They Steal More than Money

I had been thinking about this article for some time, mulling it over in my mind repeatedly. Each time I thought of the sad examples of humanity that exemplify so much of what is wrong with our country and society – people like Bernie Madoff, Angelo Mozillo, Richard Scrushy,  R. Allen Stanford, Lloyd Blankfein, etc. – I found myself perversely enjoying the warm feeling of bile and anger rising up in me, much like one can strangely find off-putting pleasure in the taste of blood in ones mouth after a fall or being struck.

But, these billionaire mega-crooks – some convicted, some able to avoid justice through technicalities, payoffs or legal maneuvering, but guilty all the same – are just the tip of the iceberg. For if these perps could commit such enormous frauds and steal so much from so many for so long, it’s a safe bet that there are many more out there, working on a much smaller scale, undetected. And, while the scale of deception, narcissism, arrogance and plain old theft committed by these men is mind-boggling, the money stolen is sure to be just a small part of the damage they have caused.

Much larger looms the irreparable injury to the very fabric of our society, to the foundation of trust that forms the bedrock of our daily lives. For once people in positions of power and trust can show such a blatant disregard for fiduciary duty, honesty and just plain human decency, all bets are off. Moreover, while the acts of deception in and of itself are bad enough, the cynical ploys, feigned indignation and hypocrisy displayed in their defense are even worse.

Who can one trust these days when it seems that everyone is on the take and bought and paid for? Did your doctor prescribe a certain medication because he thought it would help your condition, or is he just trying to get that all-expense junket to Hawaii from some pharmaceutical company? Did your investment adviser recommend a mutual fund based on merit or to earn a fat commission? The list goes on.

But even in this cesspool of lies, deception, hypocrisy and double-dealing, every now and then one finds a particularly noteworthy nugget. One such treat comes from the Mortgage Bankers Association of America, the professional trade organization of the industry that brought us our current economic malaise and the financial crisis. It turns out these masters of finance, the same folks that insist that much the mortgage mess is to blame on consumers too careless to read their mortgage documents, have decided to back out of a real estate purchase they committed to at the height of the market. They would now much prefer to return their shiny new headquarters building bought for around $79 million back in 2007. At the time they astutely financed the purchase with a variable rate loan with an LTV (loan-to-value) ratio of about 95%. Hmmm…how novel. Of course, 2007 was the peak of the bubble, when money was cheap, mortgages easy to come by and lenders eager. Now the MBA is using a process known as “strategic default” to get out from paying the inflated price agreed to at the time. Basically, this is little more than breach of contract. And, while a new buyer has been found for the property, the agreed upon price is now only around $45 mil, reflecting the current state of the market and the “true” value of the property.

Interestingly enough, John Courson, chief executive of the Mortgage Bankers Association is on record in the Wall Street Journal on Dec 7th, 2009, berating and lecturing consumers that living up to their loan obligations in spite of being underwater “isn’t just a matter of the borrower’s personal interest.” He goes on to insist haughtily that “defaults hurt neighborhoods by lowering property values. What about the message they will send to their family and their kids and their friends?” Indeed, John, indeed.

It’s sad that ole John doesn’t see the same moral hazard when it comes to his once high-flying industry group reneging on their commitment to community, kids and friends. What’s even sadder is that this outrageous tale of corporate malfeasance is being committed by the very same trade organization intended to guide and regulate the mortgage industry. And what’s outright pathetic about this issue is that the only people that appear to take note are Jon Stewart and a handful of bloggers. Et tu, professional press? I hope you at least got a good price for your soul and, given the MBA’s track record, insisted on payment in cash. Upfront.

And as to the bank holding the note on the MBA’s headquarters building – PNC Financial Group – who is being stuck with a loss of about $25 million, we offer a heartfelt “chin up”! After all, $25 million – an amount inconceivable to most Americans – is mere peanuts compared to the $7.6 billion – yeah, like with a “b” – in TARP money your Uncle Sam spotted you when things got rough. And while we acknowledge that you did repay this rather generous loan earlier this year, that kinda helping hand in times of need is a hell of a lot more than most consumers got.

But, after all, it’s just money. Granted, in this case, it’s a whole lot of money. A shitload in fact. But, compared to what the guys mentioned at the beginning of this article took from us, the $25 million – or even $7.6 billion – ain’t nothing to cry over. No, it’s safe to say, those guys took far more from us.

About Daniel Backhaus

Dan has close to 15 years of experience in the field of information technology, brand development, and interactive marketing, working with brands that include Bayer AG, BMW, Daimler-Benz, Deutsche Bank, H&R Block and Wachovia. His diverse background includes service in our nation’s military, and stints at Xerox, TSYS, several technology start-ups and leading interactive agencies in Europe and the United States. Originally from Germany, he has lived and worked in Germany, the Czech Republic, Greece and England before settling in Atlanta in 2005. A PMI-certified Project Management Professional and a Six Sigma greenbelt, his experience includes digital strategy, solution sales, new business development, enterprise systems implementation, project and program management, SEO/SEM and Web Analytics. Dan holds a BS in Business Management from Arizona State University and an MBA with concentration in international business from the European University in Montreux, Switzerland. The parent of three young children, Dan’s interest in environmental sustainability issues stems from concerns over their future well-being and his international background have given him an enlightened perspective on the challenges we face and the approaches other countries and societies have taken in addressing them. Dan blogs about technology, his love of writing, interactive marketing, brand development and strategy and whatever or whoever might have pissed him off the week before.
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