Posted by John Park on Jul 17th, 2008
Jul 17

foreclosures mess


According to a report today on CNN, there are 200 FBI Agents investigating 21 Mortgage Companies in the U.S.  This basically means that people will be going to jail.  This news along with the announcement made by CA’s Attorney General of an expansion to their lawsuit against Countrywide made me ponder a bit about who is REALLY at fault.
Is this another Enron where a handful of executives created fictional shell companies to perpetuate a revenue & earnings fraud?  Did one executive say she placed a sell order when she really didn’t?  Was the current mortgage crisis created in a back alley somewhere under the cover of darkness?
As the Real Estate Boom continues to unfold into a complete nuclear nightmare, I think it’s perfectly reasonable for everyone to look for scapegoats or at least a few guilty-looking faces.  The problem is that there is a lot of blame to go around.
Federal Government:  They were completely asleep at the wheel.  They’re making FEMA look competent.
State Governments:  Dozing off at the wheel while enjoying unprecedented Boom Town growth in select cities.
City Governments:  Doubling and tripling property taxes paid for a lot of parks, city shuttles and new employees.
Politicians:  Looked the other way.  Why not?  Their constituents were happy as pie spending their home equity lines like lottery winnings.
Homeowners:  Many lied or overstated their income knowing fully well that they were “fibbing” to get approved.  They signed 100% financing loan papers with enthusiasm.
Mortgage & Banking Industries:  They ALL looked the other way for a quick buck.  They had programs called “NO DOCS” and “STATED INCOME.”  Need I say more?


Let’s face it.  Everybody went along for the RIDE.
Did Nancy Pelosi ask why real estate in SF had tripled in less than 10 years?  Did John McCain ask why or how when real estate speculators drove up prices in Phoenix and in Tucson to unprecedented levels?
I am not saying that there aren’t victims.  Of course, there are victims in this mess.  I am merely saying that the current mortgage fallout wasn’t created in a vacuum.  The hands of many are a little dirty.
Jailing a few mortgage executives to make examples of them, although it may feel good, is probably not the answer.  The answer is to do everything we can as a country to ensure that something like this can never happen again.



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