I almost shot coffee through my nose with laughter while reading a Sunday Denver Post op-ed piece by Don Childears (President and CEO of the Colorado Bankers Association). His piece was written in response to two previously written op-ed pieces by columnist Mary Winter.
The subject of contention surrounds the dilemma of homebuyers, with jobs, who are about to default on their ARM (adjustable rate mortgages) or otherwise outrageously repressive mortgages, when their home is now worth less than what they owe on the loan.
Ms. Winters believes in what she describes as “strategic default,” or, more accurately put, walking away from the house and the loan. Banker CEO, and upstanding pillar of the community Childears warns against such skullduggery.
Ms. Winter believes that most home owners caught this position are dupes who have been set up by the whole realtor/mortgage lending racket; that glosses over shifting soil, ground water, shoddy workmanship and developer ponzi schemes; that employs unscrupulous property appraisers who (for a fee) grossly over-inflate housing values, so the developer/seller/realtor/lender can jack up the price; that uses blind, deaf and dumb home inspectors who couldn’t spot mold, if it was growing out of their noses; that falsifies credit scores to qualify folks for loans they have no business making; that hides the pitfalls of ARMs, within a mind-numbing mass of boiler-plate gobbledygook.
For Mr. Childears, it is all about that lack of integrity…of the borrower and those bad boys on Wall Street, from whom he now totally disassociates himself. Never mind that those thousands of toxic sub-prime (ARM) mortgages were bundled together and made into securities by numerous criminal bankers and then knowingly unloaded by bankers onto unsuspecting customers and then bankers insured the garbage against obvious collapse, so they could make more money when the toxic garbage became more generally known to be toxic garbage, and then bankers lied about it to congress. Banks all across this country.
Every week, you can read about another bank that feels compelled to pay out a tiny percent of their ill-gotten gains in civil fines to the SEC for their part in the debacle, and they are not just Wall Street banks either, Mr. Childears. But Childears and his banks want us to know that they had nothing to do with the Big Fraud or with any unconscionable mortgages in general. Right. Uh, huh.
Yes, Fanny & Freddy were complicit or at least grossly negligent in the 2005-2009 criminal enterprise, but Mr. Childears, the conniving, conspiring offenders who thought up and put into motion the whole filthy shell game were banks, with bankers, who were banking, by means of bank fraud.
Yes, Mr. Childears, we know! Your colleagues, your friends, your business partners. And PUHLEEZE don’t try to tell me that you didn’t make your own little private stash in the Caymans without crappy mortgages.
Ms. Winter naively assumes that every homebuyer eventually caught in the above Hobson’s scenario is a neophyte or otherwise blameless paragon of virtue who has been swindled into the crappy home, with a crappy loan. Right. Uh, huh. Yeah, like no one knowingly lives beyond their means (livin large!) on the tenuous promise of better times ahead. If Ms. Winter were correct, we would have no stock market or any market for most of the crap that people currently rush out to buy on credit.
I almost forgot the funny part:
This banker mucky-muck guy Childears spent almost the entire article trying to scold/ shame/threaten homeowners into sticking with their crappy home/mortgages. He didn’t mention the thousands of folks who really were swindled by the time-honored caveat emptor scam that is designed by bankers/lenders to put the entire onus on the homeowner and none on the lender/bank. Master & Commander Childears did not mention the thousands of borrowers who, as actual human beings, were having to choose between making the recently ballooned monthly mortgage payments and buying groceries for the family.
For Childears, his banker’s appeal to integrity consisted of threatening those home- buyers, who are currently in debt up to their eyeballs, that defaulting on their mortgage might prevent them from qualifying to get in debt up to their eyeballs in the future. I kept reading and kept laughing, until I almost fell victim to the aforementioned coffee aspiration. On the planet where which Mr. Childears resides, life-long-debt is the Spice! The Spice is life! We must protect the Spice!
No, I am not saying that everybody who has gotten into serious debt should simply skip town, nor am I saying that everybody who finds themselves in that position, is a victim of the system. It was always a devil’s bargain before it became a Hobson’s choice. On the other hand, guess who plays the devil in my little scenario?
But it is an interesting truth that the power of the lender is only assured if the borrower continues to pay the debt. As a people, we are enamored and in awe of these American titans of banking and finance, but we forget that their titanic status depends entirely upon the continued cooperation of the American serfdom (i.e. us), that they have created and seek to propagate. I am reminded of the old adage that “you can’t get blood out of a turnip,” or perhaps better said, “when you got nothing, you go nothing to lose.”
Childears came down from Mt. Olympus just long enough to tacitly acknowledge this truth. He neglected to mention it, but power people only resort to open threats, when they are experiencing unaccustomed perspiration. He and his ilk are hoping like hell that nobody will make the connection.
If more homebuyers walked away from their worthless houses with unconscionable mortgages, the banking/mortgage industry would discontinue their present practice of bamboozling. Right. Uh, huh. I am sure that banks would then simply write off all of the bad loans, resell the homes at the actual value, with a full discloser as to any and all defects going to express or implied warranties of habitability, with low, easily comprehensible, fixed 30-year mortgages, and to well-qualified homebuyers only.
Okay, now I just made a funny joke. Feel free to resume sipping your coffee as soon as you stop laughing.
J. Brandeis Sperandeo
P.S. Please feel free to express your thoughts on this issue, whether they agree with mine or not. It will make for an interesting discussion, I think.
JBS
P.S. As of last week, (one day after Mr. Childears tried to characterize his banker buddies as a bunch of stand-up, regular folks) credit card companies (banks) changed their financing policies.
The interest that you pay for item purchased on credit (APR) had always varied wildly, depending upon the bank’s calculation of your “credit worthiness,” a big part of which included your total family income. But now you can no longer combine you and your spouse’s household income on the application.
This means that the banks will count your entire monthly mortgage bill against your “credit worthiness,” but only part of your actual household income to support it. This little accounting gimmick assures that millions of credit card users will now pay a much higher APR to the banks, as soon as they start a line of credit, while the banks get double-covered.
Please remember that these are the same banks that currently pay virtually zero interest, when they borrow from other banks or from the government, because those banks that we bailed out have really great “credit worthiness.”
JBS
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