Am I just that much brighter than other people? More specifically, let me address this question to the current administration's economists.
When I watched Alan Greenspan's cratered face several weeks ago I was fascinated. I found his heavy-lipped feigning of shock and awe over our horrid financial meltdown just a bit disingenuous. After all, I have been on the front lines of the financial system in this country since I was 24 years old. I started as a gopher for three financial brokers who had very little compassion for their clientele or concern about the meaning of a fair fee. Not surprisingly, some people who needed the money borrowed it anyway, but it was also unsecured, a risk which justified some of the high expense.
Within two years I recognized that swimming with the sharks was not for me. I started my own very conservative and highly reputable mortgage brokerage. Our interest rates are and always were cutting edge and I have prided myself on educating my borrowers and offering them the best options. Unfortunately, people like my former bosses were the front crust of the hoard that marketed mortgages over the last thirty years. Ironically it seems now that they were not motivated by a desire to expand home ownership like I am, but by what I refer to as blood money.
Several years ago I was giving a class at a local Community College for potential first time homebuyers. In the middle of my rant - in which I insisted these students practice due diligence by comparing and understanding advance mortgage disclosures and the final figures on their loan documents - I warned them about these charmingly corrupt Suede Shoe Boys & Girls. Shortly after the words were out of my mouth I glanced down at my own feet. With a grand gesture, I pointed out that those wearing suede boots were, of course, trustworthy. Nothing like being hoisted by your own petard.
Yes, it was good for a laugh, and my post-class reviews were highly flattering, but I meant what I preached. Taking responsibility for one's own financial choices and actions is a sign of maturity. That said, I have to wonder if the people who were conned and hoodwinked into getting terrible mortgages were naive, foolish or merely fanatically optimistic. I really do want to give them a break, but I also think that we cannot always bail people out from the consequences of their own stupidity. Deceptive practices were certainly employed by many loan officers - in both banks and mortgage brokerages - but was that the norm? I really find that hard to believe, but I have a bit of the Pollyanna in me still.
I confess when I was a young and impressionable girl, I was a complete mark. Why? Husband-shopping from kindergarten, I had the seemingly common ability to fantasize that any charming and decent-looking professional with his own house might be 'the one'. In my era the majority of women would have needed to wait until getting married to afford a home, so I was not unusual. Sadly, equal pay for equal work is still a work in progress, so this problem lingers. The only difference now is that the majority of couples both work, postpone children and greatly sacrifice if they want to become stable homeowners.
With the housing markets on fire the last few years and wages stagnant, many people thought they heard their own financial clock ticking. Panicked, they gritted their teeth and signed those loan documents, hoping and praying that in a few years the fabulous equity they would surely accrue could save their asses when their personal pigeons came home to roost.
Of course everything in life and economics has a cycle, but the young and naive do not always see this as clearly as they should and few of us can predict when those cycles really begin or end. Or maybe those who dived in while ill-prepared did not want to see the risk clearly. After twenty years of losing income, many people were slipping out of the middle class. This produced some hysteria. Not only were their true disposable incomes shrinking, but the prices of homes were well beyond the average person's ability to pay. When these same people consumed beyond their means, the combined obligations overwhelmed them, a continuing condition for many.
The real inflation evidenced by the cost of the necessities of life - including food, transportation, housing and health care - have ransacked the average American's spirit. Perhaps that is why I have no compassion for those responsible. My 'hit' list includes Phil Gramm, George Bush, Dick Cheney and the republican-dominated congress who flaunted their power during most of Bush's term and continues to play the role of spoiler since the democrats regained a small majority in 2006.
I have even less tolerance for the surprise of so many of these Wall Street and Big Bank players who continued to come up with screwy loan products to keep the profits rolling. Most mortgage brokers are in a heap of hurt this year, but for the last several years brokers like me - who refused to imprison people with these horrible loan products - have been paying the price for our integrity.
Realtors began to shun us when we told them the truth, but the borrowers themselves despised us for informing them of the true risk of what they were doing. No matter how diplomatic I was, nobody wanted to hear that his or her desire for a home of a certain purchase price was so far above his or her means. It cost me to have a conscience, but I would look at these people and their little kids and think, If I get you what you are asking me for, you won't be able to afford to feed your kids in two years.
My competition made hundreds of thousands of dollars putting people into future foreclosures, while I limped along wondering how long this could go on and how long it would be before we ended up surviving on our integrity and nothing else.
Again, to me the end result of these 'no doc', stated income, negative amortization loans and other products with two or three year teaser rates was obvious. The sophisticated investor or borrower and the self-employed - whose net income did not reflect their real disposable income - had the assets and reserves to rebound if the market shifted. The average consumer with a job and little savings - the majority of the mortgage market - did not.
Putting these people into such complex mortgage products that exposed them to extremely high risk was unconscionable. Other loan officers knew better and obviously did not care, but where were the Big Bank watchdogs? Where was that Banker man who used to shame us for even asking for a loan we had no ability to repay? S/he was sitting there helping us overcome a legitimate fear of failing as we signed on that dotted line over and over again.
Now the experts act surprised that GM is having difficulty making it to year end, retail sales have fallen drastically and these retailers are begging for Washington's help. As the Feds invest our tax dollars in bank mergers, Wall Street, mortgage companies and others hoping to gain from the $700 billion bail-out, we mourn our situation. These funds were not available for universal health care or education. One has to ask why not. The politicians know that if those big businesses who want to nationalize their losses scream 'help' on that crowded platform, it feeds the panic. The corporations still have us by the short hairs, and that is a disgrace.
Maybe it is just me, but I look at my suede boots and my first thought is, These boots can last another year. That is exactly the way I am also thinking about my car, my clothes, my cell phone, my computer and my old dog. The world has criticized Americans for years for consuming an outlandish share of the world's resources, so after 9/11, what did Bush tell Patriotic Americans to do? Go shopping. Yeah, that would teach those damn terrorists a thing or two about America!
Perhaps our great leaders missed it when we changed. Basing 70% to 80% of our economy on an unsustainable amount of consumerism was and is stupid. After almost eight years of Corporate American Rule, however, they have us on our knees. Should those interests really be surprised that some of us, in self-defense, have finally closed our wallets?
Or, I ask again, am I just that much brighter than other people?