POSTED AT 12:24 AM ON Sep. 24, 2008 | PRINT | Email | SHARE | COMMENTS (5)

When it rains, it pours, and last week’s financial news was a perfect demonstration of that.

Just last year, Wall Street was raking in record revenues with employees at the five major securities firms all receiving an average bonus of more than $200,000. Today, three of these firms have imploded, thanks to their roles in the subprime mortgage crisis.

Worse yet, the federal government recently bailed out American International Group (AIG) and mortgage lenders Fannie Mae and Freddie Mac, effectively nationalizing them.

Accompanying this financial doom are the stories of hard times on Wall Street. News outlets are dedicating features to college students currently facing the prospects of jobs that do not guarantee Town Cars and gold Amex cards or shoe shine boys at risk of losing their livelihoods.

Apparently, no one faces the pinch more than Wall Street bankers. No one, except for all those people losing their homes. 

In August alone, one in 416 U.S. households got a default notice, were warned of a pending auction or foreclosed on. A disproportionate number of these homeowners are blacks or Latino since they were most susceptible to sub prime loans.

No government agency seems interested in “bailing” these individuals out. This has largely to do with the dominant discourse surrounding people of color as “greedy” and undeserving of government aid.

Some argue that the government can do little to aid homeowners. This strikes me as a little preposterous considering the abundance of good proposals.

Consider one put forth by Nouriel Roubini, an economics professor at New York University. Roubini claims that while the federal government must rescue the mortgage-related assets of financial institutions, primary aid must be given to distressed homeowners. Specifically, he argues that government purchase of distressed mortgages will ensure that homeowners can contribute to the functioning of the economy with their spending and consumption patterns.

Roubini is no stranger to bold ideas. Back in 2006, he was one of the first economists to suggest that the U.S. was headed for a housing bust.

I am not arguing that federal intervention in the economy was somehow inappropriate. However, support for the economic elite must not come at the expense of others, particularly the vulnerable.

This is easier said than done, given the unhealthy relationship between politicians and the wealthy in America. Sadly, government aid for Wall Street instead of distressed homeowners demonstrates, once again, our societal priorities.