Saturday, May 7, 2011

Retooling My Earlier Ideas

I've been thinking a lot about my post about the mortgage crisis (Easter Sunday) and realizing that, in my typical zealotry about issues of personal self-awareness and accountability, I definitely overstated my case in ways that I'm not comfortable with.

Sometimes, I just shoot from the lip.  When that happens, I find that I have to return to the scene of the crime and consider the damage.

This article by Elizabeth Warren, "Unsafe at Any Rate," published in Democracy: A Journal of Ideas in the Summer of 2007 says what I could never say half as well about my own feelings about financial responsibility and reform.

Warren addresses the concern I voiced in my earlier post, that people have sometimes (or often?) gotten themselves into their own financial messes: 
"Some Americans claim that their neighbors are drowning in debt because they are heedless of the risk or because they are so consumed by their appetites to purchase that they willingly ignore the risks. Surely, in such circumstances, it is not the responsibility of regulators to provide the self-discipline that customers lack. Indeed, there can be no doubt that some portion of the credit crisis in America is the result of foolishness and profligacy. Some people are in trouble with credit because they simply use too much of it. Others are in trouble because they use credit in dangerous ways."
But, as Warren goes on to argue, "that is not the whole story. Lenders have deliberately built tricks and traps into some credit products so they can ensnare families in a cycle of high-cost debt."

Using an apt analogy, Warren argues that the financial industry might as well be selling toasters that have a 20% chance of going up in flames.  No one would buy such a toaster, if they knew.  And thanks to the creation of the U.S. Consumer Product Safety Commission (CPSC) in 1972, consumers are entitled to know, so that they no longer run the risk of inadvertently buying them. 

While I think people need to take responsibility for their own financial mistakes--and we all make them, by the way-- I don't mean to suggest that I'm not in favor of increased consumer protections and increased accountability on the part of organizations that peddle financial products.

Profiting from other people's mistakes or misfortune is wrong, by any standard--particularly if you are the one who deliberately misleads people into committing disastrous errors.

In my early twenties, I myself fell victim to a misrepresented financial product (what was marketed as an "annuity" turned out to be nothing more than a glorified life insurance policy).

I was furious when I realized what had happened.

The guy who sold it to me--a long-time family "friend"--made me feel like a fool when I confronted him about it.

His exact words were, "Well, but I thought you were an educated woman.  I assumed you knew about these things.  I gave you the paperwork to look over..."

I remember thinking, "Okay, you schmuck.  We'll just see about that."

But, in some ways, as a well-educated single woman, I had the luxury of indulging my fury.  I found out about and joined a class action suit, documented what had been said to me, provided copies of all materials (many of which had not been given to me prior to purchase) and--two years later--got my money back, plus interest.

But I realize that my case is not the norm.  Many people with low-income jobs, who are also compelled to assume responsibility for their families and who may not have access to the kind of information and resources that I take for granted, are not going to have the luxury of my kind of pro-active anger.

And there was a lot of paperwork to file.  I make my living using words; for me, it was easy enough.  I was motivated, and it's what I do all day.  For many, though, it would be a difficult--and implicitly humiliating--chore.

It's easier (if not easy) to take a stand when you are the only one affected--mentally, emotionally, financially--and the only one who will have to suffer the consequences of your actions.

Most people are not in that situation.  And I agree, we need to protect everyone, regardless of their circumstances.

My toaster exploded, so to speak, but in the end, I was lucky.  I suffered only minimal scarring.  And yes, I learned my lesson, but it was very limited and very small-scale.  I now know firsthand that the buyer has to beware--no matter what she's buying--and that some sellers will take advantage of family friendships, ignorance, good-natured innocence, trust, you name it, to make a commission.

As Warren argues, though, "To say that credit markets should follow a caveat emptor model is to ignore the success of the consumer goods market–and the pain inflicted by dangerous credit products."

If we can regulate what people can and cannot sell when it comes to toasters, there's no reason why we can't regulate what can and cannot be sold in the financial industry.

I certainly don't want other people to get burned, and I didn't mean to suggest as much in my earlier post.

What I want is for people to acknowledge, when or if they are unfortunately burned, for whatever reason, what actually happened.

Did I knowingly touch the stove or did I walk into the kitchen only to have the toaster explode on me one morning?

All that said, it infuriates me that Obama has not appointed Elizabeth Warren to head the Consumer Financial Protection Bureau.

If he can reiterate support for Jeff Immelt's appointment, he can sure-as-shit back Elizabeth Warren.

And yet, he isn't, as this April 14, 2011 article in Bloomberg Business Week suggests and as is increasingly becoming all-too-clear.

There is a grassroots campaign being organized by The Coffee Party.  I've included the Facebook link on my blog.

I find it incomprehensible.  Elizabeth Warren is the best candidate for the job; the fact that she supported a $20 billion dollar fine on the mortgage industry should seal the deal, not kill it.

It's moments like these when I realize that I'm in the right profession for my personality and temperament.  I would not do well as a politician, administrator, or run-of-the-mill bureaucrat.

I realize that there's a lot of BS that comes with that territory, and some of it, unfortunately, seems somewhat necessary.  It greases the wheels of the big managerial machine.

It's not really all that different from the double-dealing and self-serving courtiers who used to surround the king; it's a facet of human nature, perhaps.  Whatever it is, we've always had it and I think it's unrealistic to think it will ever entirely disappear.

That said, I can't help but think that, if some paunchy, dye-job, over-the-hill, fat-cat politico came to me and said that "they" wouldn't support Elizabeth Warren's appointment as head of the Consumer Financial Protection Bureau, I would listen as patiently as I possibly could and then say,  "Yeah, well, suck it asshole, because Elizabeth's in charge and that's the end of it."  

Can you imagine the headlines?  "Feisty President Tells Warren's Opponents to 'Suck It'."

So much for my staunch advocacy of civil discourse.  ("Physician, heal thyself.")

Similarly, when Colin Powell was coming under fire as Secretary of State under Bush, I think I would have listened carefully to what everyone was saying then and said, "Yeah, well, suck it asshole, because Colin's in charge and that's the end of it."

I'm sensing a definite trend in my political commentary.

My (rather crudely expressed) point is, I think there is value in appointing people who are 1) self-reflective, 2) consistent in their ideas and opinions, regardless of the "sides" or "trends" in political debates, and 3) willing to speak their mind even if--and, in particular, when-- they know that other people in power won't agree with them.

They say what they say because they believe in it.  And they believe in it today and tomorrow, because they thought about it yesterday and decided that it was what they believe.  This is who they are.

And when they make mistakes, they acknowledge them, but they also acknowledge that people are always more than the sum total of their mistakes.

We need people like that in charge of things.  We just do.

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Ralph Waldo Emerson once wrote, "Life is short, but there is always time for courtesy."