by Celeste Froehlich

Created on: October 24, 2008   Last Updated: January 21, 2009

The current financial-crisis is rooted in unrestrained greed and the climate of deregulation that allowed it to spin our of control. The banks have been victims of the short-term outlook of their own CEOs. Their leaders in recent years have been much more concerned with short-term profits and big bonuses than in the longer-term risks they were piling on to their companies by over-leveraging and investing in mortgage-backed securities. The federal government and its regulators who allowed the financial sector to "get drunk" on faulty risk models shoulder the lion's share of the responsibility in this mess. Obama promises to usher in a new era of responsibility. His approach is to develop and enforce smart regulations that ensure the economy will work for all Americans, not just a privileged elite.

Much of the current financial crisis could have been avoided with a higher level of regulatory oversight. Some of the deregulation that led to this mess began during the Clinton administration, but the more important changes have taken place during the current Bush reign. Treasury Secretary Henry Paulson, and former CEO of Goldman Sachs, in 2005 he advocated for the most recent deregulation of investment banks that led to this mess. We need to stop relying on the same people and tired solutions that got us into this mess to get us out of it.

Clearly other factors have also played a role in the crisis, like Alan Greenspan's interest rates that were held too low, too long fueling a dangerous housing bubble, or the ignorance of borrowers who took on mortgages they couldn't afford. Undoubtedly, these factors and others contributed to the creation of a perfect storm, but ultimately, this crisis and the huge taxpayer bill we are footing for it are the end result of the conservative philosophy of extreme deregulation, of utterly unfettered capitalism- the same philosophy that has been a hallmark of John McCain's career. In the midst of this crisis he has attempted an about-face on regulation, but his words ring hollow after a career dedicated to deregulation of markets.

Free markets can promote innovation and wealth creation, but they require checks and balances in the form of regulation. May we learn this lesson well, and vote for political leaders who will assure it, so we are not playing the same blame game a generation from now. Our children can't afford it.

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