Forum Post: When I visited the file center for a mortgage company before the crash...
Posted 12 years ago on Oct. 19, 2011, 4:24 p.m. EST by guessWho
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I was given a tour of the file room where more than a million mortgage files were kept. Each file the proof of a home owned by millions of people across America. It was at least the size of a football field. Racks and racks of file shelving.
When I reached a certain staging area, where thousands of files were being prepped I asked my guide, the manager of the records storage area, what they were for. "Well these are the files are more at risk for default, the ones with bad credit, so we bundle them up and sell them in a group so that there is less risk and then the company makes more money when they sell them at a better rating." (Note: a better rating implies less risk)
It took me a second to consider that and ask my next question. "How exactly does bundling the risky files together make them any less at risk from default?" The manager shrugged his shoulders in an "I don't know" kind of gesture.
"Some math whizzes that know better than us worked it out. I just package them up and send them out."
A few years later, America found out that the math whizzes didn't know better than us after all.
This was not funny accounting. This was CRIMINAL accounting and in the future it needs to be REGULATED, MONITORED, and ENFORCED. Those of you that think capitalist pursuits don't need regulation - think again. We all know greed tends to trumps altruism when no one is at risk and the stakes are high. High like a million mortgages. High enough people will call you stupid and tell you they know better when they don't.
To those of you posting about how great your capitalist system is, and how bad regulation is, think again. Canadian banks are well regulated, and me, a Canadian, knows our banks have an amazing reputation across the world and people invest in them because of it.
To those of you who think your 'capitalist' system is the fabulous, 'lets improve it and not throw it out you damn socialists', WAKE UP.
You have a CAPITALIST economy, with a DEMOCRATIC government, that enacts SOCIALIST programs like medicare and social security. ALL of these are MODELS that have proved to be effective to govern aspects of your society that have made life better for all. I'm sure if you looked hard enough in your very large country you could even find an example of a communist system somewhere, for something. And please - don't say a commune, that's obvious.
Capitalism and Democracy are not linked. Just look at China, a communist government, with a capitalist society.
One that has let capitalism overtake social concerns so much, that when a two year old gets run over in the street, TWICE 18 people walk by and let her writhe in pain and let her get hit again, because good Samaritans get sued. The one person that tried to help by finding her mother was even told to 'mind their own business'.
Have you ever looked at the 'conditions' in order to have in place an equitable free market according to Adam Smith? Even HE knew they were unattainable! That's why monopolies are frowned on and broken up, because the basic principles don't allow them to exist in order to have a proper free market. The banks are monopolies when they are "too big to fail". Its a problem even to a capitalists! You should be complaining about barriers to entry in the market right now!!!
Everyone needs to stop drinking the de-regulation kool-aid. Ever read Friedman's 'Free to choose'? I did after reading Klein's 'Shock Doctrine' to get the other side of the story. There were no case studies or references to prove Friedman's claims - its all BS. Klein on the other hand, has 60+ pages of notes on primary and secondary reference material to back up her story. Its a book you can trust.
Thank you to every Occupy Wall Street protester around the world. I know you're doing the right thing.
~Fantastic Post ~ WOOT!!!
The government is Wallstreet & Wallstreet is government now. So find the criminality and expose it case by case OWS.
Simply focus on and expose SPECIFIC cases of Fraud, theft, insider trading that has gone unpunished, and it will be a job valiantly done. The whole world will applaud that, it will grow into an insurmountable roar. The wind is already at your back whether you know it or not.
Right-On!!! Great Essay guessWho!!!
Fact is, our gov't has basically legitimized every ponzi, fraud and theft game in the country. You hit the nail on the head... if what they've done is NOT criminal...WHY NOT? I'm a small business person. If I did that to my clients, trust me.. I would not have enough money to stay out of jail. Of course, I don't have enough money to by a congressman or two either.
You might want to investigate your history a bit. The Government is the one that purposefully lowered regulations and told banks to make loans to those that couldn't afford them.
Yes, the banks knew the loans were bad. But they were not just encouraged but in some cases actively forced by the Government to make those loans.
Simple as that.
Now why did the government do that? Because a bunch of people demanded it and various representatives felt it was a great way to continue being elected.
Do some research. And btw, I worked at a company that processed and created that paperwork you saw. We knew literally years before it collapsed that it was going to based purely on the types of loans being made. Heck a group of us had one of those office bets on when it was going to hit the fan. I missed by a couple months.
Regardless, when you have highly vocal and powerful congressmen telling banks that a certain percentage of their loans have to be made to those that wouldn't qualify due to risk and further lowering the regulatory standards to make it a possibility then you have a situation where the people have absolutely screwed themselves.
Of course, there is even more to the story but I doubt you've read this far.
Yes, I've read this far. Perhaps I should have clarified that the system needed to be regulated, monitored and enforced from and UNCORRUPTED Government system as well? One that was for the public interest, rather then the corporate one?
I counter that there is no simple solution to all of this that is easy to propose, the rotten is obviously systemic, and not all in one place. No one person will ever have the whole story.
I get that. I'm glad to hear from you. I've often wondered how people who had to work in that environment felt and I'm really sorry you had to work through it.
I do wish you didn't write a post to me that was so disrespectful though. :-/