Written by Rob Fetten
I have somewhat of an inside track on how the executive management feels about the financial and housing crisis. I have heard their claims and excuses first hand through live web meetings and media released communications. I have heard it from:
- JP Morgan Chase
- Bank ofAmerica
Their message to themselves, their employees, and the public is the same. “Our customers stopped making their payments, and that’s why we are in this economic mess”.
I have yet to hear from any banker that they actually take responsibility for lending money irrationally and extremely irresponsibly. They actually place all the blame on the homeowners. Yes, that’s right! When describing the lending portfolio of first and second mortgages, top executives from Chase and others have discredited the consumer by throwing them under the bus for not being able to keep up the payments on a bet they made with the bank for a piece of real estate. They refused to mention that they loaned 100% of the value of the properties, and never verified employment or income of the customers. What else could they possibly do? Admit their mistake and set themselves up for lawsuits by investors and consumers?
During the height of the market in years 2005 – 2007, loan officers were pushed to sell home equity loans to 100% of property values, and
we were pushed to sell highly profitable sub-prime and Alt A loans. Sub prime and Alt A loans were mortgage products that required no income, employment, or assets to be verified.
Their statements smell of “it’s not our fault” that homeowners must foreclose. When in fact, it is 50% their fault. There are two parties that go in on a housing purchase deal.
The bank and the buyer both take their chances. The bank orders an appraisal and checks market conditions to hedge their bet that they won’t lose money. Their whole job is to PROTECT the investor of this fixed income product that is sold on a secondary market.
There is a question surrounding the Occupy Wall Street protesters and that question is what are they angry about? I’ll tell you what they’re angry about. They’re angry that Wall Street Banks have taken no responsibility for the financial crisis the entire world is in. The US Government has yet to charge anyone with a crime or even faulting these institutions with extremely poor ethical behavior.
The banks have gotten out of the financial mess with a bailout from the Fed, while the public has been left behind to deal with the foreclosure process and the loss of equity, income, and their home.