Business

<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Friday, December 12, 2008 Meltdown also an opportunity, panel says In Seattle, speakers discuss the financial crisis and what it means for the future. By Yoshiaki Nohara, Herald Writer SEATTLE -- The ongoing economic crisis that stemmed from risky mortgages presents not only challenges, but also opportunities to reinvent America, four speakers said at a panel discussion in Seattle. The government continues to spend billions of dollars to bail out fragile financial institutions, hoping that they will resume lending money to businesses and people, said Peter Dorman, professor of economics at The Evergreen State College in Olympia. But the problem is that nobody knows how much more money it will take to achieve that. "Just stop it. No bailouts," Dorman said. Dorman was among the four panelists at the event at Town Hall Seattle on Wednesday night. About 230 people attended the event organized by nonprofit groups such as the Institute for Policy Studies, Jobs with Justice, National Community Reinvestment Coalition and U.S. Action. It's one of the 60 similar events happening in 29 states this month, said Alan Preston, Northwest organizer for Working Group on Extreme Inequality. "The purpose is to educate people about the real story of the root causes of the economic crisis and what the bailout means," Preston said. Three major factors have triggered the financial crisis, Dorman said. America's huge trade deficit required massive borrowing by the U.S. from foreign countries. The unequal income distribution resulted in many Americans over-reliance on credit cards to make ends meet. And the deregulation of the financial industry prompted aggressive and irresponsible lending practices, especially in mortgages. Once the housing boom ended, banks started failing, Dorman said. And the bad economy continues to hurt manufacturing and other industries. "Nobody can tell us where the bottom is if we can ever get out of this," he said. Dorman suggested creating a public banking system -- instead of bailing out private financial institutions -- to solve the credit crunch. Three other panelists were Dian Ferguson, former executive director of Operational Emergency Center; Tony Lee, advocacy director for Solid Ground; and Kristen Sheeran, executive director for Economics for Equity and the Environment: E3 Network. Lee said the story of subprime mortgages is summarized in two words: greed and fraud. Financial firms and mortgage brokers made money issuing risky mortgages and selling them as securities to other institutions. At the height of the housing bubble, they didn't even verify a borrower's income. "This could've kept going on as long as the housing market kept rising," Lee said. "Once the home prices stopped appreciating, they couldn't refinance their mortgages." The economic downturn plagued by the housing crisis hurts not only homeowners, but also nonprofit groups that aim to help those in need. Operational Emergency Center shut down this summer because it couldn't refinance a loan for its building in Seattle, Ferguson said. The government is playing a large role improving the economic crisis, Ferguson said. People need to pay attention to how officials act. "We have to do a much better job holding people accountable," she said. If any good comes out of the financial crisis, it gives the nation opportunity to invest its resources in critical sectors: health care, education and energy infrastructure, Sheeran said. Building renewable energy systems should improve the economy as well as addressing the climate crisis. "We have enormous challenges ahead of us," she said. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. To read other terms and conditions, click here. Log out

1. Boeing 787 Dreamliner lifts its nose at Paine Field; flight set for Tuesday 2. Arlington assault leaves man critically injured 3. Recession hard on Snohomish County eateries 4. Up to 3 inches of snow expected in some parts of Western Washington 5. Washington could see new taxes in a host of areas 6. I'll see you in Hell's Kitchen 7. Biz week 8. Veteran, teacher, painter — and now, Mukilteo man is an author 9. Gov. Gregoire knows her budget is doomed 10. See the holiday light spectacle at Warm Beach 2 - Top 10 Stories Most Talked about 3 - Top 10 Stories Most Emailed

• Zambian woman thanks students for their help • Food banks see rise in use • ‘Making Spirits Bright’ in Edmonds • Wolfpack takes aim at state • Seahawks help students smile • 95 and still volunteering • Sno-King joined by local TV king • Veterans back for Wildcats • Lynnwood seeks to plug $2 million budget gap • Snohomish County offers the best and most affordable venues for conferen ... • Boeing will build, flight test and deliver 787s in South Carolina to spe ... • Snohomish County EDC promoting job growth in key industry clusters • $4 million grant to advance brain tumor research has Everett links • Providence medical center construction tops off its 12-story steel frame ... • Tulalip affordable housing project to be financed by KeyBank, Raymond Ja ... • Arlington's Lak of Ink has a growing following for Luke Kooyman's creati ... • Bank of the Northwest formed