“Sex, Money and Power” – this was a new class a professor was thinking of offering in the philosophy department at Whitworth University when I was attending. Being a Christian college, it was quite a departure from mundane courses, so it got a lot of attention.
For some reason sex, money and power is a bad mix. Just look at Bill Clinton. The subprime mess also has quite a mix of these ingredients. The only thing it lacks is a Paris Hilton type mortgage company CEO. Sorry, I digress.
According to the Financial Times, Obama is proposing a radical plan to set the mortgage world straight. In his plan:
Unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans should be fined and the proceeds used to help bail out borrowers facing a wave of foreclosures
Writing for the Financial Times yesterday, Obama in his own words:
“While predatory lenders were driving low-income families into financial ruin, 10 of the country’s largest mortgage lenders were spending more than $185m (€136m, £92m) lobbying Washington to let them get away with it,”
Is this just populist rhetoric? No. I think Obama has a point. I’ve always said you can’t hang the mortgage brokers for this one. You’ve got to start with Alan Greenspan and Wall Street. Greenspan lowered the cost of money to guard against deflation. In 2003, he himself said he wasn’t sure of the full consequences. However, in the full three or four years that this drama played out, no regulatory body in the country was doing any kind of oversight into the financial markets. The boys on Wall Street were free to do as they pleased and booooy did they push cheap money to homebuyers.
Back in the day, as a mortgage lender I felt there was something amiss. How could subprime loans be priced so close to prime loans when the risk was substantially higher? And on these short term ARMs too? There was something wrong. Something didn’t feel like the way it should. Then when real estate appreciation stopped across the country, the frenzy unraveled.
It’s a story of money and power. Who knows sex might be right around the corner!
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on Sep 7th, 2007 at 2:04 am
[...] next. The first was finding courage . The second was hanging at the Waffle House. The third was looking for money and power. Our brave and quirky hero ran the rest of the way, and when he got there, he got another [...]