The United States is in the worst economic crisis since the Great Depression and there does not seem to be much light at tunnel’s end. Every American family is adversely affected by this situation and will continue to be for many years.

Well, maybe not all. 06-29-11-dsve-wilson.jpg

An elite cadre of Wall Street bankers, hedge-fund managers and brokerage executives are still enjoying an extraordinary high life. Last year Wall Street bonuses exceeded $100 billion. Whose money was that and just how much perspiration was produced by the recipients to entitle them to such over-the-top compensation?

How it happened is really not all that complicated. The nation’s fi nancial troubles became a crisis with the collapse of Lehman Brothers, a highly regarded and respected investment banking and fi nancial services institution which declared bankruptcy in September 15, 2008. The collapse of that 150-year-old business was caused by greed, gullibility, poor management and some level of fraudulent behavior by Lehman management. The problem began some years earlier when applications for residential mortgages were accepted and approved without investigation into the borrower’s ability to repay. The fundamental concept of credit is that the borrower can and will repay. But this was not a concern with sub-prime mortgage lenders.

The thinking in Washington was that everyone had the right to own their own home and no one should be excluded from this privilege just because they were already burdened with debt or had a low income or no income. Such borrowers were offered what became known as sub-prime mortgages. These loans involved higher interest rates because the risk of repayment default was greater. But the completely fl awed rationale was that residential property would always increase in value so a foreclosed mortgage really posed no serious risk to the lender.

How wrong this was.

Most of these sub-prime loans were bundled together by investment banking fi rms and were sold globally. Millions of these mortgages became toxic assets when the loans went into default. Lehman sold these bundled mortgages but also retained very signifi cant quantities because the yield was extraordinarily high. But that yield was dependent on timely repayment which was not happening. In spite of outrageous end-of-quarter manipulations to deceive analysts Lehman’s balance sheet became obviously and seriously negative.

The price of their stock fell to the fl oor and their board sought federal relief which was denied. In the midst all of this, Lehman executive George Herbert Walker IV (and cousin to George Walker Bush) had the audacity to not eschew millions in bonuses for himself and his team because they were entitled to them. What a self-serving arrogant jerk is George Herbert Walker IV. These Lehman executives and many others with financial services firms were responsible for the loss of millions of American jobs and hundreds of thousands of families being turned out of their homes. And for this they felt they were entitled to millions in bonuses? What are we missing here?

So it leaves a most obvious question on the table. How could these super intelligent, highly educated and trained bankers, investment brokers and hedge-fund managers have been so stupid?

The answer is that they were not and they are not. Well, for the most part, at least.

There really is no explaining Bank of America’s acquisition of Countrywide Financial if Bank of America conducted appropriate due diligence. But Bank of America Chairman Ken Lewis was entranced by a 7 percent+ return on Countrywide’s assets so they did the deal. Then they reluctantly agreed to acquire Merrill Lynch, which was within hours of collapse, only to fi nd out later how desperate the esteemed brokerage house’s condition was.

Bank of America, Wells Fargo and other lenders then began frantic foreclosures on the properties in default with absolutely no regard for the borrower’s rights. People were ushered out of their homes after part-time paper signers executed foreclosure documents without concern for proper foreclosure protocols. This was done with the full knowledge of the CEOs and boards of these banks, which now use institutional advertising to promote a “good guy” image.

That is arrogance personified.

Now comes the question of who pays. Our country pays. The world pays. Every man, woman and child, except the few select from Wall Street are paying and will continue to pay for many, many years.

FDR realized that the way out of the Great Depression was to get some money in people’s pockets. The banks had to start lending and the government had to lead the way with job creation.

It worked.

Today banks are not lending. The very institutions that created the crisis are refusing to provide credit — which is the means for businesses to start, construction to begin and American citizens to do business with each other in a traditional and time-tested manner.

So the next time you walk into your local bank branch and you are offered a cup of lemonade and a cookie, just politely decline. Instead say, Brother, can you spare me a dime?”

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