MacroScope

Who do you blame for the credit crisis?

June 30, 2009

Greedy bankers are routinely blamed for the credit crisis but one British-based poll of — well, financiers — spreads the blame more widely.

Gary Jenkins, head of fixed income research at Evolution Securities, wanted a more specific scapegoat and ran a poll of about 200 mostly fund managers and investors asking them to pick their credit crisis culprit. Former U.S. Federal Reserve Chairman Alan Greenspan was the clear winner, picking up 35
percent of the votes. He has been widely criticised over the past year for low interest rate policies that helped fuel the credit boom.

Former U.S. president Bill Clinton also figured quite prominently with about 10 percent of  votes, and British prime minister Gordon Brown got quite a few.

Some bankers were singled out, including Fred Goodwin, former chief executive of Royal Bank of Scotland and Richard Fuld, the head of collapsed Lehman Brothers.

In a related article in Euroweek, Jenkins also had a unique culprit — Bill Gates of Microsoft. None of the maths behind structured credit could be done without spreadsheets like Excel, Jenkins reckons.

So who do you think is to blame?

(Reuters photo: Kevin Lamarque)

Comments
20 comments so far | RSS Comments RSS

What has Bill Clinton got to do with the credit crisis? As far as I know he reduced the deficit.

 

The Republicans, including McCcain and george Bush, made the whole mess worse, by obstructing valid oversight of the entire financial system.

Over sight they said would “drag down the economy”; yeah, well, look what they’ve got for the “freedoms”. People are by nature greedy, and need to be “regulated”.

Not to mention the Bush/Republican $3 TRILLION war in Iraq, one with no justification, has increased the US federal deficit more than any other administration in history; it’s now approaching $10 TRILLION, or about $30,000 PER PERSON !

 

Well,
from my point of view the roots of the credit crisis is not a macroeconomic one but a micro – well a micro of jubos respectively financial institutions thriving for market shares and volume.
Bank-managers driven by short term profits in order to keep share prices of their companies up in order to avoid beeing taken over by other bank managers…. and so on. The funny end of the story is, that the conservative banks whos shareprice did not rise as much are the winners. The short term driven bankers were taken over by the conservative bankes.
Thats basically the story we are all suffering from.
Well…1929 …. 2008 the next financial jubo crisis will be in 2087 …thats the good news about it.

Posted by Mark | Report as abusive
 

The blame is on the U.S. Government for allowing unregulated capitalism.

Posted by John Kubica | Report as abusive
 

I look for what they have in common. I’ll bet they have MBAs, mostly from Ivy League schools. It is what they have been taught and encouraged to do, that is reflected in the current mess. If they had been schooled in a more conservative fiscal policy, perhaps the crisis could have been avoided or at least it would have been more easily managed.

Posted by w edwards | Report as abusive
 

Its the governments fault. End of. There is no such thing as a free market anymore. Get back to competing currencies backed by commodities. Ever since 1971 the printing presses have been in overdrive and the solution we are told to use today? – SPEND SPEND SPEND. Now please just try to apply this logic to your own home budget……..yup, wouldn’t work huh.

 

I have an economics degree from the University of St. Thomas. One of those few that watch these meetings in front of the house and senate banking committees. Greenspan warned them for years about the danger of letting Fannie and Freddie continue doing what they were doing. I would say the house and senate were to blame for inaction or not taking action to prevent the housing problems we now face.

 

Clearly, the federal reserve controls all monetary policies of course. With the passage of the Gramm-Leach-Bliley act of 1999 that repealed the Glass-Steagull act of 1933, congress effectively removed a series of checks and balances that have worked effectively to regulate banking since 1933. Clearly it would seem this was a mistake and a catalyst to the present day crisis. Moreover, for many years, Greenspan has been very clear about the need to address the falling dollar and the fact that America consumes much more than it produces. When foreign investors pull out of the dollar, it essentially creates a “run” on the bank and federal reserve panics because now the system has to come up with the required liquidity to pay these people who want out. More than one analyst have hinted to this scenario being played out last September which it would seem could also be a catalyst to our present day mess.

Posted by Donnie | Report as abusive
 

George W. Bush is to blame

Posted by Kent McAbee | Report as abusive
 

I think the Bankster’s & Congress in concert led to the crisis. History shows Govertments are never for the people only for themselves and their lobbyist. All self interest. Why is it when a company makes a mistake they seem to never repeat it’s history yet the state does? Madoff just used the system that was in place to his advantage with no regulation to stop him nor cared to.

Posted by Brian Scrocca | Report as abusive
 

I blame George W. bush his policies,and for not understanding markets,rules,etc…He is responsible,in fact its hard to believe how he managed to serve two terms,americans are of course also responsible,they elected him twice.

Posted by martin paciuc | Report as abusive
 

I blame everyone involved in 80-20 no doc loans.

And I blame everone involved that took out option-arms and didn’t have a plan for the increase in interest rates.

And I blame congress for holding onto the gasoline taxes such that it causes natural gas, electric, and hyrodgen (water+electricity=hydrogen) to be left out in the cold for delivering our energy to power vehicles.

I blame that desparate stranglehold on gasoline taxes for vulnerability of the US economy to oil flucuations.

Remember, the investment world caught on to “plateau oil” and then the price of oil jumped…then the price of gas followed….then inflation….around then people stopped buying cars….then interest rates…then the defaults on option loans and 80-20 …then the economic collapse.

I blame the politicians mostly. Because they have no guts to let loose of any tax revenue they are currently getting.

That desparate grip on transportation taxes and the manipulation of taxes associated with transportation is a huge problem.

Posted by LAObserver | Report as abusive
 

Greed is a byproduct of capitalism. Uncontrolled greed is a byproduct of government incompetence and corruption.

Since jailtime has always been an undesirable consequence of greed, it follows that a tidal wave of careless, greedy and previously illegal practices were the result of flawed government policy.

The Federal Government…..especially electeds…..are the culprits in the meltdown. A major conspiracy underway for 20 years. No doubt about it.

Posted by rayman in CA | Report as abusive
 

Clearly, all of the above share some of the blame but it goes much further. The Republican majority was complicit with Clinton when he signed the credit swap legislation. Clinton and the democrats then pressured the banks, Freddie and Fannie to push through more loans for low income people. When regulators came before Barney Franks committee in 2002 with concerns about future problems in the banking industry, he and Waters adamantly told them there was no problem and refused to look at the numbers. In 2005 when the Bush Administration, McCain and Shelby again tried to get legislation through the Senate to bring the situation under control, it was voted down, with Barack Obama as one of the no votes. Chris Dodd had sweetheart deals going with the Bankers and Mortgage companies and closed his eyes to what was happening. Obama received huge campaign contributions from Freddie, Fannie and Raines. Bankers and Mortgage companies took advantage of the laws that were passed going back to Jimmy Carter and the fair housing legislation. Our elected leaders passed the laws that allowed all of this to happen and the bankers took advantage of the yellow brick road layed before them. Greenspan made credit free and easy so his legacy would be a man of continued prosperity. The biggest culprits are the elected officials and their banking buddies who greased their campaign coffers. The foxes are still in the hen house and cannot find a way out. We are doomed to legislative mediocrity and an administration who believes in Nirvana.
God help us.

 

Blame goes to un-constitutional governing, ignorance, and greed amongst our voters and politicians, for decades leveraging the sovereign wealth, and the personal responsibility of the American Republic.

Posted by jason | Report as abusive
 

All of us who have spent more than they’ve earned.

 

I blame everyone who didn’t question the mentality of continuous growth, and who joined in because everyone else was doing it.

 

Who do we blame for the credit crisis? That’s the easiest question I’ve ever heard, except for maybe “what day is it?’. Credit in and of itself is a flimsy excuse for people, who can’t otherwise afford to live within their means, to establish a temporary higher standard of living. The old saying of “If you don’t have the cash to buy it, don’t buy it” should be printed on every piece of American currency. And another all time favorite “Buyer Beware” should be stamped on everyone’s forehead to remind them of the credit scams that are so prevalent in today’s world. We, as a nation, are living way beyond our means, from corporate American to the hourly employee at the burger stand down the street. This will all come crashing down hard and heavy, much stronger than the current “crisis”, if we don’t turn things around. Stop spending on frivolous things, save a little, and live within the means. Mortgage companies loaning money for a house that the borrower can’t afford is not the mortgage company’s fault. It’s clearly the fault of the borrower. All borrower’s, whether for credit cards, mortgages, vehicles, etc. are considered as adults and should conduct themselves accordingly. Variable rate interest rates are just one of the things that borrowers should consider prior to signing the papers. It’s certainly not up to the taxpayers to bail them out simply because they feel that they were duped into something. Give me a break!

Posted by Frank | Report as abusive
 

Our economy prior to 2008 was an inflated one, built on leveraged trade, aggravated by greed and plagued by poor leadership. When it worked, we took it for granted. When it failed, as designed to, we tried to find scapegoats. The crisis is one of cumulation. We just need leaders of good vision for the long term in the Fed and Treasury.

Posted by Miner | Report as abusive
 

I have a hard time blaming lenders because of their greed. I certainly don’t feel sorry for them. They took the risk and now they have to pay for their greed. Massive losses on bad loans. Got what they deserved. Borrowers, though? How can you borrow more than you can afford. Spend it. Then blame someone for lending you too much?

 

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