What has caused the current national financial crisis? Is this the way capitalism is supposed to work, good times and bad? Are we so ignorant that we do not learn from our mistakes?

As a finance and accounting major in college, I spent many hours studying economics, but I never studied a situation similar to the one we are in now. Yet I have reached a conclusion about its cause: GREED, plain old greed.

Not that greed hasn’t been around since the beginning of time. John Milton and others foresaw a citizenship “perpetually threatened by the corruption in government utilizing patronage, faction, standing armies and the promotion of a monied interest.” He and others felt it was the duty of government to limit corruption and greed, and promote virtue.

Yet we have failed to control greed, allowing it to control us, even more so in recent years. The blame also rests with both major political parties. Too often we saw what was happening and just shrugged our shoulders. In too many instances, we did not want to get involved.

The economic crisis began before Barrack Obama and Mitt Romney became candidates for the office of president. It began with the housing and subprime mortgage crisis.

Low quality subprime mortgages historically ranged at around 8 percent. In 2004, that grew to 20 percent. By 2006, 90 percent of them were adjustable rate mortgages, a very risky loan. Disposable personal income compared to personal debt between 1990 and 2007 dropped 30 percent. Lenders had to face the possibility that there was a growing number of homeowners unable to meet the terms of their mortgages.

So many houses were put on the market that the cost of housing dropped because refinancing was unavailable. Banks began to fail. Lehman Brothers, a cornerstone of Wall Street, filed for bankruptcy, even though it held $600 billion in assets.

After a seven-hour hearing, the judge ruled that a planned buyout of the core business for $960 million by the banking house Barclays was approved. He lamented there was no other choice.

“Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets ... It’s hard for me to imagine a similar emergency," he said.

Yet even as the "tsunami" grew, some of the financial firms rewarded their officers with huge bonuses. Barclays gave its chief executive officer $10.3 million in compensation for 2011. The bank’s previous year’s profit dropped 16 percent, and it continued to seek answers to the problems created by the debt crisis. Many banks continued to give reduced, but still huge bonuses, and Barclays has been investigated for possible violations by traders at the banks conspiring to influence lending rates.

Another major crisis is that many mortgages on homes are higher than the property’s value. Some lending institutions have worked out temporary arrangements with their borrowers with the realization they are only postponing foreclosure.

At one time, venture capitalists were called corporate raiders. They would buy up companies having financial difficulties and operate them until they had made a profit. Then they would sell them, laying off employees and selling the assets. And they used the favorable tax laws to eliminate or drastically reduce the income taxes due. Greed is not in their vocabulary.

Those who are greedy disagree. They claim they are smart business people conducting their operations in a legal manner. They are smart because they do whatever it takes to make money.

They never taught me those tactics in college, and frankly, I am turned off by those who use them. They should learn what it means to be compassionate and honest.

Paul Gordon, a local historian, was mayor of Frederick from 1990 to 1994. Reach him at prg202@comcast.net.