Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering. So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess. Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
--Eric Lipton, "Ex-Leaders of Countrywide Profit From Bad Loans"; The New York Times (3/3/09)
Let me see if I've got this right.
Bank executives at subprime lenders made hundreds of millions originating toxic loans that helped blow up the housing market. In turn, that helped blow up the banking system, which -- surprise! -- is now tanking the general economy.
Nothing has happened to them.
On the contrary, they are now using their toxic loan wealth and banking connections to make money a second time on toxic loans -- this time, by buying them for pennies on the dollar.
To paraphrase the government attorney who admonished Joseph McCarthy: "Have you no sense of decency sir(s), at long last? Have you left no sense of decency?"
And what kind of financial and legal system stands by and watches this happen??
Proposal: Financial "Son of Sam" Law
After serial killer David Berkowitz reportedly received lucrative offers to sell his story to publishers, New York state passed a law preventing such a travesty.
Known as the Son of Sam law, it authorizes the state to seize money earned from such a deal and use it to compensate the criminal's victims. The rationale, which hardly seems to require explanation, is that no one should financially profit from crimes that they've committed. Since then, 39 states have passed similar laws.
Such an approach seems tailor-made for today's housing and financial crisis, and the "economy killers" at the root of it.
The best thing for public confidence would be a healthy economy generating lots of well-paying jobs.
In the meantime, the next best thing would be sending the people most responsible for the financial crisis to prison -- or at least pulling them away from the trough ("A-I-G" is starting to look and smell a lot like P-I-G).
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2 comments:
Like flipping from Obstetrician to Oncologist, I suppose.
This is the same thing - albeit writ large - as when the former subprime mortgage broker starts doing loan modification of foreclosure workouts for a fee.
You are right, there ought to be a law, or at least a principle.
Of course some might argue that a realtor listing short sales or repping REO props for a bank sort of falls into the same boat.
I'm sure the Countrywide guys just think of themselves as working a different segment of the housing market. (When I was a lawyer interviewing for a job, I asked what the (very large) firm's practice areas were; the answer I got was "from womb to tomb.")
Amongst many other things, I think Realtors differ from the senior predatory bank exec's in scale -- as in hundreds of dollars of compensation vs. hundreds of millions. As they say, "follow the money."
Full disclosure: as a Realtor, my sympathies are squarely -- and overtly -- with other Realtors. However, in the big picture, I think Realtors are much more the schlimazels (yes, Laverne & Shirley again) in all this than the schlemiels.
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