When credit availability is reduced, the ramifications have been far-reaching. The move can hurt a consumer's credit score by making them appear to be strapped for cash. It also removes a financial cushion that people rely on when times get tough.
Credit counselors have ringside seats to see how abstract concepts such as "credit crunch" play out in the real lives of consumers, and often it is not a pleasant sight. They often find themselves to be the bearer of unpleasant news. Among some of the bummers? Having to tell consumers their dream house will never be affordable. Demand for credit counseling services continues to be strong, even as the economy shows some signs of improvement.
President Barack Obama, speaking a year after Lehman Lehman Brothers' $693 billion bankruptcy, warned against complacency as the financial crisis ebbs and said Wall Street firms must accept a new regime of “common-sense” regulations to avoid another market meltdown.
Obama used the backdrop of Federal Hall in New York City to renew his push for revamping market regulations. The president urged the financial community to support that goal and he emphasized the need for global coordination on financial oversight.
“There are some in the financial industry who are misreading this moment,” Obama said. “Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them.”
Lehman’s bankruptcy helped trigger a global financial crisis that led to more than $1.6 trillion in losses and writedowns by financial institutions and unprecedented government interventions in banking, insurance and auto industries.
In response to the financial crisis, the Obama administration proposed on June 17 changes to U.S. financial regulations, including oversight of the systemic risks that large financial institutions pose to the economy, new ways for the government to dismantle failed companies and a regulator to oversee financial products for consumers.
Government Involvement
Americans can be confident that “the storms of the past two years are beginning to break,” Obama said.
“While there continues to be a need for government involvement to stabilize the financial system, that necessity is waning,” he said, adding that “normalcy cannot lead to complacency.”
Obama called on Wall Street to “embrace” reforms, not fight them.
“It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system, and a more broadly shared prosperity,” Obama said.
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