Romer Thinks "Consumers" Should Take Share Of Responsibility For Lehman Collapse

Hey kids, in case you haven't figured it out, yesterday was the anniversary of Lehman Brothers' epic collapse, touching off Wall Street's brilliant swan dive into a dung heap of its own making.

And so the White House is Making The Speeches, and having Teachable Moments, Never Forgetting, and Putting Things Into Larger Historical Context. And somewhere your Wall Street Titans are absorbing this rhetoric and searching their souls, wondering: "Hey! Could we take this outpouring of sentiment, chop it up into a tranche with toxic mortgages, and sell it as derivatives?"

Yesterday, Christina Romer went on MSNBC to talk to Andrea Mitchell about all the great lessons that this moment has to teach.

ROMER: We absolutely feel that we have to get regulatory reform moving! That's part of what the president was talking about today! Using this anniversary to remind people! Just how bad things were a year ago! And how we do not want to be there again!

WATCH:

Visit msnbc.com for Breaking News, World News, and News about the Economy

You should watch the video, because without it, it's so hard to convey Romer's VAPID! ENTHUSIASM! FOR EVERYTHING! That makes it hard to determine what aspect of the president's remarks are most important to her. Luckily, she tells us:

ROMER: I thought the other part that I liked so much in the president's speech is to say, it's not just about putting in new rules, it's about a new sense of responsibility! Among government, business, and even consumers. That we all need to do our part to rebuild trust and make the system work again! And I thought that was a terrific message!

Yes! That is a "terrific message!" I hope that millions of American consumers spent some time yesterday reflecting on how their lack of responsibility caused the demise of Lehman Brothers. Let's all meet back here tomorrow to reflect on the anniversary of that time we all caused the AIG liquidity crisis!

[Would you like to follow me on Twitter? Because why not? Also, please send tips to [e-mail] -- learn more about our media monitoring project here.]

Comments

[RJPCambridge]

Vapid MBA to be sure --- the lowest lifeform in modern day America is the MBA.

They all took this "on message" public speaking classes - and can say nothing endlessly - while the fellow MBA's adore them for being so vapid that the fools will be stunned by the style and ignore the lack of anything behind it.

Been watching speeches like this in corporate America for 20 years --- yawn.

[CherokeeGirl]

Did we take the candy? Yes. Did we refinance every six months and pull ghastly amounts of money out of our houses? Yes. Did we rely too heavily on credit? Yes. We take responsibility for taking the candy, but everybody was doing it and nobody foresaw what would happen because of it. We should have seen it coming, but we didn't.

However, you can't just smack wall street and the banks on the hand and tell them to be responsible and then everything's gonna be okay. You can't expect a scorpion not to sting you.

Common sense is in order, regulation, and ENFORCEMENT. Can't wait till we start doing that!

[benwha]

yep, I saw neighbours borrowing from their house to buy BMW's, massive flat screen TV's, etc. We can sit here and complain about wall street but we sure as he$$ better look at ourselves and what drives our incredibly selfish, immediate gratification and "entitlement" behavior.

[gavrielle]

Actually, some of us didn't take the candy. Some of us threw away the pre-approved credit card applications because some of us paid for everything in cash and owned our stuff outright. Some of us were told that, since we didn't have credit cards, we had "bad" credit (because we had NO debt and paid our bills in full) so that we couldn't get a mortgage or rent a nice apartment.

You seem to forget that consumers were told deficits were good. Convinced that the more debt they held the more credit worthy they were. Encouraged to pay the minimum on their cards every month so that the banks could rake in double and triple the cost of the purchased item in interest and fees. In order to get credit you had to have debt and as long as you scraped together that minimum payment each month you could get the mortgage, move into the pricey rental apartment, have the big screen TV, etc. Granted, some people are fools, but the system is still rigged against anyone who doesn't have a credit card and didn't spend wildly.

[CherokeeGirl]

I agree with everything you said except for "You seem to forget..."

You don't know what I have in my head. I remember it very well.

[AngelaQuattrano]

Is this really what you did? Because I did not. But I will agree with you on one thing. It would be good for you to start exercising a little common sense if this is how you have run your life.

[CherokeeGirl]

oh gee, thanks for the advice. WHAT WOULD I DO WITHOUT IT? YOu have truly saved my life! NOT!

Look Lady, you don't know what I've been through. You don't know that I had a stellar credit rating till I lost my business due to an anchor store closing in our mall.

See? Make sense? Don't open your mouth unless you KNOW what you are squaking or judging about. Got it? Good!

[MrMostly]

Jason - this is dis-information. Clearly, there was no link in what she said between Lehman and consumers. You made an unfair inference to arrive at that conclusion. Do you believe your readers to be ignorant?

[DWHarper]

I am sure that Romer was just lumping all parts of the financial system together in emphasizing responsibility including consumers. However, the consumer would probably be the least responsible for the financial meltdown. If the consumer is never offered a no money down, subprime mortgage none of this happens. This little "product" provided by the financial minions is at the heart of the crisis and it was only let loose because of the massive deregulation by a Republican Congress and an impotent Clinton and Democratic Party. This also allowed the financial institutions (which is what banks of this time have to be called because the divisions between different financial entities blurred considerably) to market these "junk" mortgages as financial investments. The consumer only wants to buy a house and if they are not offered these mortgages and don't qualify for a traditional loan, they just rent. Of course, then we don't have a housing bubble either.

[LightningJoe]

Jason, you've got some OTHER problem with Romer; not the ones you tell us about -- unless enthusiasm is now a fault. Maybe you just don't like her not-so-veiled implication that we the consumer are also at fault.

Of course we are! It's US who keep this machine ticking over, with our preference for the cheap junk the stores want to sell us, so it can break in two weeks and require another purchase.

You gloss over completely, however, the fact that we consumers were only the last add-on, when she said, "it's about a new sense of responsibility! Among government, business, and even consumers. "

[GabrielNW]

This seems reminiscent of The Samuel Vimes 'Boots' Theory Of Socio-Economic Injustice.

If you're unfamiliar, in short it goes like this:

"[A poor person] can only afford ten-dollar boots with thin soles which don't keep out the damp and wear out in a season or two. A pair of good boots, which cost fifty dollars, would last for years and years - which means that over the long run, the man with cheap boots has spent much more money and still has wet feet."

However, you seem to be blaming impoverished people for only being able to buy stopgap goods as though, if given a choice, they actively prefer to buy things that wear out. I'd be interested in where this information came from. Was there some sort of study conducted that showed - all other factors (price, brand knowledge, etc.) being equal - that poor American consumers would knowingly opt for shoddy merchandise rather than quality goods? I've certainly never heard of this.

[kitkatborn]

What makes you so sure the average consumer wants "junk." Speaking as a consuner, I buy quality when I can afford quality or when it is available. I am sure most consumers feel the same way.

[AutumnWytch]

I think this post is a little unfair. I think what she was trying to say is that the American people need to show some restraint in borrowing. And I'm not talking about mortgages or car loans, I'm talking about unsecured debt, meaning credit cards and unsecured lines of credit. I think that's a valid point. I think it's a fair point. Because too many of us, myself included, find ourselves mired in debt that we can't repay when things get tough economically. We've been living beyond our means for a long time, and the American consumer does bear some burden of responsibility. It is about personal responsibility and personal restraint. Just because you're pre-approved for that $10,000 line of credit or credit card, that doesn't necessarily mean that you should sign up for it and charge it to the hilt. Believe me, I've learned that lesson the hard way.

And to caricature Ms. Romer for her comments is a low blow... in my opinion.

[BluestateGuyInTX]

Okay, here's the difference: if Joe middle class is irresponsible he suffers whereas if the CEO of a megabank is irresponsible the entire world suffers. Do we really need to have all these people making an equivalence between somebody who bought a house that might have been a tad over their means and someone who churned out 100s of Billions of dollars in CDSs? Who do you apologists for the bankers think you are fooling. Nationalize the banks that fail, fire the executives and bust the banks into bite-sized chunks and sell them off. Any corporation that is too big to fail is too big to exist.

[masher]

You are a radical. Next thing you will be claiming that free trade with communist China is a losing game!

[BluestateGuyInTX]

Heaven forbid. ;-) The only problem is that it has been years since China was anything but Capitalist with a capital C.

[johnpfree]

"it's about a new sense of responsibility! Among government, business, and even consumers"

I'd like to think that she was telling people to not incur massive credit card debt even though they can.

If people weren't such dumbasses they wouldn't get in so much trouble. But of course they are dumbasses, so we need to buck the big money and seriously regulate the lenders, both credit card and mortgage, and bust those f---ers up, so they aren't too big to fail!!

[masher]

Yup, if you listened to Obama's speech to school kids it was also all about GOP style blame the victim personal responsibility. Its just a matter of time before Obama will join the rethungs in blaming the economy on lazy stupid American workers.

You can already see this in Obama's policy. He bails out the rich, but forces workers to take cuts. He grants H-1B work visas to Microsoft but ignores all the fraud, lowered wages, and unemployment it creates. H-1B also discourages US students from investing in Math and Science because it devalues the wages by manipulating the labor markets.

It just goes on and on with Obama. Reagan would be so proud of Obama. Too bad the GOP doesn't like him. And he is trying so hard to be a good corporatist.

[WinterParkMom]

I cannot believe that's what you took away from that speech. If you have kids and are a good, encouraging parent, you will have said many times, work hard in school, because no one will ever give you anything for free. You have to work for everything you want, even an education. When your kid came home discouraged from failing a test, or not having won at some game, have you never said, keep practicing honey, or study a little more, or let's try looking at it this way....

If you have kids and you've never said these kinds of things to them, sorry for you and them.

[Synthon]

Yes, as an American consumer I am so ashamed that by pumping a huge chunk of my salary into a 401k for almost 20 years, I helped cause this financial meltdown. I can hardly sleep at night from the guilt.

[techBob]

As well you should be. If you're like me you were forced into a 401k as traditional pensions were converted by the Fortune 100 company I worked for for 28 years only to be layed off after two mergers and years of offshoring, lucky enough to find another similar job paying 40% of the previous salary. Lets not mention said 401K is still 40% below what I personally put into it. Although my mortage is paid in full the value of my home has been deminished while my credit card limits have been lowered, fixed rates turned into variable, interest rates increased by the banks and the minimum monthly payments have tripled. Still never missed a single pasyment in my life. The shame of it all.

[SuZy0925]

Ah yes, capitalism at its finest. All you need now is a health crisis so you can lose your home, and then live in a tent city while the likes of Ken DeLay have 10 luxury homes and are probably eyeing more. Let's face it, capitalism is its own version of communism--there is too much room for corruption. But don't forget to buy American--so those workers in Mexico and Asia can get their little $.05 (year) raise, and the DeLays can buy 5 more homes and gold leaf their bidets.

[Synthon]

Ah, yes, the great 401k Scam. I have a feeling it will go into the history books as a failed economic experiment (to put it mildly). I just thank God that Congress did not let GWB and his crew move Social Security into a 401k-like realm.

[booker52]

From what I understand there are at least 3 bills just sitting and ignored by both the congress and house on financial reform.

[rad21]

There is an unholy alliance of media, policy makers and big business, all greased by the almighty dollar. It is the usual "whom do you know" ... forget about what you know; and how accurate the information is.

Thanks to independent informational channels, like the Huff Po and other blogs, these shenanigans are now more widely known and more critically analyzed.

[Philclock]

What about the collapse of government run FNMA and FHLMC, the underpinning for Lehman?

[KevinLippert]

It is beneath the dignity of a journalist like Jason Linkins to insert so many exclamation marks into a transcript of a TV appearance, then accuse the speaker of vapidity, when he created that sense with his editorializing punctuation I expect better of Linkins and of HuffPost!! Thanks!

[Beca]

Well to be fair this woman was just a wee bit overexcited and gleeful, and it was a bit odd considering the subject matter, almost freaky. As if her people told her to sound positive, and she took that and ran with it, giving it extra effort to sound just oh so peppy and ellated.

[mainemichael]

Vapid is accurate! (!!!!) Wotta schlub! She appears to be capable of being an office manager in a car dealership and little more. She ignored the questions and spewed bullcrap. What's her doctorate in, evasion? If she is representitive of a governmental economic expert, we have as much to fear from gov't regulatory incompetence as from bandit captitalism. (!!!)

[petalsoft]

People investing in homes they know they couldn't afford and because the credit companies allowed them 0% interest doesn't make them any less culpable. Yes, some Consumers gamed the system too...they aren't all on Wall Street. Maybe we should learn about hustling and how Section 8 housing has been abused by the middle class...no? we don't want to go there?

Our society needs to change because who else is producing these Neanderthals on Wall Street...they aren't just coming from the Upper class. Middle Class families have also shared in the thought process into bigger and better, why else would we have the term "keeping up with the joneses" Yes, Jason unfortunately Lehman isn't solely responsible. Lehman represents our society as a whole and that's a vapid, money hungry greedy, whiny non-thinking tea bagging crazies that has taught that it's better to work quick and easy than smart and hard. I think Romer knows exactly what she's saying.

[Beca]

You are under the assumption that people understood all the financial hagling that takes place with mortgage companies, and hence you are incorrectly assuming that they just knew they could not afford the house, but decided to go out on a limb and buy it anyway. That group is so insignificant, it does not even register a blip on the map. Most people went to their banks or mortgage companies and applied for a mortgage--most mortgage officers are sales people, they get rewarded for closing on a new mortgage-or as they call it, selling a new product. If people go to a bank and apply for a mortgage, they are under the understanding that the bank will determine how much these people can afford and the bank will determine the amount of the mortgage they can afford. If the mortgage company says "oh sure you can afford a $500,000 house instead of a $200,000! don't worry, I'll make it work for you with these fantastic products ws have to offer, like adjustable rate mortgages, etc. Getting a mortgage is complicated and can be very confusing, if you have a salesman telling you yes you can afford it, you tend to trust them and go for it. Most mortgage companies don't educate their consumers well and don't clearly explain what all the terms mean, they just keep telling them not to worry, etc. It is the banking indistry's fault for relaxing the rules for mortgages to begin with