‘ ‘ ‘ Over the past six months, the United States has seen unprecedented and previously… ‘ ‘ ‘ Over the past six months, the United States has seen unprecedented and previously unimaginable developments in the financial sector. ‘ ‘ ‘ In March 2008, Bear Stearns, which was previously one of the world’s largest investment banks, collapsed as a result of the widespread subprime mortgage crisis. The subprime mortgages and credit crisis that led to the downfall of Bear Stearns would strongly impact other large financial institutions, as well. ‘ ‘ ‘ Within the past month, Fannie Mae and Freddie Mac, two of the United States’ largest mortgage lenders, were put under conservatorship of the federal government. ‘ ‘ ‘ Lehman Brothers, an American institution for more than 150 years, filed for the largest Chapter 11 bankruptcy in American history. The sale of Merrill Lynch, the largest investment-banking firm in the United States, to Bank of America followed this event. The events of 2008 have completely reshaped the face of Wall Street, in what some pundits call the worst economic crisis since the Great Depression. This past week, Bush introduced an initiative that would inject $700 billion into the economy in order to buy the mortgage-backed securities and other faulty securities that have been some of the most significant causes of the United States’ severe economic woes. Although Bush’s presidency has been marred by poor foreign and domestic policy, his initiative to prevent the collapse of the credit market is an absolutely necessary move that will protect average workers, families and people whose homes are in default. However, the largest and most sweeping governmental intervention since before World War II must be met with caution and reason, and it must be a strongly regulated plan. In the real estate market, the value of homes is often dictated by the overall standing of the financial markets. However, in the current economic environment, the value of the mortgage-backed securities, which the government is purchasing, could very well be valued at less than the $700 billion that the government would be issuing. Although it is vital that the government implements a recovery plan quickly, more deliberation is critical for such a consequential decision that would significantly affect the lives of every American taxpayer. Democrats from both houses of Congress contend that the United States government should demand a premium ‘mdash; specifically, a stake in any of the financial institutions that are participating in the bailout. This move would protect the American people from assuming all of the risk involved in such a monumental effort. Doing this would effectively limit the ultimate cost that the American taxpayers would have to pay by allowing the government the opportunity to regain some of the capital loaned through the acquisition of equity in the participating institutions. In a time when a sweeping united effort is required, both Sen. John McCain and Sen. Barack Obama have been more than forthright in their strong support of a bipartisan effort to cure the United States economy. Although both McCain and Obama have many differences with respect to policy initiative and moral principles, the economic crisis has served as a forum for both to demonstrate their capability and willingness to reach across the political aisle to achieve political legislation. Both Obama and McCain have stated that the federal government should provide strong oversight for the proposal. They have stressed the importance of securing the American taxpayers’ ‘investment,’ and they are attempting to ensure that the proposal will be working for the American people, rather than for the Wall Street firms that got the United States into this mess. However, such disastrous events, which will undoubtedly haunt the American people for years to come, should highlight the necessity for stronger government regulation in the financial markets. After the collapse of the financial sector and the slowing of the credit markets, it is obvious that the next president cannot continue a system of easy credit and lax regulation in the economy. In order to ensure that a crisis similar to the one that we are currently experiencing never happens again, it is vital that the American government maintains strong regulation over the financial markets and makes certain that loans and mortgages are not dealt with like candy, but with safety and security. E-mail Shane at [email protected].