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Understanding greed

October 11, 2011

OPINION by GORDON MULLIN

I’m greedy.

When I do my taxes, I don’t ask myself, “what’s the fair amount I should pay?’  Nope.  I just attempt to follow the byzantine tax rules as best as I can hoping I don’t make a mistake and find myself on the receiving end of an IRS audit.  I work hard, spending a great deal of time looking for write-offs trying to make that “taxes owed” number on my 1040 just as small as possible. And I must confess, never has it crossed my mind to pay more than what the rules tell me.  Greedy me.

My Webster’s Unabridged defines greed as “excessive or rapacious desire, esp. for wealth or possessions.”  With the continued downturn in the housing markets and banks tottering at cliffs edge, we’ve been hearing the word a lot.

We now have entire swaths of occupations deemed to be populated by the greedy- bankers, lenders, Wall Street brokers (ouch-too close to home), mortgage agents and, of course, the usual suspects- lawyers, developers, and every single employee of insurance, drug and oil companies. Wall Street is merely the target du jour.

However, it strikes me that we’ve become so accustomed to hearing greed used to describe others that we’ve come to think of these people as somehow different than us regular folk and I don’t think that’s true.  I know we all like stuff-owning stuff, possessing stuff; using stuff.  Shopping itself has become a pastime for many-kind of a hobby.  “What do you want to do today, dear?  Why don’t we go shopping?  That’d be fun.”  Ever heard that?

I think we’ve simply mislabeled a common and normal human inclination, the pursuit of self-interest, when it is in others we’ve chosen to castigate.  This month it’s Wall Street brokers who sold subprime loans and financial gurus who packaged those mortgages and sold them to banks, hedge funds and your 401k provider.  Recall that in 2007 they were doing the exact same thing and everyone was fine with that.  There were a few voices warning of an impending bubble in the housing market, but like the tech stock bubble of 2001, no one wanted to listen.

Three years ago, Harry, the guy next door who bought his home in 1974 for $30,000 and now could retire on the gains, felt those unplanned riches were his just due and no one considered him greedy for pocketing the eye-popping profits.

The mortgage broker at the bank who offered a suite of alternatives to Maria, the buyer of Harry’s home, perhaps knew that Maria was over extended but Maria was old enough to make her own decisions and there were plenty of other places she could look for advice and options.  She hadn’t saved up any money for a down payment but the lender was willing to finance 100% of the home, encouraged by Congress’s ‘Minority Assistance’ mandates.  She’d be paying only the interest for a couple of years but she wanted, not the starter home, but the nice one, the expensive one and she knew that of course prices would continue to climb, she’d get that raise, and things would turn out well.

The bank packaged up Maria’s mortgage along with hundreds of others and sold them to Fannie Mae who borrowed in the market at government subsidized rates to buy Maria’s loan so that the mortgage was off the bank’s books and didn’t drag on their capital requirements.

Fannie Mae in turn offered AAA credit rated bonds with excellent returns that everyone knew was implicitly backed by the government and investors, mutual funds and retirement plans of public employees, gobbled up the bonds of Fannie Mae, all enjoying the safety of government sponsored returns.

Three years ago, everyone was pleased with the situation.  No one considered an entire financial industry greedy.  All was well.  Till the housing market bubble burst.  And now we look for scapegoats finding them, most recently at, where else, Wall Street.

We are all inclined to desire wealth and possessions.  When the times are good, we’re content but when times are bad we seek out those we deem responsible, label them greedy, and demand our politicians regulate, regulate, regulate.

We should not seek the regulation of greed for that is truly beyond the reach of government.  We can and should demand honest and fulsome disclosure by all, both lenders and borrowers.  Bubbles will occur again; they always do.  But we should not ask for solutions based on the regulation of greed- that’s a distraction from our problem and leads us down a path to where there are no answers.

We merely find ourselves.

Gordon Mullin in a registered financial adviser in San Luis Obispo.

 


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The real problem was the financial service sector was 6% of GDP in1960, but 20% today. Why? How?


To slice and dice and create wealth at the top 1/10th of 1% of US, to gamble and to destroy the middle class!


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What do you mean “Three years ago, everyone was pleased with the situation. No one considered an entire financial industry greedy. All was well”???


Bush drive for home ownership fueled housing bubble

http://www.nytimes.com/2008/12/21/business/worldbusiness/21iht-admin.4.18853088.html


White House Philosophy Stoked Mortgage Bonfire

http://www.nytimes.com/2008/12/21/business/21admin.html


FBI saw threat of loan crisis


A top official warned of widening mortgage fraud in 2004, but the agency focused its resources elsewhere.


They ended up with fewer resources, rather than more


It has the potential to be an epidemic,” … “We think we can prevent a problem that could have as much impact as the S&L crisis,”


http://articles.latimes.com/2008/aug/25/business/fi-mortgagefraud25


Predatory Lenders’ Partner in Crime


Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.


Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.


http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html


The Reckoning


Agency’s ’04 Rule CHANGE Let Banks Pile Up New Debt


From 12-1 to 33 to 1. In other words, for every dollar in equity, it had $33 of debt.


The 2004 decision for the first time gave the S.E.C. a window on the banks’ increasingly risky investments in mortgage-related securities.


But the agency never took true advantage of that part of the bargain. The supervisory program under Mr. Cox, who arrived at the agency a year later, was a low priority.


http://www.nytimes.com/2008/10/03/business/03sec.html


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I agree with you. My comment regarding “no one considered….” is wrong. I should have said ‘few’. And, I agree with you on your position regarding oversight, or the lack thereof. In fact this fiscal nightmare started during Clinton and was ignored by Bush. Both sides took substantial campaign contributions from Fannie Mae and undermined the oversight agency. It was Congress and all administrations from Clinton on (including our current president) which has kept the fire going under this boiling pot.

There’s plenty of bad actors to point at. But my point is that without proper oversight, business, like all humans, will act in their self interest and seek to create (in this case) financial product derivatives which follow the existing guidelines. Don’t expect anyone to be more cautious than the regulators stipulate when there is an implicit government guarantee behind the banks. That’s just not how we humans act.


You won’t find me defending government’s action here. I think the government was (and is) the chief cause of our current problem.

Thanks for writing .

Gordon Mullin


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“In fact this fiscal nightmare started during Clinton and was ignored by Bush”


Nice narrative, incorrect though:


Although Clinton deregulated Glass Steagal, it wasn’t him who took the regulators off the beat, or used “voluntary” regulation or had his regulators on the floor of Wall Street chainsawing regulations!


F/F worked OK UNTIL Dubya and comp


How HUD Mortgage Policy Fed The Crisis


Subprime Loans Labeled ‘Affordable’


Every four years, HUD reviews the goals to adapt to market changes.


CLINTON:


In 2000, as HUD revisited its affordable-housing goals,…HUD restricted Freddie and Fannie That year, Freddie bought $18.6 billion in subprime loans; Fannie did not disclose its number


THEN DUBYA:


In 2001, HUD researchers warned of high foreclosure rates among subprime loans. But by 2004, when HUD next revised the goals, Freddie and Fannie’s purchases of subprime-backed securities had risen tenfold.


That year, President Bush’s HUD ratcheted up the main affordable-housing goal over the next four years, from 50 percent to 56 percent


From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans


http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626_2.html


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Submitted to fast:


GOVERNMENT POLICY MATTERS!


It wasn’t government that did this, but private markets, it wasn’t F/F that did this, but other market leaders, it wasn’t CRA or other government policies (that worked pretty well until Dubya)


CRA is not to Blame for the Mortgage Meltdown

It’s time to stop the scapegoating: According to a study by the Federal Reserve, 94% of high-cost loans originated during the housing boom had nothing to do with Community Reinvestment Act goals. Lending to poor didn’t spur crisis -Fed’s Kroszner


CRA was effective long before the subprime market existed.


Most subprime lenders weren’t covered under CRA.


Wall Street created the demand for riskier loans


Regulatory oversight and accountability was missing.


The majority of subprime loans went to white borrowers.


http://www.responsiblelending.org/media-center/press-releases/archives/spin-and-outright-lies-on-cause-of-economic-crisis.html


READ THIS:


The “turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007,” the President’s Working Group on Financial Markets said in December 2008!


http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html#ixzz1UC8M7o1g


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It’s not the corporations or bankers fault that they were able to “buy” our elected officials. Our elected officials allowed themselves to be bought. The rich people of this country do not have a civic duty to not make money. On the other hand, our elected officials have a sworn duty to represent and protect their constituents and to uphold the constitution. They have sold us out to a “new world order”.

(pinky finger on eye tooth) laugh not.


However, I do think that this world has gotten so overpopulated and polluted that it does need to be controlled some how. But do we need to be lied to and treated in such a way. It is our leaderships short sightedness and corruption that has gotten humans into this mess. “Good Job!” Of course the human condition is not without fault. In a way, we are all at fault for trusting our leadership and going about our dailey lives not thinking enough about the future of our children and our children’s children. Shame on us. We are ALL greedy.


This whole “protest wall street” thing is such a farse. It is so obvious that our politicians and their puppeteers are sponsoring this to take the heat off of themselves. How do you stop a revolution if you fear one may start? You start your own. “Hey, look over there”


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The key word in the definition of greed: excessive. Maybe it is “human” to desire wealth and possessions but is it human to not have the moral code to recognize where you stop and someone else begins? Is it human to cheat and manipulate and steal to get that unreachable enough?


Unfortunately, the business schools of the 80s were preaching the “greed is good” mantra of the Ivan Boesky/Michael Milkins of the world. We now have an entire generation of CEOs who were taught that hostile takeovers and mergers and down-sizing were the meaning of life. They were also taught that the pie would keep growing and all would be well in the world. They lost their humanity as rapidly as the expendables lost their jobs.


The pie doesn’t grow. We print more money to feed the ever-hungrier pencil-pushing, soulless pie eaters who then say government should butt out of their affairs — until they dig themselves into a hole again. Meanwhile, some of us try and contribute something real to society and don’t wish to be taxed at 38% while the manipulators get by paying 20% because government only butts out selectively – as dictated by the powerful who are, unfortunately, dripping in greed.


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I heard this guy on Dave’s show yesterday when Dave gave him waaay too much time. Mullin has this let them eat cake (seems like I’ve been saying that a lot lately) attitude and he had me so irritated that I didn’t call in because I knew that I would lower myself to name calling.


“No one considered an entire financial industry greedy. All was well. Till the housing market bubble burst. And now we look for scapegoats finding them, most recently at, where else, Wall Street”


You don’t speak for all of us Mullin so this ‘no one’ is by itself ignorant. Many of us are mad at Wall Street AND the govt. because they take take take but they don’t’ give back. BTW there are many wealthy people that agree with this line of thought, there are many that all for having thier taxes raised to help our country, not all wealthy people are greedy. I’m not mad at all about the housing market bubble, to a degree we put that on ourselves. I am mad that we bail this jerks out and they reward us by charging us to use our money. I’m mad because they are taking jobs overseas and not paying their taxes. I am mad that the big corps are running this country and your answer to that was that was basicly, we should hire our own lobbyist so we have say. I felt like bitch slapping you through the mic yesterday when you put out your caviler attitude that there was no problem with them taking the jobs overseas, that they shouldn’t have to pay taxes, and that the huge amounts of wealth compared to the huge amounts of poverty didn’t really matter. You made it sound as if that’s the American way. No that is YOUR way, you and some of the extreme wealthy are greedy selfish fat cats that don’t care about anything by your bank accounts.


Typed fast, and in this case I’m not sorry for the typos.


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Thanks for writing this. Greed only comes from within a person. We can’t call someone greedy, without being greedy ourselves. If we covet what others have, then we care what and how much they own, earn, etc. We pass judgement and decide if it is “fair”. A person truly without greed, does not covet, does not care what someone else has, or how much. It is a rare person indeed (and I wish was me). And that person does not call someone else “greedy”, because what someone else possess is not envied, or desired. Like you quoted the definition of greed, “excessive or rapacious desire”. This is “within” a person. All of us, these marchers included, need to ponder on who we are calling “crooks” and “greedy”. Like the old saying, when pointing at someone else, remember, three fingers are pointing back at you.


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DJ, what you wrote does not make sense and sounds like something you are trying to repeat after hearing such illogic from a sermon at a church or from a radio program that promotes greed and is eager to coax people into mindless consumerism and materialism.


It absolutely is possible to call someone “greedy” without that observation being based upon any greed in the observer.


Also, there is a difference between envy and jealousy. You should try to understand that. A few other words you might take note of: narcissism, hedonism, sociopath, dysfunctional.


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If you judge someone “greedy”, does that make it true? What is the yardstick are you using? Your life? How are you deciding who is “greedy” and who isn’t?


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How about the top 1% who received 6%-9% of ALL US income from 1945-1980 but 23% by 2007? Would you call that greed? How about if the tax on that income received was about half of what those receiving it from 1960-1970’s paid?


By TAKING that 23% of the pie, the bottom 50% of US lost 30% of their piece of the pie!


No matter how large the pie grows, there is only 100% in the pie!


http://www.taxfoundation.org/news/show/250.html


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JonnyB, if I read your comment correctly, your “greed” bar is the top 1%. I am going to make the assumption that you are not in that bracket. What if some hard working person genuinely believes that the “greed” bar is at your lifestyle, that you have too much, and you should give more. You are greedy. Would they be wrong?


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The question posted was what what yardstick is greed. I have FACTS that the top1% have tripled their “share” of the pie, while paying about half the historic taxes, and a effective tax rate not seen since 1932.


WHILE the bottom 50% of US have lost 30% of their piece of the pie!


From 1950-1980 the bottom 90% of US grew our incomes by 75%. Next 28 years? 1%.


“genuinely believes”


BELIEF HAS NOTHING TO DO WITH IT, FACTS, HOWEVER DO!


http://www.tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8AGMUZ?OpenDocument


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JonnyB, Thanks for dialoging with me. As you can tell, I am not a big poster on sites.


I think we are closer than it appears to you right now. I know you are angry. Me too. But, judging who is “greedy” and who isn’t has everything to do with “belief” or feelings. In my example, the person judging you and your lifestyle has facts as well. You have a house, or car, or job… more than him. You are doing better, and he feels you are greedy, because you don’t do more, or have less, like him. This is the problem with a greed yardstick. It is all about feelings. Another example, we see people rage about “greedy rich”, but somehow their like minded “rich” are different? Oprah, Bill Gates, Warren Buffett, Al Gore, the Clinton’s, Kobe, (or whomever floats your boat), is somehow not lumped into the “greedy rich” category. Because it is all about feelings. That rich person is OK because they support causes I like, or shoot hoops well, or are the right party, or whatever.


Calling someone “greedy” is relative. That is why, in my example, someone with less calling you “greedy” is hurtful. A person is passing judgment on you based on a select group of facts, without knowing anything else about you. You go into justification on how others are the really greedy, and they have so much more. …. And then compared to “them (the 1%) ” you are not greedy at all. But that does not change the fact, you and the other “rich” are all greedy to him. You are the same as the 1%. You all have more. I wish my example was farfetched, but it is not. Some of the interviews of protesters I have heard follow this very vein. I guess my point is, we need to fix problems in our economy, and nation. But we are dividing people, by calling them names, judging them only by how much money they have. And it won’t fix the problem. We could take 100% of all the money away from Gates, Oprah, and other top money earners, and all we would do is put a lot of people out of work, and make a small temporary dent in our deficit.


JonnyB, I very much appreciate, that while you and I may not agree on this issue, you have been courteous in your posts. Thank you. Take care. We are all in this together.


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DJ, Good to dialogue with you too.


The problem is there is a problem. The top 1% has tripled their “share” the past 30 years. To go further, the top 1/100th of 1% had grown there “share” by 800%.


THIS is why gov policy matters


This is a good explanation

2001 Pulitzer Prize winner


http://www.tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8AGMUZ?OpenDocument


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and the problem is that their $ buys access and the related influence.


only reason democrats and republicans can’t get behind the 5.6% millionaires tax to pay for the jobs bill; those are donors at their $50,000 per plate lunchs and $100,000 tickets to their dinners.


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People like to point to one thing. It’s the banker. No, it’s WallStreet. No it’s Obama. No it was Bush. No it’s the liar loans. No its greedy corporations. No its the welfare state. etc. etc.


That kind of accusatory thinking is simplistically foolish.


It’s not one thing. It’s a complex system of many many things no one of which dominates. Millions of people took out liar loans they shouldn’t have. The banks openly participated in giving the liars loans with the support of the government. People say make things in America but then never support it when they can go to Walmart and get the same thing made in China for half the price so the American manufacturer goes out of business. Bush was one guy. Obama is just one guy. etc. etc.


So in a way you are all right and you are also all wrong. It’s all of us. Look in the mirror and deal with it.


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It’s is complicated, THAT is why government policy matters!


How did those “liar loans” get a pass? Who pushed them? Why?


How did we get here? It is a complicated story, but a quick summary goes like this: When the Bush administration took office in 2001, most home borrowers got conventional (“prime”) loans or they could not buy. Subprime lending was still a relatively small part of the total mortgage market. But a combination of a hands-off regulatory approach to the mortgage industry, a low interest-rate environment maintained by the Greenspan Federal Reserve, a president cheering on an “ownership society”, and Wall Street firms rushing in to pool together prime and subprime loans and challenge the dominance of the existing Fannie Mae and Freddie Mac home mortgage securitization system, set the stage for an explosion of higher risk lending.


Mortgage companies capitalized on pent up housing demand among many moderate income and minority borrowers. The subprime lending market soared, becoming nearly half of all new mortgage loans by 2006, and fueling huge bonuses among Wall Street investment firms like Bear Stearns.


But as has become apparent, these subprime loans were almost designed to go into default in massive numbers.


http://www.huffingtonpost.com/david-m-abromowitz/when-in-doubt-yell-fannie_b_127688.html


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What load of self-serving, greed-based B.S. from Mr. Mullin!


Mr. Mullin writes: “Three years ago, everyone was pleased with the situation.” More complete B.S.!


You are WRONG Mr. Mullin. Everyone was NOT “pleased with the situation.” Wise observers recognized the problem and predicted dire consequences, consequences we are now living with.


Mr. Mullin is in a “business” where he attempts to help people gather money from others without having to do any productive work. That’s the goal for many Americans, and that is the root of so much of our nation’s problems.


Our modern culture is sick and insane, as we have the greedy and thoughtless continually promoting cconsumer-oriented, hedonistic pursuits above all others. Our society is addicted to desire and attachment and always wanting “more, more, more.”


This is a shallow, flawed approach to life that has dire consequences. What a terrible shame that there are so many people who have succumbed to the same warped and insane mind-set that Mr. Mullin so foolishly promotes.


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I don’t believe folks have a problem with those who are incredibly successful from producing a great product, Jobs/Apple is a prime example. Its the Kelly Gearheart’s of the world, be it in the banking industry,auto industry,lending industry or oil industry etc combined with the lack luster enforcement of laws and bailouts and protection by our government that people are outraged by.

You cannot deny consumer good,materials,food etc,etc are at a all time high,so where did all the consumer savings go when big business assisted by our own governments policies ship all of Americas jobs over seas to save money and increase profits? Politicians talk job creation? doing what I ask? construction perhaps? Maybe some more Chinese drywall or Taiwanese steel to build some bridges to nowhere,electronics perhaps? forget that too,Japan has that covered, cars perhaps? oh those so called American cars are now made in Mexico,Canada or elsewhere. Maybe we should just start shipping Americans overseas to work at the jobs stolen by greedy corporations, where does it stop?This is what I hear a lot of folks screaming about but surely its not the case with every protester. Your correct, honesty would be a good policy as well as integrity, however those are qualities long gone these days in both politics and business in many cases.


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I am having a hard time blaming the export of jobs exclusively on the greedy corporations. Some of the blame rests on the greedy auto workers who demand (in the US a living wage). Some of the blame rests on the greedy car buyers who demand quality cars that don’t cost a fortune. The greedy corporations respond to a greedy marketplace and a greedy manufacturing climate.


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You are wrong, racket. Unions have been around for a long time. What changed things was the Clintons, NAAFTA, and Hillary as Senator.


http://graphics8.nytimes.com/packages/pdf/politics/memo1.pdf


http://www.redpills.org/?p=348


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REALLY? NAFTA a Repug plan? One that was created by Heritage Foundation, pushed by Ronnie Reagan the day he announced his run for Prez in 1979, negotiated by Papa Bush, yet it’s the Clinton’s fault? lol


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Mary: My point (as I ineloquently put it) is that the auto workers are greedy in wanting a living wage. The consumers are greedy in wanting a cheap car. You can’t pay someone a lot to build a cheap car. You have to pay someone a little to build a cheap car.


So the evil corporations shipping the jobs overseas is bogus as best. The automakers can assemble them here for $200,000, or they can assemble them in Mexico for $25,000. Blaming the corp for the consumers’ preference (their desire to get the most vehicle for their dollar; their greed) is silly at best.


I say blame the greedy consumer for wanting the best value for their money.


I say blame the U.S. auto workers for wanting to work for a living wage.


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Racket, Are you seriously claiming that expecting a living wage is greed? An honest day’s work for an honest day’s pay?


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