Rewarding bad behavior? There’s a lot of talk about that in America these days: condemnations of not only the bailed-out titans of Wall Street but also the homeowners victimized by unscrupulous lenders and the greedy house-flippers who stand to benefit from the Obama Administration’s mortgage reset program. A welcome perspective comes from Joseph H. Cooper, a Quinnipiac University professor of media law and ethics, who journeys off campus every week to hold classes for those whose bad behavior has earned them ten- to twenty-five-year stretches in state-funded housing. Here are their remedies for what ails the American economy.
My economic advisers do not have PhDs; a number of them, however, do have GEDs.
My economic advisers do not know from MBAs; most of their dealings have been with DAs.
My economic advisers have not dealt with Fortune 500 CEOs and Wall Street CFOs; they know from COs–Corrections Officers in a Connecticut prison.
The “résumés” of many of these advisers (inmates studying public speaking and public presentation as part of a community-college outreach program) record some experience in “street” commerce:
Got an idea of how we get some of that money back from those Freddie and Fannie guys, but I don’t want to **** my chances of getting parole. If I packaged people into the mortgage foreclosure, putting them out into the cold, I’d be on the lookout for people who be packing heat.
More typical were expressions of disbelief and indignation, injustice, what might even be considered the moral superiority of those who had come to terms with paying a debt to society. These inmates wonder: will the financial dudes who duped homeowners get to walk away from their crimes? No arraignment, no lineup, no booking, no holding pen, no interrogation, no prison jumpsuit? Will their punishment be no more than having to suffer a bit of embarrassment, which they can probably tolerate, socially and financially?
Some members of the class spoke of a hard line. One of the “rap sheets” they produced went something like this:
Take out severance fury,
With verdicts from a victims’ jury.
But when it came down to a vote, few inmates called for jail time. They were unanimous, however, as to paying the debt; they were for restitution, if not confiscation:
Better than time
for sub-prime crime,
Make ’em relinquish
every last dime.
Another recitation called “Billionaires Behind Bars: A Little Rap on Big Bankers” proceeded with this:
No golden parachutes
For misleading lenders
Commissions and bonuses
They ought to surrender.
Once divested of rhymes, earnest discussions about foreclosure plights took over. Not surprisingly, the verdict was unanimous: Those who profited extravagantly should have to help the people they hurt. Somehow, they should be “sentenced” (obligated) to work with the people who are losing their homes, to figure out ways for them to keep their homes.
Several of the inmate-students took up the challenge to propose rescue-relief legislation. With a grandmother or great aunt in mind, they rose from their molded plastic chairs and debated the terms of a Peoples’ Bailout.
“Brothers, brothers,” one intoned, as he put aside his five-by-seven note cards and gestured to the low-end laminate tables that crowd the classroom where we were to imagine mortgage magistrates (my term) who would take applications from those in, or facing, foreclosure. The first week’s hearings would be reserved for those who had been in their homes for no less than twenty-five years. These homeowners, he explained (to much approval), might have refinanced in the past few years to help out a son or daughter who had lost a job, or to pay heavy medical bills, or because a grandchild needed money for college tuition.
If I understood this spokesman fully, only mortgages on sole residences would be eligible for these initial relief grants. Applicants would be required to show proof of what they owed. With proper documentation, fully authenticated, a portion of what was owed on the mortgage would be paid directly to the bank or mortgage company that originated the loan. There was discussion as to eligibility and the degree of forgiveness. What emerged were brackets correlated to length of ownership of a primary residence:
For those who owned their primary residence for…
• Five years to nine years, there would be a 50 percent payoff of up to 10 percent of the current value of that primary residence.
• Ten years to fourteen years, there’d be a 50 percent payoff of up to 30 percent of the current value.
• Fifteen years to nineteen years, there’d be a 60 percent payoff of up to 40 percent of the current value.
• Twenty years to twenty-four years, a 70 percent payoff of up to 50 percent of the current value.
• Twenty-five years to twenty-nine years, an 80 percent payoff of up to 60 percent of the current value.
• Thirty years or more, there would be a 90 percent payoff of up to 70 percent of the current value of that primary residence.
A co-sponsor of this proposed bailout referred to the Gettysburg Address (“for the people”) in his advocacy for emancipating honest homeowners from the threat of foreclosure.
The 50-something inmate (former financial executive), who was instrumental in turning shouted notions into formula, holds ideological differences with the bailout his pencil formulated. While he said he is opposed to the government playing Robin Hood, he was stoical when these similes were offered:
Giving bailout money to Wall Street is like giving money for premium gas to a gas-guzzler, the devil coal to keep his fires burning. More allowance money to kids who have already spent what they had on drugs. A bonus to the operators of a crack house.
It must be noted that there are inmates who have little sympathy for big-timers whose residential aspirations far exceeded their wherewithal to carry a mortgage. Yet a consensus did build for longtime homeowners who have fallen on hard times: this “bill” would enact a wishful-thinking restitution rather than any kind of revenge:
Those who pushed the ballooning loans,
Forget apologies, the “I’m sorry” groans.
Judges and juries should impose an award
Make bankers give foreclosed clients free room and board.