There's plenty of blame to go around

In his Oct. 9 letter, Jim Peterson took exception to my endorsement of decisive action by the executive branch of the government in the current financial crisis.

By laying the entire fault for the financial meltdown on the Bush administration, Mr. Peterson reveals himself to be a part of the "All problems are George Bush's fault!" crowd.

There will be plenty of blame to go around. And bad guys will be found in both political parties in Congress, in the executive branch, on Wall Street, in accounting, law, real estate, and appraisal firms - and among the people who bought more house than they could afford.

Much of the predicate for what occurred took place in earlier administrations when that other party was in charge.

For example, the 1977 Community Reinvestment Act (amended in 1995) forced lenders to suspend their banking judgment so that home loans could be made to people who couldn't afford them.

Also, the 1999 repeal of the Glass Steagal Act tore down the protective wall between commercial and investment banks and led to the development of the exotic mortgage-backed financial instruments that turned sour.

Finally, Democrats in Congress blocked moves to rein in the casino lending practices of Fannie Mae and Freddie Mac.

Contrary to Mr. Peterson's assertion, in March 2009, Treasury Secretary Henry Paulson, sought to increase, not decrease, regulatory procedures applicable to investment banks.

Existing regulations for commercial banks administered by the FDIC worked well. Ironically, SEC regulations, particularly the "mark to market" provisions, actually contributed to the downfall of many financial houses.

I know the big government-types want to believe it, but no amount of regulation can trump bad management. And there is no assurance that government managers will be more effective than the managerially-challenged Wall Street leaders have been.

Charles F. Falk

Schaumburg