Thanks Dodd-Frank. You Got Us Again!

A few thoughts and other musings from the finance world. As one who has been in finance for 29 years and has paid close attention to the happenings of the industry and those who presumably have oversight on same, I suppose a tell all book would be in order as there is much to be told. But you would likely be bored so just a few points and you decide. Besides there are plenty of these books out there but unfortunately most come from those who know not what actually happened and have a preconceived agenda.

Briefly the subprime era began in the late 90’s at the behest of the Clinton administration and with the blessings of Dodd and Frank as well as many in Congress, Fed Chairman Greenspan and of course Attorney General Janet Reno. FNMA and Freddie Mac were stacked with political operatives with a mandate. Perhaps an admirable mandate but surely not one that works in the real world.
You know the rest if you could breath you received the loan for your mansion and who cares about fundamental underwriting criteria. We will stamp AAA by Uncle Sam on all this paper and who will know? Today everyone knows as the unraveling has been going on for five years and very similar to that of Japan’s post 1989 bubble which made ours look tame.

So here we are today and the names Dodd-Frank sit atop the so called legislation designed to solve the financial ills. Let us see, those who helped get this mess off the ground are presumably now going to fix it. Have you noticed neither ran for reelection?
Most telling wouldn’t you agree?

As one in the mortgage game for so long I once was proud to so state. Today I feel shame at what these hucksters and pack rats which entered the industry have done to us and have no sense of pride and barely hang on to a dose of professionalism.

Dodd-Frank among other changes have wrought a nightmare in lending of all types. If you do not believe me go and apply for .5 cents at your local bank. Or better still attempt to get a mortgage. This will be an eye opener you can’t even imagine.

No transparency just convoluted rules which seem to change by the minute. And will continue to do so. It seems as is the norm in D.C., they start a problem so they can be seen “doing something” for the people. The cure is usually worse than the disease. I lived through the S&L crisis which was not all that unlike the subprime mess. The difference in my opinion was adults handled the problem with a market oriented approach in the early 90’s and kept harm to a minimum. Makes me wonder if these so called leaders actually want a solution. Likely not as we would not need them and therefore they would not be enriched by campaign money and perks unimaginable.

Try speaking to the employees at the former Main St.Bank in Kingwood Tx. Highly successful by any banking metric. Yet the regulators beat them to a pulp and tried to tell them how to run their bank. The CEO finally said enough as was quoted in the Wall Street Journal and sent back his Bank charter. They sold the branches and do not exist anymore. Talk about ruining something that worked. The sad part is the average loan size was $100,000 and mostly to small business people and we know they are the job creators and the hardest hit. So is this going to heal our problem. Hell no!

As stated earlier I have 29 years in my field and feel like a neophyte. The hurdles are high and someday we will normalize but this is not the way to do it friends. Remember too much regulation is not a good thing. The market will work if given a chance but herein lies the problem. We do not give it a chance.
Pray we do and to those who say the market failed I say it never really had a chance as Big Brother was in the game all along.

Article first published as <a href=’’>Thanks Dodd-Frank. You Got Us Again!</a> on Technorati.


2 responses to “Thanks Dodd-Frank. You Got Us Again!

  1. Dead on accurate. Yes, the US government sought to increase home ownership to over 70% of its citizens. The only way possible for this to happen was to artificially stimulate the real estate market through bogus “creative financing” programs covertly initiated by our trusted servants in Washington. What’s truly frightening is that our leaders must have known this mass manipulation in the most voluminous and impactual market in the country….real estate…. had to rear its ugly head. They must have known that the real estate market, like any market, will eventually correct itself or collapse. If they didn’t know this, then God help us either way.

    • Of course they know Tim. Greenspan was the worst of the bunch as he did not start it but helped prolong it well into the 2000’s. He knew better but loved the adoration he received form the morons in Congress and Wall St. Yes our leaders knew but as usual did not care. That is their job to create a mess and then have the sheep turn to them for help. As you well know the help is an absolute abomination and only benefits a few. In other words status quo not ” Hope and Change” Best.

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