March 26th, 2010
by Mark P. Dangelo
www.Innovative-Relevance.com
It is a double edge debate – help those truly in need against prolonging the situation and making taxpayers who are diligent and frugal pay the price. What about the other one-half of the country with paid off mortgages who have watched 20+% of their largest investment vanish? Do they get a tax break? Taxing future generations for the failure of an existing one also is not just a moral hazard, but one that will weigh on global competitiveness, interest rates, sovereign debt ratings, and more.
Does writing off principal help create jobs in a country that lost 9 million in three years? Who is this equity / write down going to help or hurt (e.g., unintended consequences)? Is the forcing of principal write-offs by the government a new form of capitalism or something else?
The logic of this extended bailout, like the value-chain across the mortgage finance processes, is holistically flawed and in need of a serious transformation. Yet, who will stand up and make the changes to the flawed processes? With mid-term elections coming up, who will ethically stand up for all the American population and corporate investors and say, “there must be a better way” regardless of what party affiliation they subscribe to?
We need positive ideas that create and redefine industries (e.g., housing, real estate, GSE’s, mortgage financing, private securitizations). Many of us have tried to provide innovation in this area, but those in positions of influence are ensuring the old ideas are the only ideas. It is a discouraging time for many of us within the industry … as domestic and global events and regulations go from bad to worse.
For original FT article, see http://www.ft.com/cms/s/f1cd545a-38e6-11df-9998-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F3%2Ff1cd545a-38e6-11df-9998-00144feabdc0.html%3Fftcamp%3Drss&_i_referer=&ftcamp=rss
Tags: Financial Times, GSE, MBS, Mortgage, Mortgage forgiveness
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March 25th, 2010
Perhaps what should be asked is why there is such a small pool to choose from? Is it because they look inward to the industry rather than across their value chain of delivery?
Often times, wasn’t dissenting advice offered? Was it ever internalized or processed by the management team? There seems to be an inner group that continues to dominate boardrooms and executive suites — eve today. One only has to look at the musical chairs that go on as executives and directors move from one firm to another all within the same industry or sub-niche.
Yes, experience counts for success. Your examples of GS and JPM are clearly noted success stories – but they are success stories that start with strong and visionary CEO’s. So when we examine governance, the real question is “What role does the board really play and how strong is the management team?”
Are they willing or able to deal with divergent thoughts other than their own? The board supports the firm, investors, and the management team — their role is not in running the company day-to-day.
For the complete FT article, see http://www.ft.com/cms/s/3/f0bdcbe8-3752-11df-b542-00144feabdc0.html?ftcamp=rss
Tags: banking, board of directors, Financial Times, goldman sachs, JP Morgan
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March 24th, 2010
Comments by Mark Dangelo
www.Innovative-Relevance.com
You also need to ask additional questions that both the private markets and government must answer. That minimally includes what guarantees are placed on securitized assets and what level of risk classifications will be assigned to them? Why are the same mortgage bankers who cheered the process leading to housing Armageddon, now being able to benefit from the workouts?
How can new firms and people be brought into the macro and micro processes of origination, servicing, and securitization (i.e., the three pillars of the mortgage supply chain) ? Where is the innovation and competition that will benefit the consumers and markets, while letting capitalism do what it has done for generations?
I am amazed that even after the problems we have had and continue to experience, that Congress still relies on the same people to testify and provide advice. There are many lessons to learn, but there are few in the markets who are listening…
See full article –> http://www.ft.com/cms/s/3/0df154fe-368c-11df-8151-00144feabdc0.html?ftcamp=rss
Tags: banking, capital market, Financial Times, GSE, housing, Mortgage
Posted in Analytics | No Comments »