Get Off My Lawn, You Damn Bankers!

Monday, July 28, 2008
I've been following the Fannie Mae/Freddie Mac debacle, as I'm sure a lot of folks have.


I think what pisses me the hell off the most about this is the complete and utter lack of accountability on the part of the asshats who decide to take such huge risks within their publicly traded company. These fucktards are pulling in exorbitant salaries for their efforts, and when the business does well, like during the housing boom, they make even more. But when their bad decision making results in the business basically going to its knees, then guess what? They still pull in exorbitant salaries, and their failure comes home to roost on my lawn in the form of a tax-payer bailout.


While I think a reasonable case can be made to support a tax-payer bailout in this case, I want to know - if I "invest" my tax dollars in these publicly traded companies, then what return on investment should I expect? As a shareholder, do I have the right to help set executive compensation? Once their nuts are out of the fire, will they repay this "loan" to the public coffers? At what rate of interest?


And by the way, will there be future governance of these types of businesses? From where I sit, if you're going to sit there with your hand out if your business model collapses, you also get to submit to some level of government control of your business after you manage to run it into the ground.


I despise the "heads, executives win, tails, taxpayers lose" business model. How come all the accountability and consequence seems to skip the top tier of wage-earners and settle on the middle and lower class? I have a friend who owns a small business, and there's no doubt in her mind what would happen to her business and livelihood if she managed her business in the manner of these fuckknuckles. You can bet the government wouldn't bail her out, but her mortgage company would be quick to repossess her house if she failed to make the payments.

So I'm vacillating between being a curmudgeon ("Get off my lawn, you damn bankers!") and being a 7 year old ("This is so unfair!"). Either way, I suspect we'll be footing the bill, and there'll be no accountability. Damn unfair bankers.

12 comments:

Jim Wright said...

Well, thanks, Janiece. Now I'll pissed the rest of the day.

Personally I think it's about time to foreclose on these bastards.

Janiece Murphy said...

You're welcome, Jim.

We live to serve.

John the Scientist said...

Well, Janeice, I do not agree about the bailout. More governmentla control will come with more scenarios like this. It's because the governmetn insures these loans in the first place that we get this kind of idiotic risk taking.

People (including homeowners with interest-only loans) need to feel this pain so that it does not happen again, no matter how bad it is for the rest of the economy.

Janiece Murphy said...

Yes, well, it appears the decision has already been made, whether we agree with it or not.

And while I do believe a case can be made from an economic stability perspective that the decision is the right one, it still comes back to accountability. Accountability for the stupid corporate risk-takers, and accountability for the stupid consumer risk-takers.

I guess my heartburn comes because of the double-standard. If you're a fat-cat who contributes to the politician's slush funds, then you can get a bail-out. But if you're just Joe Shmuckatelly trying to support your family? You get told to fuck off, because it's not the government's responsibility to bail out the citizenry.

Regardless of which standard is selected (bail-out or no bail-out) it should be applied equally. Don't screw the little guy and offer the helping hand to the mega-rich.

It sticks in my craw.

Random Michelle K said...

Question John. What about the homeowners who were railroaded into mortgages they couldn't afford?

In WV, there were unscrupulous people who went around the the elderly and convinced them to mortgage their homes for repairs, etc. These individuals took advantage of the lack of education and in at least one instance, claimed to be a friend of the couple's child.

And then there is the damage that foreclosed homes due to a community.

Far better to keep home owners in their houses, and getting some money out of them, than to have an empty house the bank can't offload, which will be stripped by thieves in months.

John the Scientist said...

Oh yeah. once you get to a certian level in big coroporate America, you can't fall down. You just fall sideways.

Maaaan, do I have stories.

John the Scientist said...

"homeowners who were railroaded into mortgages"

That's an extremely small segment of the market, and should be dealt with under the fraud statutes.

Becuase if you use that argument too often, then you graduate to the argument that people aren't responsible enough to make their own decision, and should have to go to a government counselor before they enter into any kind of contract.

Anyone who uses that argument in this case should be barred from entering into legal contracts without a co-sign in the future, IMO. that will keep abuse to a minimum, and protect those seniors whose decision making skills have deteriorated to the point where that's a good idea, anyway.

The majority of this bubble, in areas with economies better than WVA's (I say that to point out that areas like WVA are not the loci of this problem, not as a snide remark) is driven by homeowners hoping to 'flip" and doing stupid things with their money. A side effect has been to price many low income and young families right out of the market becuase of the ready flow of cash to the speculators. In NYC, I knew of people whose bankers knew they could not afford the price tag, but through some machination I don't understand, got them to take out a first and second motrgage at the same damn time, and by some splitting of the price into purchase and "improvements" afford the exorbitant pricetag. Those people who forced this situation through interest only loans and rapid flipping should pay the price. They are not the big fat cats, but they are just as much responsible.

MWT said...

Heh, my mother tried pretty hard to get me to sign my name on the purchase of a condo that she expected to see rise in value several months later, at which point she would sell it.

I stuck firmly with the notion that the only real estate I should have my name on is something that I'll actually be living in, preferably until it falls apart. Real estate speculation, not for me.

Random Michelle K said...

It happened quite a lot here in WV.

And I agree that speculators shouldn't be helped, and shareholders should be left to hang.

But I wonder about the average person who was told, "sure you can afford this house!"

We've been taught to trust banks, and a mortgage is a form of banking, right? So why would the bank give us a loan we couldn't afford, right?

I think a variety of circumstances combined to make a situation that was untenable, and that situation was exacerbated by people who were playing the market.

But I disagree that people who were paying their loans until the interest rates skyrocketed should be thrown out of their homes.

And it seems like the plan proposed should do just that--keep people in their homes. It's not available to people who were looking to make a quick buck--only for people who are living in their homes. It even has penalties for selling.

I'd far rather the government spent money to keep people in their homes and keep neighborhoods intact that to bail out shareholders and companies that knowingly were pushing loans on people who couldn't afford them.

John the Scientist said...

"But I disagree that people who were paying their loans until the interest rates skyrocketed should be thrown out of their homes."

If you signed up for an ARM and did not calculate the maximum possible rate, you need to take a hit. Maybe not lose your house, but you need to have your mortgage extended to 40 years at a lower rate so you pay all you contracted to owe. That lesson needs to percolate through society, but good. Stupidity SHOULD be painful.

Dunno about Morgantown, but banks were viewed as the enemy where I grew up.

Jeri said...

I'm not entirely sure that 'governmental control and oversight' is a comfort to me. I've never found that government regulation and oversight accomplishes much but bureaucratic red tape - it sure doesn't ensure quality or risk management. (yeah, yeah, spoken like a project manager)

If I had, say, a 5 billion dollar struggling program, and I had a choice to entrust it to a) the government that has brought you the social security administration and bloated defense contracting, or b) private industry tycoons like Warren Buffet or Paul Allen?

Just a thought. I'm all for privatization of lots of things. :)

Anne C. said...

I'm in agreement with Jeri. The government has shown a really bad track record for being able to handle emergency response responsiblities. Aside from the military, it's not designed to move quickly or efficiently or to make cost-effective decisions.

It seems to me that what they *can* do is start educating people about money. The banks and credit companies have agendas that prevent them from being good sources of information about money. Education about financial consequences can be achieved the hard way or the easy way. Right now, we're heading into ('cause it's going to get worse before it gets better) the hard way.

And no fat cat is going to feel the crunch, that's for sure.