Financial Justice Ideas and Issues

Los Angeles        I have now been to a fair number of meetings with top level executives at big lending institutions with billions of dollars in home mortgages that they have moved through their portfolios.  Their suits are nice.  Their knowledge is detailed and exacting.  The abbreviations are mind boggling.  The sincerity and good will is worn on their sleeves.  Today we drove up to Calabasas in Los Angeles County near Ventura to the headquarters of Countrywide, which is the largest of the lenders in the field.  The point I want to make here is not that they are no better or worst than anyone else.   

    One pattern that runs deep across all of these meetings is a central contradiction that many are not willing to embrace, engage, and then resolve.  On one hand they blizzard the prospective homebuyer with a dizzying array of “disclosure” statements and paperwork to cover their liabilities and requirements, even though they know the consumer is seduced by the purchase of the home, rather than being beguiled by the details of the mortgage documents.  They are too sharp and shrewd not to admit that the homeowner-to-be is not guided into the chair, hand in hand, by the broker or agent, and is trusting, perhaps blindly, that s/he will come out of this ok.  At the bottom line it is still caveat emptor for all of the good intentions, and that means the “buyer beware,” and the devil take the hindmost.

    On the other hand is the broker.  The homeowner is the sheep being led to the killing pen, and the broker is the shepherd doing the guiding.  Different companies count the stream different ways from 3rd parties.  Countrywide gets 75% of its business that way.  They are too smart and too shrewd not to know that there is some serious mess going on here, but they are so unwilling to bite the hand that is feeding them, so they blame the victim and essentially let the brokers off without even a hand slap.  

    It’s preposterous the fraud they are contending to tolerate.  There are no real ways that they penalize bad behavior.  They may circulate a list within their own company, but they do not share with other companies.  They do not turn the thugs into the local law enforcement authorities.  They do not sue.  They essentially look the other way, and then are surprised when they find out it’s a total mess and have to untangle the situation.  

    Increasingly, I swear it seems like brokers ought to be banned so that finally some accountability and responsibility can be forced into the industry.

    So far, big, small, or in between, we have yet to find a company that surprised the brokers and reckoned with the force — for bad and good — they bring to the market and the consumer.   Until there is clear line of sight accountability, we should ban all brokers!