Reclaiming "Who's Looking Out for You?"

Class, summer's over, it's time to do your homework. I hate to designate one of those mammoth Sunday New York Times articles as required reading, let alone one from the snore-inducing business section, but progressives should all take the time to read the Gretchen Morgenson's exposé of mortgage giant Countrywide Financial Corporation.

The piece has all the hallmarks of a company caught with its proverbial pants down. Like this gem: "[Countrywide's] spokesman declined to answer a list of questions, saying that he and his staff were too busy." (As a former newspaper reporter from a paper lacking the hold-my-other-calls prestige of the Gray Lady, I just love the idea of a corporate public relations office that's "too busy" to answer questions from the Times. "Gretchen, I'm running late for my kid's soccer game. Can I get back to you after the weekend?")

Countrywide's sales pitch promised "the best loan possible" -- but apparently they meant the best loan possible for the company and for its mortgage securities buyers on Wall Street, not its clients.

According to the article, Countrywide went to great lengths to give its customers -- particularly so-called "subprime" low-income, often minority borrowers -- the worst deal possible. Many Countrywide contracts included stiff penalties not merely for falling behind on payments, but for getting ahead on them. That's right, when the virtuous Horatio-Alger-type debtor working two jobs squirrels away a little extra to pay off the mortgage, she gets slapped with extra fees. And Countrywide did its best to give customers the heftiest mortgage they could to begin with. The company's computer program conveniently failed to take into account clients' cash reserves, so people ended up borrowing more than they had to. (In the you-can't-make-this-*!@&-up category, last year Countrywide ended this long-standing practice as part of its internal "Do the Right Thing" campaign.)

As I read the Times' exposé, I just kept thinking to myself, "Who's looking out for you?" Yeah, I said it. And yes, I know it's Bill O'Reilly's signature catchphrase.

How did we on the left ever let this rhetorical question become the property of the right? After all, it's the right that scrapped the usury laws and banking regulations that used to protect people from corporate swindlers like Countrywide. The whole reason there's no one's looking out for you is because people like Bill O'Reilly have been running our country for a generation. That's how we went from an economic system where firms succeeded by offering the best products at the best price to one where firms succeed by robbing people blind for as long as they can get away with it, or, to put it more simply, by not doing the right thing.

So c'mon class, all together now, let's say it: "Who's looking out for you?"

And if we say it enough, maybe we can get Barack and Hillary and John and Nancy and Harry to start saying it too.

Comments

[dadw5boys]

I used Country Wide to bargin for a lower rate with my bank.
Made both of them mad but they got over it I'm sure.
I made out great.
Country Wide gives regular people a leverage point against banks and other lending outfits, I am also glad they are in business.

[EdwardUlyssesCate]

One of the things that seems to have occurred in the last 40 years (I'm 60) is that the main institutions we used to trust NOT to lie to us, have slowly seen their management given over to sociopaths who lie, steal and murder without empathy. This was planned, but it happened so slowly that the older folks like me didn't see it. Others did, such as artists and musicians, but they were way too out front. Institutions of religion, education and health became liars by omission. Even today, we say the Feds lack transparency, which simply means lying-by-omission. You ever notice the smirk on Bush's face, it's the "I know something you don't, ha ha ha" attitude. Hillary, Mitt and others do it too. Ron Paul doesn't. My point is that we, as a group, through the efforts of sociopaths, have been stripped of our native self-defense abilities in mind, body and soul. Once we reclaim ourselves, then we'll clearly see the nonsense. Commentaries at http://GreatRedDragon.com are attempts to explain as much. Hope this is of some benefit.

[givemycountryback]

I have a mortgage with Countrywide and have had no problems with. But it is a conventional mortgage. I too wonder what happens if they go out of business, which I truly hope they do not. A few years back my husbands job was out sourced, so we went through a rough time. The mortgage was with Citicorp. We got behind 2 months and I tell you what, they were the nastiest people to deal with. It is not a sin to be poor in this country and I get sick of the monied people looking down on people. They didnot work for their, most stole it or inherited it.

[larry278]

I'll wait to see what WSJ says. WSJ articles are pithy, not pissy. Mr Murdoch hasn't changed that, yet. The NYT can still self destruct; Sulzburgers act like they are, at best, disinterested.

[realitytrumpsbull]

Countrywide will refinance your home, call now!
1-800-SUCKERS

[Giglawyer]

Maybe we wouldn't have so many problems if we started saying "Look out for yourself."

[Giglawyer]

This is not a case of the rich banks putting down the poor, huddled masses to steal their property. These subprime loans were a gamble on everyone's part, and those involved knew the risks, unless they were too stupid to actually read the documents handed to them. Newsweek had a great article recently explaining this. People who can't afford normal loans "took a chance" with this loans on the speculation that property values would rise and that they would be able to refinance later. Ooops. When those values didn't rise, they can't refinance, and they are stuck with a much higher rate. Gee, the gamble didn't work out for them. Of course, when they default, the gamble doesn't work out for the bank either. Banks don't make money foreclosing on homes. They make money when people pay their mortgages. So, both the bank and the consumer lose.

WHat's the fix? Many of the previous posters have good suggestions, and here are mine: (1) re-implement usury laws, indexed to the federal rates; (2) all loans must be traditional 80/20 loans or must include PMI; (3) no government bailout for banks that fail due to subprime lending.

This will freeze out a lot of low-income people looking to buy first homes. But it will stabilize the lending industry.

[WOLFWARRIOR]

Countrywide's Scam
AS reported BY the Sunday New York Times

Countrywide's sales pitch promised "the best loan possible" -- but apparently
they meant the best loan possible for the company and for its mortgage securities
buyers on Wall Street, not its clients.

According to the article, Countrywide went to great lengths to give its customers
-- particularly so-called "subprime" low-income, often minority borrowers -- the
worst deal possible. Many Countrywide contracts included stiff penalties not merely
for falling behind on payments, but for getting ahead on them. That's right, when
the virtuous Horatio-Alger-type debtor working two jobs squirrels away a little extra
to pay off the mortgage, she gets slapped with extra fees. And Countrywide did its
best to give customers the heftiest mortgage they could to begin with. The company's
computer program conveniently failed to take into account clients' cash reserves,
so people ended up borrowing more than they had to.
(In the you-can't-­make-this-­*!@&-up category, last year Countrywide ended this
long-standing practice as part of its internal "Do the Right Thing" campaign.)

Now one can only wonder the involment of countrywide in flipping house's
with forsale by owner's - Did these forsale by owners have insider's working
for countrywide?

[Portnoy]

Quick question:

If I have a Mortgage though Countrywide, and the company goes belly-up, what happens to my mortgage?

Does it get sold off to another lender?

[awake]

Depends on who financed countrywide- if there was an investor ,they may simply send servicing of your mortgate to another company.
Countrywide themselves may simply "sell off" your note to someone else.

Simply getting out of your mortgage payment is nigh-impossible.

[dadw5boys]

How about a new song?
We want all troops from every country around the world brought home and all military efforts stopped for 1 year.
What would be the effect if all troops from all nations were on bases and training not out in the world forcing people to do what some Government wants done?
Would the people being supressed feel free to live?
Would the people feel free to stand up to zealots and push them out of their lives.
Militarys have a strange effect when they start forcing rules on people. The zealots and terrorist seem to make more sense when Soldiers are enforcing laws that reduce freedoms to try and stop terroristor zealots.
Without the Soldiers in peoples lives the zealots and terrorist have a hard time selling thier HATE.

[louiswu]

LizM The fact is that in one way you are absolutely correct. Not everyone can afford a house whenever they want one. Yes. The issue here isnt that those dumb buyers need to be protected from themselves. The real issue is that there was a whole industry, full of professionals who were willing to provide mortgage financing to people who anyone could tell, couldnt make the loan payments. These werent dumb borrowers, these were highly educated and highly compensated professionals who did this. The aggravting part is that the big bond dealers then put together these loans and sold them as investment grade thereby endangering the rest of us as the highly paid and educated types on Wall Street who also knew these were shaky at best sold them. Now, when the bill is coming due they are crying out that the Fed has to do something to protect the little borrowers. The Fed bails out the Wall Street fellows and the little guys are still going to go down the tubes. The root cause is when the banking and mortgage laws were 'liberalized' to allow interest only, no doc loans, and other obscenities. Remember, professionals who scream at the drop of a hat about personal responsibility, and yet run to the fed as soon as they get a dose of the way personal responsibility feels when it is you who is being held responsible. It is the professionals who did this to us. Not the dumb borrowers who simply tried to do what they saw others, those educated professioals doing.

[Mariel]

This is about a national tragedy. Pride, greed. Oh so longing for the good old days, when we thought things would actually get "better", not knowing how worse they would become.

Now we know that America's peak years occurred some time ago.

[LeftRight]

And it's not just in the money world, either. Look at the Environmental protections, and the Consumer Goods protections (e.g. lead painted toys, bad dog food, etc. coming from China) and the fact that the gasoline and oil world is somewhere around 3-5 times what it was under Clinton (a rate of increase never seen anywhere, anytime, in all of history) and yet, "It's just the market!"

[rlc41]

It use to be loan sharks used to be located in back alleys and busted your kneecaps for not paying. Now they are considered respectable businesses obnoxisly advertising 24/7 in all media. They don't break bones anymore, they just take everything you own and ever will own. They figured that way was much more profitable.

[Cranbot]

I agree! When they can boost your interest rate on a credit card to 32% for being 1/2 hour late with a payment (because their online system logged it in late) that's loan sharking.

Years ago you hired a financial advisor or a lawyer or any other professional because no one person could understand everything. Now your broker sell you stocks that will earn him a commission, whether they are good for you or not he could not care less, your insurance guy steers you into bad policies, your mortgage gal sells you on a piece of crap loan, etc....

A law professor at Harvard just had her class of 80 lawyers to be peruse a typical credit card disclosure (cash back award type) and asked them to figure out what the actual interest rate would be. It took them something like 6 hours of discussion and they were still not sure if they got it right. What hope does the average person have?

There is no "common good" or "community" left in this country. It's all me first and the gimmee, gimmees.

[LizM]

When will progressives learn that not everyone can afford a house whenever anyone wants one. It just doesn't work that way.

When will progressives learn that personal responsibility means that you can't always have what you want when you want it.

I mean, who is more at fault here...the lender?...the credit card company with the high interest rates and the low minimum payments?...or the individual who just can't help living beyond his means?

When will progressives learn to grow up!

[loril]

...Probably about the same time that Neo-Clowns learn that hard working people in lower income groups will sometimes reach for any lifeline that is offered, in an attempt to get their kids out of run down rentals operated by greedy landlords, filled with lead paint, insects and other health infractions. Perhaps when well-heeled types stop trying to gut public schools, social institutions such as libraries, public parks and other services that those of us in the more modest strata use regularly to enhance our lives and minds.

In this "I've got mine, now you go get yours...'cos I'm not going to help anyone" society, people are using other methods to better the lives of their children.

I live in an inner ring suburb and I have a small child. I am not one to believe the hype...but the drumbeat of "move to the outer suburbs! This place will be a slum in 10 years!" is endless. No, we work hard and we are college graduates...but we cannot afford a $400,000 home in the exurbs. We are staying put. However, we know many people who are "fleeing" to questionable mortgages right now...these are two career couples with degrees, not "people looking for a handout who don't like to work". Can they afford their monthly nut? Well, in these unstable times, who knows? If everyone keeps their jobs, it will probably be ok. If someone gets outsourced without notice, it will probably be disaster.

By the same token, the people who live 10 minutes away in the inner city, look at our inner ring suburb as "paradise" where their kids can have a better start. Thus, some of them are working their butts off in the attempt to scrape together enough money to live here.
Most of the people I know are just as "grown up" as the "personal responsibility hounds' I have met, who were born into upper middle class families and have done nothing different than I have done...but who proclaim themselves to be superior and more deserving of what they have.

[danielbrook]

If you really believe in personal responsibility and that "you can't always have what you want when you want it" you should be in favor of restoring the usury laws that enforce that ethic.

It wasn't progressives who got rid those laws. It was conservatives. (And I'm sure they did it altruistically to help the poor--not the banks and credit card companies ;)

[ihavenobias]

Yes, thank you!

But if conservatives did what you suggest, they might have to stop blaming the victim (the usual tactic).

In fairness though, I shouldn't just say "conservatives", but rather, those with conservative ideologies (fully or partially).

As I've said before, looking back, how can any progressive be proud of Clinton's Big 3:

NAFTA, GATT and the Telecom Act of 1996*

*We rightfully complain about the state of media but how many of us point back to the Telecom Act as a huge part of the problem?

PS---This is largely of why I can't support Hillary. She really seems like the most likely (of the big 3 candidates) to push through more NAFTA/Telecom legislation. But, like her husband, she'll get a pass with use of the "moderate" card.

[Kansas Evans]

When will conservatives learn to grow up? You can't cheat people out of their earnings and then blame them for not knowing the rules. Are we adding "blame the cheated" to "blame the victim"?

Think about it, who's REALLY living beyond their means? The peole who are trying to buy a home and take part in the American dream, or the people who needed to put in penalize early payment to squeeze the last drop of dime from a dollar? "Oooo. Bad news ma'am/sir. You seem to be more responsible then we thought you were, judging from your efforts to get out of this loan. But you're still not as bright though, huh? (laughter) Yeah, early payment's gonna cost you another organ. We'll jut take this kidney here. You don't need two anyway." Let's stop and think what THEY had on credit. I think we can safely cross a heart of this list.

[awake]

I'm in the leasing and finance field and I can tell you that many people don't understand the fine points of leasing and finance, and will believe whatever the salesperson tells them.

The salesperson is dreaming of the commission and will say or do whatever it takes to close.

One can say the same for mortgages. Most people don't understand the process, or how a mortgage works, and will just go with what their broker/lender tells them is best, because they are supposedly the experts.

If there's no such thing as predatory lending why are there laws forbidding predatory lending?

[Desiderata]

And when will the self righteous learn not to judge so harshly the less fortunate, else be made to walk in their well-worn shoes as a fact-finding lesson from whom or whatever masterteacher assigns such lessons?

[ihavenobias]

I guess you forgot the ONLY reason people are less fortunate is because they are "lazy".

That's the reason for all problems apparently, that people are lazy and that they just need to pull themselves up by their boot-straps.

This assumes, of course, they even have boots.