In all the coverage of the subprime mortgage mess, there has been a key element missing: the sales pitch.
This is where the rubber meets the road, where the actual swindle goes down, where the trap snaps shut and the sucker is held fast till he can be skinned alive. It is the Glengarry Glen Ross moment.
We must understand these moments when we listen to the head hogs — Countrywide, Merrill Lynch, Citicorp, AIG and the other giant loan sharks — as they whine that the whole disaster is all the fault of deadbeat borrowers who should have known better.
And these moments are all committed to paper somewhere, except I don’t know how to get my hands on it. So I’m asking for help. Does anybody out there know somebody who was or is involved with a subprime mortgage outfit?
These moneylenders don’t just send their high-pressure sales force into battle unprepared. Like any other high-pressure sales outfit, mortgage brokers must use work sheets, talking points, training manuals and even scripts. These are to be followed, sometimes word for word. That’s what it means when the voice on the phone says, “This conversation may be recorded for training purposes?”
Every reasonable objection the prospect may raise has been anticipated, and a suitably deceptive answer prepared. Every evasion and obfuscation and misdirection has been scripted. And I’d like to put this stuff on the internet where it belongs — not to expose or embarrass any individual, but to expose the shabby trickery of the foundation upon which the huge banking firms are built.
The most likely source for such documentation, it seems to me, would be a remorseful or disgruntled former employee of a mortage broker who hasn’t bothered to throw out the old scripts and manuals.
Do you know any such person? I would offer him or her, and you, complete anonymity of course. Written backwards, my phone number is 0075793068. In the same way, I can be reached on line here: moc.liamg@elttilood.emorej
Buck’s Social Security posting, below, sent me back in the archives first to April of 2003 and from there to a post from the gray, menacing dawn of the Bush misadministration. The latter was titled, Contrary to Published Reports, Social Security is Okay. For whatever historical interest it might have, here goes:
On Monday, March 19 of the year 2001, high officials of the Bush administration made it clear that the Social Security crisis was over.
In fact, as they announced at a press conference, Social Security was in better shape than ever before in its history. And it would be on solid ground until at least 2038, when the first of the baby boomers will be 92. Medicare was in good shape, too: its main trust fund wasn’t expected to run dry until 2029.
The news would have been a huge relief to the tens of millions of Americans who believe that little or no money will be left by the time they reach retirement age. But the information never got to those worried millions, or to anyone else except a few thousand news junkies and policy wonks. Television seems to have ignored the story completely. The major papers ran it, but in such a way that for most readers it remained hidden, like Poe’s purloined letter, in plain sight—
The Boston Globe gave it 658 words; the Chicago Tribune thought it was worth 488. The Washington Post ran it on page 5, the Los Angeles Times on page 9. The New York Times also printed it inside, under the gripping headline: “Trustees Extend Solvency Estimates for 2 Benefits.” The lead sentence in the Wall Street Journal was, “Medicare and Social Security, the big entitlement programs for elderly Americans, are still going broke, though more slowly.”
But here are some other possible leads — bearing an equivalent or greater relation to reality—that might have introduced the neglected little story:
“The public relations campaign to scare Americans into turning Social Security over to Wall Street yesterday had a dangerous and perhaps fatal collision with reality.”
Or, “The Bush administration today scrambled to discredit a report from its own officials that undermined the president’s campaign promise to ‘reform’ Social Security and Medicare. Far from needing reform, etc.”
Or, “Even after loading the dice by using what many economists consider to be overly pessimistic growth projections, the Bush Administration was nonetheless forced to conclude yesterday that both Medicare and Social Security would remain solid at least until the youngest baby boomer reaches retirement age.”
Or, “Record budget surpluses — the major justification for President Bush’s proposed $1.6 trillion tax cut — would disappear if economic predictions used by three of his top cabinet officers are accurate. So would any immediate threat to the stability of Social Security and Medicare.”
All these leads are supported by facts contained in the various stories. And all qualify as news under the dog-bites-man rule: a widespread assumption about the world turns out not to be true after all.
All of the stories were caused by a report from the secretaries of Treasury, Labor, and Health and Human Services, joined by two outside experts. This report and the press conference called to announce it involved federal programs that touch the lives of virtually every American. Widely perceived as on the brink of bankruptcy, Social Security and Medicare prove to be in better shape than ever before — and by a considerable margin, too.
Then why did editors and reporters conclude that the report on the Social Security and Medicare trust funds deserved no better than what amounted to a collective yawn?
Might it have been because the stories were based on the fuzziest of numbers? Although the government may be obliged to pretend it can see decades into the fiscal future, does it follow that responsible journalists are obliged to take the pretense seriously? Of course not.
It would be unkind to dwell on past instances when the press regurgitated equally fuzzy figures with childlike trust, so let’s do it. For more than ten years, the press has been squawking like Chicken-Licken that the sky was about to fall on the whole baby boomer generation. Eventally “more people believed in UFOs than think they will ever receive Social Security.”
The widely-reported quote is from Peter G. Peterson, a former Secretary of Commerce under Richard Nixon and a leader for nearly 30 years in the campaign to destroy public confidence in Social Security. Mr. Peterson’s aim in raising his false alarm was to destroy Social Security. To do this, he proposed to gamble with the fund by diverting billions of dollars away from it and into the stock market. The suckers might win or might lose; the brokers, who would take the house cut off the top, could only win.
So successful had Peterson’s doomsaying been that it still lurks unexamined in the heads of journalists as well as most other economic illiterates. So editors and reporters were reading to believe the latest spin on the old story
After all, that spin was coming from the very people issuing the report. Most of them were members of the Bush cabinet, and it was in their interest to attack the very report they were obliged by law to issue. Like Peterson, Bush wanted Social Security to look broke so he could fix it—by putting billions of dollars from it into the stock market.
One trouble with this plan was that at the moment the thing that appeared to be the most badly broken was the stock market itself. Privatization of Social Security was starting to look about as smart as turning your life savings over to the purser on the Titanic.
Another drawback was that the president, in a striking display of cognitive dissonance, was telling us that the good times were over so we had better cut taxes. The logic was that this would allow us to pay down a little of our credit card debt, while at the same time getting rid of that pesky budget surplus that was looming over the economy. Or something.
At the same time Bush, by arguing for a tax cut spread over ten years, was implicitly predicting that the economy would remain strong enough so that lower taxes would still produce enough revenue to provide needed government services. In other words we could both have our cake and eat it, under the theory that had earlier produced President Reagan’s monumental deficits.
Anyway, Mr. Bush’s cabinet officers were in an uncomfortable position. They really thought — every true conservatives does, in the deep, secret bottom of his soul — that Social Security and Medicare were crackbrained communist schemes that should be terminated at once, and with extreme prejudice. But in a nation of fools, many of them unfortunately voters, wisdom cannot be said aloud. The rabble must be scared into doing what is best for it.
For one thing, the reports in question are an annual affair. The number of years till the projected insolvency of both funds went up last year, too, and had been going up since 1997. This year’s increase, consequently, sounded like old stuff.
In the third place, as the Wall Street Journal pointed out, “when the programs finally reach their insolvency dates the government likely would have to slash benefits — a 30% cut in Social Security alone, according to the report — increase taxes, or both, officials said.” In 37 years, everybody better watchout. Officials say.
And the Journal says, “Many economists believe the programs represent a burden on all Americans that in the long run is untenable.” Many editors probably believe that, too. Certainly most publishers do.
From this point of view, then, the responsible course is to downplay a story which offers only false and temporary hope. The sad but unavoidable truth is that our reckless generosity toward the old, the helpless and the sick will lead, if unchecked, only to ruin. That this hasn’t happened in the 66 years of Social Security’s existence is a miracle that, in the conservative worldview, cannot possibly continue.
Here's a skill we’ve all developed by now, but too often get rusty on: looking for the unsaid.
Take this article in the New! and Improved! Wall Street Journal, “Washington Takes On the Mortgage Mess”. Thank God someone’s doing something.
What started as a slump in home building and rising delinquencies on dodgy mortgages has evolved into a financial crisis and a likely recession. U.S. authorities are scrambling to respond.Last week, the administration said the Federal Housing Administration may guarantee mortgages for up to 100,000 homeowners, many of whose homes are now worth less than they owe on their mortgages.
In addition, the Senate passed a package of measures including a tax credit for buyers of foreclosed properties, funds to state and local governments to buy and rehabilitate foreclosed homes, and tax breaks for home builders. The bill’s prospects in the House and the White House are uncertain.
Okay, I know I’m not educated in the ways of haute finance, but doesn’t the Senate’s package focus on help for buyers of foreclosed houses and the construction industry? I mean, a hundred thousand mortgages guaranteed when projections mention four million defaults? If so, why are the sellers hurting more than the buyers? They were making out like bandits, you should pardon the expression, during the boom and now they’re not, so the relative gap is significant, that’s certainly true. But they’re not on the street, like the people who fell for the subprime scam.
The Journal, personfully struggling for identity in the Murdoch era, tries to focus the blame on the consumer for borrowing too much, and on the government for not co-signing the loans, with the following questions.
- “Did government contribute to the housing crisis?”
- “What steps has the government taken to expand its support for housing since the crisis began?”
- “What other steps are in the works?”
- And of course the critical issue: “Will these programs boost home sales or prices?”
Okay, so an attentive person would have considered that an adjustable-rate mortgage begun at a time of historically low interest rates had essentially only one likely future. Can’t go down, won’t stay here forever, what’s left?
But here we are, and the question now is, who benefits from the public largesse? The less perspicacious who fell for a financial scam? Or the financial corporations who perpetrated that scam?
I’m betting on the latter.