The New York Times has a great article providing some background on why we are in the mess we are in. The article states:

But by the time Mr. Mudd became Fannie’s chief executive in 2004, his company was under siege. Competitors were snatching lucrative parts of its business. Congress was demanding that Mr. Mudd help steer more loans to low-income borrowers. Lenders were threatening to sell directly to Wall Street unless Fannie bought a bigger chunk of their riskiest loans.

So Mr. Mudd made a fateful choice. Disregarding warnings from his managers that lenders were making too many loans that would never be repaid, he steered Fannie into more treacherous corners of the mortgage market, according to executives.

For a time, that decision proved profitable. In the end, it nearly destroyed the company and threatened to drag down the housing market and the economy.

Basically greed was the cause. Think of all of the get rich quick infomercials you saw during this time period. You needed no money down to get a house. Anyone could get a loan. Fannie was a big part of these because the government pushed them, as did the banks to buy up the bad loans in order that banks would have more credit to make more bad loans. It was a vicious cycle.

This is a blog about personal finance. It is a way to keep me on track as I continue to make my way down the path of being debt free. So obviously there will be plenty of talk about ways to save money, to make money. However, I have to watch greed. Greed will cause us to make horrible decisions. Greed is what makes us try to buy a $500,000 house on $45,000 a year income. We must keep a level head and know that this is a long process. Realizing that if we are doing this simply to have bigger toys, we may get swept up in the next bust.

So why am I worrying about my finances if it is not about the bottom line? The reason is that personal finance is not about the ‘Benjamin’s’. It is about a life style. Not the champagne and caviar idea from Hollywood. Rather a life of fulfillment. A life without worrying if my family will have a home in the future. To not have to worry if someone else can help me when I retire. Abilities to help friends and strangers with needs. Money is simply a means to an end.