Chutzpah

The lending industry has it:

The mortgage industry, facing the prospect of tougher regulations for its central role in the housing crisis, has begun an intensive campaign to fight back.

As the Federal Reserve completes work on rules to root out abuses by lenders, its plan has run into a buzz saw of criticism from bankers, mortgage brokers and other parts of the housing industry. One common industry criticism is that at a time of tight credit, tighter rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits.

Discuss.

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28 replies
  1. 1
    Walker says:

    One common industry criticism is that at a time of tight credit, tighter rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits.

    Shorter lending industry: Please do not make us document the illegal things we do.

  2. 2
    4tehlulz says:

    American Capitalism(tm) rests on the ability of lenders to supply money to as many people as possible, and for the government, which represents many of those people, to bail us out when those people cannot pay us back.

    Creating “standards” and “criteria” to give out loans only to people that can afford them endangers American Capitalism(tm) by slowing down unfettered lending and the government bailout that follows. This also contracts the supply of money that can be used to buy little plastic tsatskes made by our friends in China, who then lend us money to fight Wars for Freedom(tm) in the Middle East. How American is that? And the endless government bailouts are an indirect way for those deadbeats to pay us back anyway, as well as for future deadbeats to put a down payment on the money they won’t be paying us back for.

    Any interruption of this natural cycle of American Capitalism(tm) will only cause more problems than it solves. If we don’t lend people the money to buy lead-glazed cups and plates, then they’ll be less money to lend us back to fight the wars to liberate the Middle East from [ideology to be determined]. This clearly is an attack on our freedoms and smacks of International Socialism(tm). I hope you choke on that(tm) check from George Soros, John.

  3. 3
    pharniel says:

    if they don’t like the regs they can take hte traditional measures and buy their way out.

    a 40% increase in taxes, back dated to 2001 should be sufficent, for all vp’s and up as well as the corporation.

  4. 4
    RSA says:

    One common industry criticism is that at a time of tight credit, tighter rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits.

    And of course if tighter rules had been proposed in a time of looser credit, the criticism would have been that they would slow the economy and were unnecessary in any case. Somehow it’s never a good time to institute oversight.

  5. 5

    One common industry criticism is that at a time of tight credit, tighter rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits.

    Okay, what’s the downside?

  6. 6
    Z says:

    Jeez. The American public isn’t supposed to demand accountability or make them change the behavior that nearly brought down our economy. It is just supposed to say, ‘Tsk. Tsk. You are such bad, naughty CEOs.’ Then we are supposed to bail them out, the way Mumsy and Dadums did when those same CEOs were young.

  7. 7
    Zifnab says:

    if they don’t like the regs they can take hte traditional measures and buy their way out.

    Cheers to that. What’s the old Right-wing slogan? Love it or leave it?

  8. 8
    The Moar You Know says:

    I demand the right to do whatever the fuck I want, and have the public pick up the tab for any mistakes or injury I cause. Passing laws against any of my behavior you find stupid, rash or harmful is a bad idea.

    Boy, if you change their wording around and apply it to me, I sound like a real asshole!

  9. 9
    Cyrus says:

    This is so brazen, it almost makes me wonder if we are in the wrong. To us, it looks like the dollar is tanking, white-collar crime has been in the news almost continuously since Enron, I don’t think there has been more need of and support for regulation and transparency in both government and business since FDR… to lending industry representatives, the threats they’re concerned about are more paperwork and a risk of lawsuits? Either they’re totally crazy, or we are.

  10. 10
    jake says:

    Rules are for little people.

  11. 11
    The Other Steve says:

    Working inside a mortgage company, I gotta say… there’s very little effort put into documentation today. It’s easy to lose track of things… very ad hoc… very loose.

    They’re reluctant to move to a very efficient, well organized system that can be followed, because… they want to be flexible and changed course when new products come up.

    See, the boring stuff is all handled by Freddie and Fannie, and they have an efficient boring process. The small guys all throughout the industry cannot compete with the big GSE’s because they can’t get the costs any lower. So they go off into these interesting products because they have high returns. Er, well, also high risk.

    If the market was regulated in terms of product. We’d only have the boring safe ones. It would mean that some people would not be able to buy homes, although the number of these people who couldn’t buy who could actually afford to is quite small.

    For example, a coworker was telling me how 20 years ago we got a mortgage application for a multi-million dollar home in Beverly Hills or somesuch, and as collateral was a signed television contract. That was it, there was no income history, no money in their savings, nothing. As it happens, we rejected the application thinking it was too risky. The show wound up as the #1 spot for like 6-7 years, but there was no way of knowing when it started.

    Under existing boring mortgage rules, they wouldn’t be able to get a mortgage. Granted, if they had lived in an apartment for a year or two and saved their money, they could have paid cash. So I don’t think the hardship is that great.

  12. 12
    Ninerdave says:

    As the Federal Reserve completes work on rules to root out abuses by lenders, its plan has run into a buzz saw of criticism from bankers, mortgage brokers and other parts of the housing industry.

    Wah.

  13. 13
    Dennis - SGMM says:

    The mortgage industry has only to threaten to withhold their campaign donations (As the homebuilders did) and our courageous Congress will forget all about regulations, pass another bailout and humbly apologize for even considering tying the hands of the financial wizards. Besides, Due Diligence is so passé in an economy where the theories of Charles Ponzi are regarded more highly than those of John Maynard Keynes or Adam Smith.

  14. 14
    Original Lee says:

    That doesn’t require any more chutzpah than calling for a federal statute to preempt personal data breach notification laws in 42 states. They really don’t like personal data breach notification and wish it would go away, but if there were a federal law enacted during this session of Congress, chances are good it would be toothless and worthless to the consumer.

  15. 15
    Decided FenceSitter says:

    Listening to NPR this morning and listening to the Financial Times chap say effectively, “We should be worried about the .5% saving rate; it shows that we are a rapidly building economy. Sure the last few years it go out of control…”

    WTF?! Come on, am I so fuckin’ insane for wanting controlled, sustainable growth? Am I (& my wife, really, who is the financially responsible one) the only one who sees a problem with betting that the future is bright.

    The FT analyst even said as much, “Debt is borrowing on the fact that the future will be better than the present. I wish I hadn’t saved in my 20’s and instead spent the 10 bucks, the 20 bucks here and there.”

    WHAT SORT OF IDIOT IS THIS FINANCIAL MANAGER!? Sure you can spend for fun things; once you have your FUCKING NEST EGG in case the future doesn’t pan out; otherwise you are just betting that the roulette wheel will always come out in your fucking FAVOR!

  16. 16
    Raka says:

    So if we regulate the lenders, they’ll be “forced” to increase actual costs to consumers to offset potential costs to themselves. Just like they’re “forced” to foreclose on homes (which has a massive ripple effect on property values and the economy as a whole) rather than working out payment plans or refinancing the owners at a reasonable fixed interest rate.

    Lending industry to America: Why you gotta make me hurt you, baby?

  17. 17
    jake says:

    The FT analyst even said as much, “Debt is borrowing on the fact that the future will be better than the present. I wish I hadn’t saved in my 20’s and instead spent the 10 bucks, the 20 bucks here and there.”

    Riiight. So it was OK for mortgage co’s to give ARM & LEG loans on houses the buyer couldn’t afford. The MCs were just encouraging people to be optimistic about the future!

    The lunatics have taken over the asylum and are laying siege to the village.

  18. 18
    Shade Tail says:

    This reminds me of one of the biggest GOP talking points before the 2006 midterm election:

    “If the democrats win, they’ll just spend their time on a bunch of investigations against us!!!”

    …And? I *wish* I lived in the alternate reality in which those investigations actually happened. If lenders get exposed to more lawsuits, fuck ’em. It’s nothing more than they deserve.

  19. 19
    jake says:

    So if we regulate the lenders, they’ll be “forced” to increase actual costs to consumers to offset potential costs to themselves.

    This is our cue to start chanting: “If you’ve done nothing wrong you’ve got nothing to hide!”

  20. 20
    Rick Massimo says:

    When municipal governments or even worse, school administrators, ban something and they knew full well that they have absolutely no legal basis for doing so, their old fallback is that it’s a “potential hazard.” Well, yeah. A freaking Nerf ball is a POTENTIAL hazard.

    Here we have the mortgage industry doing the same thing. Walking down the freaking street is potential exposure to a lawsuit. Grow the fuck up and stop stealing money from people, and you won’t get sued. End of story.

  21. 21
    Redleg says:

    Well, at least they’re not (yet) blaming the implosion of the housing lending industry on too much paperwork.

  22. 22
    KRK says:

    potentially exposing lenders to more lawsuits

    Nothing new here. Protecting corporations from legal exposure has been a core value since the Reagan revolution. (See, McCain’s opposition to the Fair Pay Act that went down last week for a recent iteration.) We’ll never get back to fantasy 1950s-land if corporations are held to their legal obligations.

  23. 23
    Calouste says:

    One common industry criticism is that at a time of tight credit, tighter rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits.

    And having proprer paperwork on an amount of money that for most people represents a sizeable chuck of all the money they will ever make in thier lives is somehow bad?

  24. 24
    Calouste says:

    Listening to NPR this morning and listening to the Financial Times chap say effectively, “We should be worried about the .5% saving rate; it shows that we are a rapidly building economy. Sure the last few years it go out of control…”

    WTF?! Come on, am I so fuckin’ insane for wanting controlled, sustainable growth? Am I (& my wife, really, who is the financially responsible one) the only one who sees a problem with betting that the future is bright.

    The FT analyst even said as much, “Debt is borrowing on the fact that the future will be better than the present. I wish I hadn’t saved in my 20’s and instead spent the 10 bucks, the 20 bucks here and there.”

    WHAT SORT OF IDIOT IS THIS FINANCIAL MANAGER!? Sure you can spend for fun things; once you have your FUCKING NEST EGG in case the future doesn’t pan out; otherwise you are just betting that the roulette wheel will always come out in your fucking FAVOR!

    We’re talking about an FT analyst here. 80% chance that it is an Oxford/Cambridge type, and with those you have 90% chance that they came from a family that had too much money to start with. Don’t expect too much connection to reality there, although you do get the odd ones.

  25. 25
    ET says:

    What circle of Dante’s version of Hell do these guys get assigned to?

    Words fail me. I just which I had the half-wit who uttered the sentence in front of me so I just beat them over the head with a heavy object. Maybe then they would understand.

  26. 26
    jake says:

    And having proprer paperwork on an amount of money that for most people represents a sizeable chuck of all the money they will ever make in thier lives is somehow bad?

    Yeah. Weren’t the bobble heads screaming that this is the fault of the irresponsible people who didn’t do the proper amount of research, quadruple check all of the documents and cross-examine everyone involved in the transaction?

    Oh wait, that was the buyers.

    Never mind.

  27. 27
    grumpy realist says:

    It doesn’t make any difference what the mortgage industry wants. The chain of packaging together huge bunches of dodgy debts into CDOs and SIVs has been irrevocably broken. They can scream their little heads off as much as they want about the cost of paperwork, but you can bet your bottom dollar that the Securitization Train will sit dead on the tracks until they start buckling down and proving the financial health of the debts they have on board. Otherwise, the stuff is just going to sit there. And sit there. And sit there.

  28. 28
    Lynn Lightfoot says:

    I liked your final instruction: “Discuss.”
    There’s no need for discussion. I haven’t read any of the 27 comments that existed when I read the post. I will not be at all surprised if all 27 say the same thing I’m saying. When did the lenders ever wish to do anything to make life easier or cheaper for those they are enthralling? The lenders wish to have a free hand, period.

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