Just because you can, doesn't mean you should

Over the last year or so I have read countless articles in the media whereby blame has been assigned and/or delegated to a variety of parties regarding the financial "meltdown". Blame has been assigned, but not limited to: the SEC, President Clinton, President G.W. Bush, former Fed Chairman Alan Greenspan, sub-prime mortgage borrowers, sub-prime mortgage lenders, Congress, the Democrats, the Republicans, CEOs, the poor...and the list goes on and on. Also blamed has been Fannie Mae, Freddie Mac, greed, Wall Street, etc.

No doubt an argument could be made to blame each and every one of these persons or entities (heck, it's already been done, right?), but the problem I have with all this blame is that it doesn't really get to the root cause of the problems we currently see. I believe that greed is the closest descriptor that truly captures the basis for all the problems we are seeing with our economy, but is it really greed or something close to it?

Instead, I've recently formulated my own idea regarding what has been going on in the financial sector that has brought us to the current state of affairs. I think greed is a strong component of the problem, but closer to the source is what I have outlined in this post's title: Just because you can, doesn't mean you should.

Lots of things were done to help get us into this mess. Rules were changed, relaxed, done away with, modified, etc. to allow for what everyone hoped would be a better flow of capital from one place to another: the heart of free enterprise. No doubt some of these moves were intelligent, some political and some social, but just because someone can do something doesn't mean they should.

Looking back at the relaxation of standards for both Freddie Mac and Fannie Mae (as a means to help more Americans own a home) we can see that this was meant to be a social policy with nothing but the best of intentions. Yet, the relaxation of standards was perverted (and in a grand scale) to become a money-making machine for certain mortgage lenders. After all, what impetus is there for the lender to be careful and prudent when they can sell-off the loan and not have to worry about whether or not the buyer could actually make payments for the life of the loan.

Certainly this is, in no small part, a component of greed: making money for one's self without regard for the bigger picture, but the bottom line was that mortgage lenders did not have to go down this path. They could have elected to work within the letter and intent of the new regulations, but opted to not do so. They could, but didn't need to.

I'm actually tired of reading article after article whereby the author attempts to explain why Person A or Governmental Entity B (or some combination thereof) is responsible for this current mess. Each author has his/her own political agenda. Each author has their own area of expertise and may make generalizations about areas of which they do not have sufficient knowledge. Instead I think it makes far more sense to place the blame at the local level as opposed to the national level where most blame seems to focus.

Let us look at the individual loan officers, credit rating agency employees, and the like as the main culprits. They may have operated within the letter of the law, but clearly they knew what they were doing was wrong and they should have stood up, en mass, and said "No." to their overlords. They should have said "This is wrong and we will not be a party to it." But I guess that is easier said than done. Especially when one realizes that their gainful employment may very well be based upon their performance.