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September 18th, 2008
02:49 PM ET

How we got into this money mess

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/09/18/art.vert.financial.street.jpg width=292 height=320]Editor’s note: Glenn Beck is on CNN Headline News nightly at 7 and 9 ET and also is host of a conservative national radio talk show.

Glenn Beck
CNN Headline News Anchor

"Greed is good."

At least, that's what Michael Douglas' character Gordon Gekko claimed in the movie Wall Street. But, just like Gekko, the modern-day companies that followed that motto now find themselves wondering how everything could collapse so fast.

You know the names by now: Countrywide Financial, Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG. And that's not even counting companies like Citigroup, Merrill Lynch, and Goldman Sachs that, while still in existence, have lost untold billions in market value and have laid off thousands of employees.

Maybe greed isn't so good after all.

Lehman was founded in 1844 when Henry Lehman, a German immigrant, opened a small shop in Montgomery, Alabama. His brothers joined him six years later and, by 1858 they were busy turning cotton provided by local farmers into a cash crop - a business that didn't have anything to do with helping low-income families afford 27-bedroom McMansions.

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Filed under: 360° Radar • Economy
soundoff (28 Responses)
  1. Franci

    Should These Crooks (Lehman Brothers Inc. Chairman and Chief Executive Richard Fuld received compensation valued at $22.1 million in 2007, etc.) be charged for criminal actives under the RICO act?
    Racketeer Influenced and Corrupt Organizations Act is a United States federal law that provides for extended penalties for criminal acts performed as part of an ongoing criminal organization. It also provides a civil cause of action for those injured by violations of the act. RICO was enacted by section 901(a) of the Organized Crime Control Act of 1970 (Pub.L. 91-452, 84 Stat. 922, enacted 1970-10-15). RICO is codified as Chapter 96 of Title 18 of the United States Code, 18 U.S.C. § 1961–1968. It was intended to make it easier to prosecute organized crime figures, but has been applied in several other cases as well.

    September 19, 2008 at 12:15 pm |
  2. Cl Montgomery Jr

    First, I would like to know how this financial crisis could have occurred without the appraisers being out there over valuing the average property. It is well known that appraisers normally receive flat fees for their part, and when they satisfy their loan agents, they get more work. The loan writers receive commission and I'm guessing some coached their appraisers on where they expect the property values to come in even without themselves having been out there. The refinance people drove their own commissions higher and higher, but without the appraisers going along with the deal it could not have happened.

    We all know that when an appraiser is on the property, the homeowner is anxious to get some idea of where the numbers will come in and usually before the appraiser leaves the property, he has disclosed to the homeowner a good idea what will be reported to the refinance company.

    Everyone, including the homeowner took a piece of these fictional home values. The higher the equity amount, the more money everyone took out of the deal. But it could not have worked if the appraisers were held to a higher standard of honesty and professionalism.

    Question: How come the appraisers aren't kept separate and prevented from being hand-picked family members, business partners and the like? When a refinance company sends out a property appraiser, it should be someone dispatched from a separate company altogether, not someone with an office down the hall.

    CL Montgomery Jr
    Fresno CA

    September 19, 2008 at 12:06 pm |
  3. Rose of Muscoy, Calif

    Remember greed is man, religion is church, faith is God.

    September 18, 2008 at 8:52 pm |
  4. xtina, chicago IL

    maybe we need to become more conservative in our lending practices in the US after all.

    I was thinking the other day about Barack Obama's reaction to all this ; and I wondered , "would Barack Obama be MORE likely to favor government intervention and pushing for loans to lower income people, or would Barack Obama be LESS likely to push for big government to "take over" and push for loans for lower income people?..."

    September 18, 2008 at 8:52 pm |
  5. Sandy

    Let's face it, we need to make sure that business can't buy off our elected government officials. I really believe if they have money to give millions to the senators and representatives they have money to bail themselves out. I believe all spending is a matter of priority. Have you ever stood in the grocery line and the person in front of you uses their welfare card for their kids milk and cereal but they have money to pa;y for their beer and cigarettes. PRIORITIES. We also have parents that can't afford insurance for their families but they have boats, nice cars and plenty of money for booze and cigs. I've also been in the checkout line to pay for store brands for my childs milk and ice cream and a welfare mother in front of me bought each child their own BlueBell ice cream. DEFINITELY PRIORITIES from top CEOS to the welfare mother.

    September 18, 2008 at 8:50 pm |
  6. Joseph Tampa

    Simple, the Bush Administration allowed it to happen on their watch. Less than 3 months ago, all major oil companies posted record profits. Business as usual as everyone struggled to put gas in the vehciles. This could literally wipe out the middle class.

    September 18, 2008 at 8:46 pm |
  7. Greg

    Keep yelling Glenn. Lets just hope the goverment doesn't overreact the other way but I have very little confidence they will.

    September 18, 2008 at 8:38 pm |
  8. Roberto in Revelstoke B.C.

    Twenty eight years ago, when Regan ushered in his economic ‘trickle down’ policies, Wall Street and industry’s top C.E.O.s were, for the most part, members of the ‘greatest generation’; people of decency, courage, concern, and champions of the middle class from whence they came. Today, we have greedy, self centered, over paid, fools whose only motivation is getting rich as the poor get poorer, aided and abetted by the same type of fools in Washington. Thank heavens that in Obama there appears to be decency again; may his vision and intellect guide America back from the brink.

    September 18, 2008 at 8:23 pm |
  9. Jacque

    It is easier for a camel to get through the eye of a needle then a rich man to enter the kingdom of heaven.

    Money love of money and power is the root of all evil. Will McCain start to miss use his powers. McCain will be a weak president because he relies on his vp in order to shine. Well the candle will sson brun out. America is tired of jokes and no answers, Wake up McCain this is no laughing matter.

    September 18, 2008 at 8:18 pm |
  10. Melissa, Los Angeles

    I heard that since countries are printing up more money to try and fix this situation, they are going to compound it more by creating inflation.

    These companies should just fail and not get government help. I know it will cause a huge financial problem but it seems as if corporations are getting off far too easy.

    September 18, 2008 at 8:04 pm |
  11. Robin

    It is just so frustrating. These people over borrowed and over lended while many Americans did without things to make their own mortgages. Now, the return for being responsible is bigger taxpayer debt. Money, which I am sure, we are borrowing from CHINA because we do NOT have any. It is a great practice for some.

    Well, for instance, my brother in law is having a hard time so I think I'll write him a one million dollar HOT check! I'll assume the bank will cover it because that is what my government assumes we'll do as a nation.

    We should all start learning Mandarin. This is an extremely precarious issue!

    September 18, 2008 at 6:48 pm |
  12. Kay

    I was reading about a family collecting 133 million in a lottery in Ga or somewhere. I know this could be a stupid thought to some, but remember this is "just my opinion". The Tennessee Lottery is now at 154 million for Saturday's drawing. Instead of 1 person winning all of this money, why in the world could $100,000.00 or $200,000.00 be the winnings of over 2000 people or 1500 plus families. I'm for sending young people to college who deserve to go, but what about the ones who just want to get pregnant at 14 & 15. These kids are not going to go to college, they know everything about everything! Why in the world does everyone need millions of dollars to be happy? TV, MTV, Rappers, Paris Hilton? It seems like anymore there is a thief in every "henhouse"! What happened to being HONEST!

    September 18, 2008 at 6:04 pm |
  13. Larry

    We all know that the Republicans is responsible this problem. Bush, McCain, Palin etc. all are part of the problem not the solution. But with CNN is giving McCain and Palin 3 to 1 air time, makes it seem like their right. When you have evidence that Palin is lying, McCain don't know anything about the economy. Obama is the one we need. But we all know that when it really look like he is going to win, race will take over. Just remember His mother is White! How can you call a prisoner a hero? I am a veteran of 14 years, three shooting wars. He was shoot down, so he did something wrong. He did not lead any troops or airmen is escape attemps. The only thing he did was refuse early release by the enemy. But he said, if he knew that it was going lead up to five more years of being a prisoner, he would of made a different decision. CNN refuse cover that you call him a hero who's?

    September 18, 2008 at 5:53 pm |
  14. leeda

    we should stop the blame ing game lets search what to do next ask the exprts and see who can gaive the best advise ofter all its our money right so lets not argue and do something about it . right

    September 18, 2008 at 5:48 pm |
  15. John Satriano

    McCain blames naked shorts and up-tic sales for the market's problems. These are sleazy trading practices which were approved to benefit speculators. But how much could they really have hurt the economy. Not very much, I think.
    How much does McCain even understand about these practices. Not very much, I think.

    September 18, 2008 at 5:33 pm |
  16. Keith

    Social programs for the middle class? When are people going to realize that the democratic strategy is already being implemented in obama's 'Public Allies' in Chicago? No wonder obama wants to meet with hugo chavez, nationalize everything; if obama looks to his right he'll see joe lenin, that's how left obama is.

    September 18, 2008 at 5:28 pm |
  17. Martha Nunn

    This is the frist time in history news people have done so much nick picking ever word a person say. This is a person running for any thing. Some of you people neeb a real life. You will ride one person and let the other person just lie!!!!!!!!!!!!!!! Now you news people tell a lot of lies also. Please stop acting like we the people can't think for ourself.
    Martha

    September 18, 2008 at 5:18 pm |
  18. Dan in Boston

    Finally, trickle down has reached its final days. !!!!!!
    The illogical theory of enriching the rich has met its match in Sen. Obama. Today Obama suggested that a kinder economic path seems lit.

    I hope the tax scheme he suggests appears sagacious and wise widely. Fair tax and good treatment of the poor (and middle class (now too)) should be perceived as properly populist and all-American as it truly is, and the "tax-break-for-Trump voodoo-" economics can be put to rest. It is sad for America that the past deregulation presidencies pushed us back to back economic times (maybe as bad as 1929 but with a draining war at the same time).
    Too bad we have these poor days ahead - for my family, your family, AIG, my wallet, and my empty gastank (that I hope'll get me to work for payday tomorrow– the car needs repairs too).

    But Thanks for Baracks epic ephocal speech today that put to rest the pro-rich tax system.
    Thanks Senator Obama, GOOD LUCK and GODSPEED.

    September 18, 2008 at 5:17 pm |
  19. Michael, Pensacola, FL

    Republican deregulation! To them its all about making money so they've had 8 years to weaken the oversight controls!

    September 18, 2008 at 4:56 pm |
  20. chris

    congress needs to step in and investigate chris cox

    September 18, 2008 at 4:42 pm |
  21. suki

    This problem started with the republicans back in the late 80's – just look at the Keating 5 ( McCain was looked at during that though he eeked by and didn"t get busted like he should have) – he and his wife have been involved with corrupt people who got rich off the backs of the middle class

    Phil Grahm is advising McCain – his history started this dergulation ball rolling and McCain has been in step with him and Bush ever since

    September 18, 2008 at 4:25 pm |
  22. Don, WA

    I hate to admit it – but I find myself agreeing with Glenn Beck...which troubles me...I hope it never happens again.

    September 18, 2008 at 3:54 pm |
  23. Jim

    " Greed is good"- Woe to you who call good evil & evil good.-
    Woe unto you who are rich, You have recieved your consolation.
    Lay not up for yourself treasure on earth .
    Words & wisdom 2000 years plus old have been ignored .
    Stupidity can be best defined as do the same mistakes over & over & expecting different results.- That is how we got into this mess.

    September 18, 2008 at 3:37 pm |
  24. Maritza

    Thank you for your honest clarity, again you are the voice of reason on many issues, immigration, taxes our national security, and of course your perspective on this election, too many news anchors display their bias toward Obama on CNN , that Cambell Brown women who on occasion takes over for Anderson Cooper is soo bias I have to reach for the remote, speaking of bias your view / analysis is always usually free of any one sided message your programming is always very imformative and well structured, once in a while we can see your veins popping with anger at the left , but for good and justified reason , your radio program is just as interesting and important to keep on the air, Thanks Glenn for your work , thanks for not forgetting middle america.

    Maritza

    September 18, 2008 at 3:22 pm |
  25. MaryAnn

    It all started when Bush proposed legislation and it passed for financial institutions to increase minority home ownership around 2002. then in 2004 with no down payment for minority homeowners. All this with no regulations to keep the financial institutions honest....and here we all. Suffering from Main Street to Wall Street.

    September 18, 2008 at 3:10 pm |
  26. Kent, Illinois

    I will refrain from telling my opinion of the author as that alone will make sure that it isn't printed. I will only say that I do not believe in bailouts of any kind for companies that are traded on Wall Street. I understand the other opinion and I do not agree. If you run a business improperly and you get in trouble..............other companies will buy you..........period. It is the way of Wall Street. No bailouts by the Govt should happen.............Time to put a Democratic President in office..............things would not be happening this way.........

    September 18, 2008 at 3:08 pm |
  27. Cindy

    Glenn,
    I have to agree with you. It was greed pure and simple that got us into this mess. These big corporations thought that they were going to make a fast buck by giving everyone and his brother a loan but it backfired on them and now they are running for their lives. Meanwhile we, the American people, have to cough up the cash to fix their problems.

    I say we need to round them all up and prosecute them to the fullest extent.

    Also part of the problem was that people were too busy trying to keep up with the Joneses and not rationalizing if they could truly afford the house that they were buying. They can't be left out of this mess either. They are very much to blame!

    Cindy...Ga.

    September 18, 2008 at 3:06 pm |
  28. J from DC

    The problem is with solutions.

    Republicans Solution: More oil wars and tax cuts for bib business.
    Democrats Solution: More jobs and social programs for the Middle class.

    The Republicans Solution is the problem, and it is wrong.

    Ever have someone cheat on your paper in school?

    Seem these days, the McCain campaign is coping answers off the Obama Campaign. From his message of Change to his Campaign colors. Problem is they are getting away with it. Maybe, the McCain campaign is subconsciously endorsing the Obama Campaign. Now that’s a story waiting to be reported.

    September 18, 2008 at 3:02 pm |