job is to decide whether their bank can afford to loan you money and they evaluate your ability to do so only in that context (to protect them, not to protect you). It is not their job, or their responsibility to tell you how to lead a fiscally sane life.

Cycloptichorn wrote:

After all, is it not the job of the loan or mortgage officer and bank to tell you that you can't afford certain loans?

No, that is your job and nobody else's. Their job is to decide whether their bank can afford to loan you money and they evaluate your ability to do so only in that context (to protect them, not to protect you). It is not their job, or their responsibility to tell you how to lead a fiscally sane life.

That practice was abandoned completely, because the banks and investment houses thought they have found a way around the risk involved with lending people money they couldn't afford to pay back. The banks used to be cautious about lending, not just b/c it could screw the person in the house, but because it would screw them too.

I understand your desire to avoid scapegoating - but as purely intellectual exercise 'the sector', as I referred to it several times, does bear greater responsibility than individuals who were caught out. IMHO.

I've tended to agree with Thomas - but it's not like the two of you are diametrically opposed - you just seem to be taking an apologist stance re: the financial sector - I imagine because you fear a national blood rush to the head targeting bankers rather addressing the issues, and fair enough.

Prosecute them for what?

It's not the job of the financial industry to perserve economic stability, it is to make money.

It's not unethical to bet big and lose.

If they were able to do that we would not be in half the mess we are in, and the many investors that paid them to do their job would not have taken such a big loss!

Sorta sounds what I imagine Burning Man (still haven't made it there) to be like. In other words: fascinating.

The Leap Frog System
Oct 10, 2011

When a board of directors removes a CEO for poor performance, we don't expect the board to have a specific plan for how the next CEO will run things. The board's job is to remove the underperforming CEO and start a search for a new one.

That model reminds me of the Occupy Wall Street protests. Some pundits are criticizing the protesters for not having specific demands, but I don't think that's a fair observation. The protesters are simply trying to fire the old CEO, metaphorically speaking. It's not their job to micromanage the next one.

Some politicians have branded Occupy Wall Street as a class war. But I think that misses the point too. If the economy were humming along and creating the right kind of jobs, folks would see wealth as an aspiration and not an enemy.

I see Occupy Wall Street as an effort to get rid of the system that brought us to this place. The anger is not so much about replacing politicians as it is a complaint about the nature of government and the corrupting influence of money. Our collective image of the protests is muddied by the media's fascination with the nut jobs in the crowds, allegations that George Soros is the puppet master, and references to evil bankers and capitalists. We humans like to put faces to evil, but sometimes the evil is simply the result of a mismatch between the system and the times.

As self-appointed Transitional Leader, I support a new Constitutional Convention. Sooner or later the Occupy Wall Street protesters will join Tea Partiers and others in calling for exactly that. Nothing short of a total system reboot will clear the streets. Tweaking the tax code won't get us there. Replacing ineffective politicians with other ineffective politicians won't get us there.

Our current system of government served us well for over two hundred years. It was perfectly designed for simpler times. Now the natural complexity of issues plus the corrupting influence of money have choked out the system. We're firing on one cylinder. It's time for a new system.

In times like these, it's easy to focus on all of the bad news. But I'm not wired that way. When I see a broken system, I see an opportunity to build something new and better than can leap frog the performance of competing governments. (I'm looking at you, China.)

The Internet has come of age at exactly the time we need it to form the platform for a new system of government. A new and properly engineered government could be immune to financial corruption and more efficient at matching economic resources to opportunities. That sort of change would be enough to turbo charge the United States' economy for generations.

In a reengineered system of government, I like the idea of states operating as test sites for social and economic programs. In some ways, that's the opposite of how things are operating now. For example, the federal government is clamping down on California's state-legalized medical marijuana industry. Does that look like a government system that is worth keeping?

If you want the rich to pay more taxes, there are two ways to do it. One way is to use force, but that path leads to ruin or gridlock because the rich have plenty of force of their own. The other way is to change the system to make it worth the extra taxes. I'll gladly pay 5% more in taxes in exchange for a better system of government, under the theory that a better government will create a better economy and give me a return on my investment. And I'll believe that's possible when we have a Constitutional Convention.

"Occupy Wall Street": Approved!
Posted: 10/11/11 11:45 AM ET

In the space of less than a month, the Occupy Wall Street movement has gained national notoriety. A new poll out Monday shows that more than half of Americans are aware of the grass-roots campaign pushing back at the outsize profits, bailouts, and influence of the financial sector. That quick rise has plenty of special interests so worried they have resorted to a pathetic yet popular tact: When you feel threatened, work overtime to marginalize the threat before it establishes traction.

Me? I want to publicly say thank you to the Occupy Wall Street movement. Thank you for not accepting the status quo. Thank you for not assuming there is nothing to be done. Thank you for rattling the cages. Much coverage of Occupy Wall Street has cast this as the beginning of something new. That's only partly true. What I find so encouraging is that Occupy Wall Street's more important message is that this marks an end point. An end to just shrugging and putting up with the inequity. An end to patiently waiting for government to get its act together and take steps to reduce the pain felt by millions of Americans who are unemployed, the millions more who are underemployed, and the millions more again who worry that if we indeed slip into a double dip recession they will soon become unemployed. An end to letting Washington just continue further down its dysfunctional dark hole without being called out.

To deride the movement because it has yet to formulate a well-delineated platform says plenty more about the critics than the protestors. Revolutions tend to be messy, especially in the early going. The unholy alliance of much of Congress, K Street and Wall Street that has set the agenda from day one of the financial crisis is simply trying to protect its turf by casting aspersions on the ad hoc nature of the movement to date. I suppose I shouldn't expect anything less. After all, there's no way they could stage a substantive rebuttal based on facts. It is a real shame that the progress that Congress made last year in passing consumer financial reforms are now being blocked by these same interests.

The recent New York Times' report that inflation-adjusted median household income declined 7.6% from June 2009 to June 2011 has garnered much attention. While plenty bad enough, that income drop is really just an emphatic exclamation point to disturbing long-term trend. Adjusted for inflation, median household income has gone no where since the late 1990s. So much for shared prosperity.

As we all know to make up for the lack of income gains, American households borrowed plenty in the '90s and all the way up to the financial crisis. Yet the response to date has been to bail out the banks but offer virtually nothing to overextended homeowners who are hopelessly underwater on homes. Yes, I am well aware of the various federal housing assistance programs that were launched in the wake of the crisis. But they have been failures. And why is that? Well, our federal government thought it would work to craft programs that offered some small incentives to banks to modify mortgages, and then ask the banks if they would like to participate. It was entirely optional! And we're supposed to be surprised that three years in, banks -- after having happily accepting the bailout money -- weren't exactly eager to participate? Please.

And in my opinion there is no greater example of Washington politicians and K Street lobbyists working against our future prosperity than in the treatment of student loan debt. To be clear, this problem existed even before the crisis; families have been taking on crushing debt to help the kids get ahead for a few decades, as the cost of school has far outpaced inflation. It's just come to a painful head now: graduates with no jobs, or low paying jobs are justifiably panicked that they will never be able to get the loans paid off. Meanwhile, many well-meaning parents who only wanted to help their kids by taking out loans for college, are now laid off, or in new jobs that pay less. Yet where's the relief for these borrowers, who took out loans so their kids could compete in the workplace, or better yet, we collectively could compete in the global marketplace? Far from relief, here's what we have: a bankruptcy system that does not allow student loans to be discharged. Many other debts can be discharged, but not student loans. Look, we want a society where everyone strives to repay their debts. That's clear. But to single out education loans as the one type of debt that our system specifically prohibits from standard bankruptcy is flat-out wrong. We bail out the banks, but offer nothing to American families that borrowed to become more educated and competitive?

And more recently we now have the big bank-fee dust-up. Financial reform post-crisis has reduced banks' ability to collect as much fee income. So some banks have responded by announcing plans to roll out new fees to make up for the new restrictions on what they can charge for the old fees. Let's be clear, this isn't a matter of the banks being able to make payroll. What's at stake is the magnitude of their profits. They are piling on new fees to keep their outsize profits up. Sure, that's absolutely fair play in a capitalistic society. But I don't think this country was built on the fee income that gouged the little guy. Banks used to rely more on income from lending money to qualified borrowers, be it businesses or individuals. Today, the financial system seems less interested in being an intermediary in financing a growing economy and more interested in collecting fees that have absolutely no connection to participating in economic expansion. Is that really how low we're going to let the target be set? Occupy Wall Street is issuing an emphatic no. To that, I give a heartfelt, "Approved!"

For those unfamiliar with Suze Orman, she writes about personal finance.

Even if it's legal to jeopardize the welfare of nonconsenting third parties, it's certainly unethical.

I firmly believe that a huge percentage of the bankers involved knew what they were doing would end in massive collapse for their own banks, and were betting on being bailed out - or on being retired comfortably with their fortune no matter what happened.

After reading this post, my question is: what rules or changes do you recommend be instituted in order to remove the systemic risks that our country faces from the financial sector?