Place blame for crisis

By JOSE A. GARCIA

President Obama is right that we all need to do our part in this “new era of responsibility.” But those who caused this current crisis owe a special obligation to make amends. And lax government enforcement, which allowed the crisis to fester, must come to an end.

We are in a severe recession right now because banks acted recklessly in offering mortgages to people they knew couldn’t afford them, and then by selling the mortgages to Wall Street.

Investors there doubled the irresponsibility by trading in obscure mortgage derivatives.

And the federal government was complicit because it did not regulate the trading in newfangled commodities tied to those derivatives, like credit default swaps.

Responsibility

Those most responsible for creating our current crisis must accept responsibility for their past actions and shoulder the brunt of the hard work to come.

As Obama stated in his inaugural address, “This crisis has reminded us that without a watchful eye, the market can spin out of control — and that a nation cannot prosper long when it favors only the prosperous.” No longer can the market be left to regulate itself to the detriment of American workers, our environment and the global economy. Continued lax regulation would be irresponsible.

It’s all well and good for Obama to call on all Americans to sacrifice. But America’s working people know all too well the sacrifice that hard times call for. Families are losing their homes, men and women their jobs and debt has become the monkey on the backs of too many Americans.

While everyone will have to pitch in, working Americans have already been giving their all. Americans are working more hours for stagnant wages — all while labor protections are slowly being eroded. As workers toil to keep productivity and profits growing, their health benefits are disappearing while out-of-pocket medical expenses are becoming commonplace.

Paychecks short

For all their hard work and sacrifice, American families have been rewarded with debt. Paychecks are falling short. Credit has become the way to meet the money gap when families need to pay for basic necessities like food, car repairs, home repairs and medical expenses.

So, yes, we all need to pitch in, but above all the private sector and government regulators need to act responsibly. Financial firms must ensure that their products are not filled with tricks and traps aimed at obscuring the true cost of credit. And the government must keep a sharp eye on them.

As we renew our resolve, we must also pledge that American families will never again be an afterthought of the American market.

That is true responsibility.

X Jose A. Garcia is a senior research and policy associate at Demos (demos.org), a national public policy center. He wrote this for Progressive Media Project, a source of liberal commentary on domestic and international issues; it is affiliated with The Progressive magazine. Distributed by McClatchy-Tribune Information Services.