In May, 2006, two years before the subprime mortgage crisis hit the U.S., and by extension (as the U.S. is still the largest economy in the world) globally, my friend Robert Gnaizda, Esq., then general counsel with the Greenlining Institute, and I predicted the coming crisis in an Op-Ed we co-authored in the American Banker newspaper. The subprime mortgage crisis hit with full impact in September, 2008, and the world has not been the same.
Well, another crisis is brewing, but this time the crisis may in fact be triggered by a combination of consumer anger and good intentions. These "good intentions" originate from the genuine interest to protect and serve the public by local, state and federal policy makers, and oddly enough, a good number of my friends in the advocacy and activist community, who of course genuinely believe they are doing the right thing in calling for, amongst other things, "the end to subprime lending." This would be well meaning, but it would also be wrong. Let me explain.
The first crisis, which began as a mortgage crisis, and then morphed into a general credit crisis, then a financial crisis, then an economic crisis, and is at present a global crisis of confidence, was not so much the result of the failure of capitalism and free enterprise, but the failure of greed. As I have said before in the Huffington Post, this crisis is today not so much an economic crisis as it is a crisis of virtues and values. We have lost our storyline.
The crisis was and is not a crisis of subprime lending. Yes, I said what you think I said.