So, What Did You Expect?

In an earlier article, I argued that Congress should pass legislation designed to fix the crisis in financial markets that was experienced in late September, 2008. In short, my argument was that unless Congress stabilized the housing industry, the nation was faced with the prospect of housing troubles spreading to other parts of the economy. I was relieved, although somewhat nervous, when Congress passed legislation authorizing the use of some $700 billion in funds to shore-up the financial markets.

To date, some $350 billion in funds have been spent by the Bush administration, and the chief architect of the recovery plan, Henry Paulson. Unfortunately, none of the money already spent has been allocated to the housing market. In fact, all of the money that has been spent has gone to banks and securities firms, in some cases to the same firms whose poor decisions helped to cause our current credit crisis. Through all this, Henry Paulson appears to be more concerned about his next job (perhaps as the head of one of the rescued securities firms), than he is about fixing the nation's credit problems.

Recently, Fed Chairman Ben Bernanke stated that until the housing crisis is addressed, a permanent and sustainable economic recovery is not eminent. Where has Congress been while some $350 billion in funds have been spent? It appears that they have been asleep at the wheel, as they have been during most of years of the Bush administration. Did I expect a different outcome? No, not really; but I hoped that Congress would at least insist that a portion of the money they authorized would go to fixing the problems existing in the housing market. Mr. Bernanke and President-elect Obama should insist that steps are taken to provide assistance to the housing market. Without a strong consumer sector, which is bolstered, in part, by a stable housing market, the economy is not likely to recover, no matter how healthy bank balance sheets become due to Mr. Paulson's assistance.

Congress still has a chance to recover their fumbled opportunity-by ensuring that any further spending authorized under the "bailout" plan provisions to assist the housing market. If Congress can't do this, then perhaps they could at least manage to remain awake while at the wheel.

Author Biography

Peter Ponzio, the author of Children of the Night, is a CPA with over 30 years experience in Corporate Finance, holding positions as divergent as Treasurer, VP of Sales Administration, Vice President of IT, and General Manager of an internet start-up company in the late 1990s, and CFO at a subsidiary of a Fortune 100 company.

Mr. Ponzio graduated with a degree in English literature from Loyola University of Chicago, and an MA in Literature from Northwestern University.

Peter's website can be reached at http://www.peterjponzio.com