Heads Banks Win, Tails Homeowners/Taxpayers Lose

Too big to fail banks have it all - bailout funds, loss coverage, huge bonuses, no accountability, etc.  No wonder they have no compassion for struggling homeowners!

MORTGAGE EXPERT, DETROIT, BIRMINGHAM, BLOOMFIELD, ROCHESTER, ROYAL OAK, TROY, MICHIGAN

Despite all the political rah, rah and posturing, banks seem to be running the government these days - and we're letting them.

Before we get into all that though, I was flattered to be invited to lunch with Senator John Pappageorge (R-MI) on Monday in Troy.  He's concerned about issues in the housing & mortgage markets (who isn't), but his frankness about his ignorance on the topics was a pleasant surprise.  No political B.S., just a man admitting he can't know everything.  We discussed several challenges facing homeowners, he asked some great questions and took notes, and I ended up with an "assignment" to write some briefs for him to possibly present to a joint committee in January.

Annual Checkups

On Thursday I had my annual physical.  My doctor and CPA I  seem to see only once a year and so far, that's a good thing!  While my doctor was putting me through his procedures, I asked him and his nurse when they'd last had an annual mortgage checkup.  I could tell they were both uncomfortable with the subject, even though I was the one half-naked.  The question is, why were they uncomfortable? 

Our patterns of expectations can be pretty silly and sometimes outright illogical.  We are told and so have come to accept, that we should see doctors, dentists, CPA's, financial planners, estate planners, and more on a regular basis.  We're also supposed to have our cars, home heating & cooling systems and numerous other things inspected regularly.

These are all intrusive, take up time and aren't a lot of fun, but we do them anyways because we understand the danger of ignoring them .  So why do people avoid annual mortgage checkups and look for the nearest exit when I bring them up?

When's the last time YOU had a mortgage checkup?  Contact me if you'd like to know more.

Big Banks, Big Trouble

After numerous banks failed during the Great Depression, the government stepped up its regulation of banks and banned banks from getting involved in insurance and risky ventures.

Ever since that time, banks have lobbied to dissolve those rules, all in the pursuit of greater profits.  Slowly, over time, bank lobbyists convinced (bribed) politicians and government officials to relax these rules and allow banks greater freedom. 

Looking over the wreckage of our economy, how do you think that worked out for taxpayers and homeowners?

There's an old story told of how to cook a frog in a pot of boiling water.  If you toss a frog into boiling water, it'll just jump out to save itself.  But, if you put the frog in the water and then bring it to boil, the frog will react too late to the rising water temperature - the heat sapping its strength so it can't hop out.

That's what the system of collusion between the banking industry and the government has done to the American taxpayer on a consistent basis.

If a politician had told you before you voted for them that they would be part of approving the biggest federal bailout of all time AND allow bank executives to pay themselves bonuses with that bailout money - would you have voted for them?

The government knows exactly how to play you though.  It starts with campaign promises you want to hear, but they never seem to deliver on.  It continues once you've put them in office with posturing and propaganda all designed to placate and appease you.  But what really gets done, what do they really follow through on?

What's a politician's number one concern?  How about a government official?  If you think it's protecting the American people or doing what's right for our country, then you haven't watched the selfishness on most reality TV programs.  The majority of politicians and government officials are concerned with one thing and only one thing - keeping their jobs. 

By the way, these just aren't any jobs and it's rarely about the money.  It's more about the perks and power.  Back in the early 1990's, GM, Ford & Chrysler all cracked down on vendors and suppliers taking their employees out to lunch, dinner and events.  Why?  Because the employees were making too many decisions based on what was in the employee's best interest (through perks) and not in their employer's best interests.

Now think about Washington D.C., the center of the nation that happens to be the world power.  The free lunches, dinners, sporting events and more, pale in comparison to the intoxication of being at the "center of the world".  For some I'm sure it's more addictive than crack cocaine - and most of us have seen the extremes of what a crack addict will do for their next high.  Why do you think so many politicians are against term limits?

It takes money to stay in Washington D.C. or power.  If you're a politician you need money to win your next election.  If you're a government official, you need power over the politicians that appoint you or can force you to resign.

Big banks supply both.  Wall Street firms too.  I'm really not too  sure of the differences anymore between banks, insurance companies, investment companies, hedge funds and the lot.  They've successfully managed to be allowed to effectively blur the lines.

Call up a big bank today and ask what they offer.  You can open accounts for checking, saving, money markets, mutual funds, etc.  Want to invest in stocks?  We'll have that department call you.  The same goes for insurance, annuities, estate & financial planning, commercial loans, credit cards and even risky investing in derivatives and such.  One stop shopping!

Jack of all trades, master of none.  Bank executives thought they had all the angles covered - but they were juggling so many balls and stuffing their pockets with so many bonuses, that they got blindsided by an economic meltdown.  How are you entitled to a bonus when you didn't see that coming?

Think about all this at election time.  Nothing's going to change if YOU don't take the time to vote and make your vote count.  Incumbents should be held accountable for this mess. 

Vote with your wallet also.  What bank do you keep your money at?

The Week Ahead

The Halloween parties already started this weekend.  My wife  Rose and I may be going to one tonight at the Oakland County Boat Club on Sylvan Lake, Michigan's oldest boat club.  She's not feeling well as I write this, but I hope she can rally so we can go.

Tuesday is the monthly meeting of the Birmingham-Bloomfield Public Policy committee.  Wednesday I head down to Detroit for a planning meeting for the Mariner's Inn annual River Rhythm event on November 6th at the Roostertail.  They're still looking for silent auction donations and tickets are still available.  Click here for more info.

Friday night I'll be in Detroit again for Angel's Night with Motor City Blight Busters.  With 65,000 expected volunteers patrolling across the city, it's one of the safest nights in any city anywhere.  A far cry from the 1980's when the rest of the country tuned into Detroit to see how much of it was burning on Devil's Night.  John George deserves so much credit for making this happen, but they're struggling financially due to all the cutbacks in corporate and government donations.  You can help  out by making a donation here.

Both organizations are also in desperate need of volunteers to help with marketing.  Contact me if you're interested.

On Saturday morning I'll be in Troy for the "Michigan Money Summit" at the MSU Education Center.  It's open to the public, so maybe I'll see you there.

Make everyday count and remember to refer me to family & friends looking to refinance or buy a home.

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In addition to real estate lending, consulting and investing, Drew Sygit writes & speaks about the mortgage & real estate industries.  He holds mortgage industry designations CMPS, CMC, CRMS, CMLO, CALO, has an MBA and is an approved industry instructor.  He's presented, spoken and/or written for HUD, Financial Planning Association, Financial Planners Association of Michigan, Michigan Association of CPA's, Institute of Continuing Legal Education, Oakland Real Estate Investors Association, North Oakland County Board of Realtors and numerous industry publications.  For speaking engagements and questions he can be reached at dsygit@TheLendingEdge.com.  He also publishes his own blog:  http://drewsmortgagenews.blogspot.com.