We had no choice but to bail out banks

Jim Weber, Mesquite

Thursday, April 29, 2010 | 2:04 a.m.

Just a few years ago the housing market was booming and banks and other financial institutions were eager to lend. They bombarded us with advertising, often touting unimaginably low interest rates. It seemed that if you were a carbon-based life form you could get a mortgage. The conservative financial regulators in the Bush administration (motto “See no evil, hear no evil, speak no evil”) saw no danger and sat back admiring the workings of the “free market.”

Then things began to go badly. Mortgage delinquencies began to rise alarmingly. Banks and other financial institutions began to realize that mortgage-related assets on their books were worth ca-ca (sometimes called toxic assets) and they were in danger of being insolvent. Faced with this danger, banks quit lending. They would not even lend money to other banks because it was possible the other bank was in as much or more danger of becoming insolvent as they were. Thus started the “credit crunch” that threatened to send us into the Great Depression II.

Now, I don’t like bailing out banks any better than anyone else, but they would have taken the rest of us down with them. So the government had to step in to save the whole economic system before it collapsed and took down Wall Street and Main Street together.

Conservative economic philosophy set our economy on fire and the Tea Party activists seem to be most upset that we’ve had to use too much water to put out the fire. Sending more arsonists to Washington doesn’t seem like the answer to me. The definition of insanity (or is it insaniTEA?) is doing the same thing over again and expecting a different result.