With a Presidential election in sight, this week’s financial crisis has exacerbated pundits’ unsavory inclination to point fingers. Here is an article that shines a light on the outrageous behavior of investment bankers without rushing to judgement about which political party is more to blame.
In fact, the article, written by a hedge fund manager and bank owner, rips Washington in a wholesale, non-partisan fashion. It also contains the insight that Fannie Mae and Freddie Mac are “essentially huge, undercapitalizd hedge funds.”
Calling Out the Culprits Who Caused the Crisis
Looking for someone to blame for the shambles in U.S. financial markets? As someone who owns both an investment bank and commercial banks, and also runs a hedge fund, I have sat front and center and watched as this mess unfolded. And in my view, there’s no need to look beyond Wall Street — and the halls of power in Washington. The former has created the nightmare by chasing obscene profits, and the latter have allowed it to spread by not practicing the oversight that is the federal government’s responsibility.
Without Wall Street, the housing bubble would have ended shortly after the Fed started to raise interest rates in 2004, because no lenders would have originated these toxic mortgages if they had to keep the loans on their own balance sheets.
Many investment professionals operating in my world believe, as do I, that we are facing the greatest financial crisis since 1929.
The author is Eric D. Hovde, chief executive of Washington-based Hovde Capital and Hovde Acquisitions.
Filed under: Securities & Exchange Commission, Uncategorized | Tagged: Eric D. Hovde, greenspan, hedge fund, Hovde Capital, investment bank scandal, mfsw, sec, us congress, Wall Street
