Screwed

The "fix" is in...or is it?

I'm glad that people wiser and smarter than thee and me are in charge of certain banks, mortgage companies, lending institutions and whatnot.

Too, I'm glad that many such individuals (of all political stripes, both elected and appointed) are heading "watchdog" committees and regulatory agencies charged with keeping an eye on what's happening in those same financial areas and institutions.

I'm glad because had thee or me been in charge, we'd have likely made an unholy hash of the economy and caused the country no end of financial turmoil.

You see, had we been in charge of certain banks, mortgage companies, and whatnot, we'd have likely operated under the old fashioned notion that, when we lent money, we generally did so with the expectation that those who borrowed it would actually be able to pay it back. And we'd have demanded proof.

We'd have done that because we'd have understood that we were playing with money other people had earned and entrusted to us. We'd have done that because we'd have known that the people who'd deposited their money in our institution most likely hewed to another old-fashioned notion - namely, that we'd behave like responsible adults.

Further, I'd wager a dollar to a donut that those same people expected those in charge of the oversight and regulatory agencies to do the same.

Having such as us in charge of banks would've meant that if someone came in with a request for a loan to buy a house, they might've been treated the same way we were when we went to buy our first homes.

That was when we had to sit down across from someone who looked like and behaved as sternly as some of the school principals we knew when we were coming up. People who knew they needed to be in charge of what was happening and weren't about to listen to nonsense. People who oozed the feeling that we'd best not be there wasting their time.

"I see you want to buy a house."

"Yes, sir."

"We require a substantial down payment before we can begin the process. Do you have it?

"Yes sir. We actually have that much and a bit more."

"What's your current income? Have you brought your most recent pay stubs? You do know that, if the payments on the mortgage we're talking about are more than a certain percentage of your income, we're not going to approve the loan."

"We're inside of those numbers sir."

"Good. Now, how long have you held your current job? Why did you quit your last job?" And on and on.

We sweated through those interviews and rightly so. We sweated through them just as that loan officer sweated through the meetings wherein he or she had to justify why and on what basis they'd approved the loan. And just as the bank had to do on up the line.

It was expected. It was required. And, wonder of wonders, it worked.

There used to be a saying as regards a career in banking. It basically stated that, to be successful in banking, all you had to remember was the "3-6-3" rule.

Said rule stated that you paid 3% on all deposits, charged 6 % on all loans, and went home at 3 PM with a profit in the ledgers.

Old fashioned, simple, workable, understandable, sound.

Unfortunately, those who are wiser and smarter than thee and me decided that loaning $500,000 to someone making $30,000 a year was sound financial policy. They decided that "Ninja" loans were a good thing. Those would be "no income, no job, no assets" loans. They decided that they could approve "no money down," "pay interest only" or any other type of loan and take - without checking - what someone said about their job status or income as gospel writ large.

Helping them along were those in charge of the regulation and oversight who adopted the Sergeant Schultz standard of inspections, i. e. "Nnnothing! I see nothing! I hear nothing! Nnnothing!"

Bottom line is that all of those wise and smart people that we thought were behaving like adults were actually running the banking equivalent of Animal House and, now, to quote a friend whose opinions I deeply respect, "We are screwed."

Ask me, a lot of those wise and smart people need to go to jail.

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