You Don’t know What You Got Till It’s Gone

All good is hard. All evil is easy. Dying, losing, cheating, and mediocrity is easy. Stay away from easy.  -Scott Alexander

It is not power that corrupts but fear. Fear of losing power corrupts those who wield it and fear of the scourge of power corrupts those who are subject to it. -Aung San Suu Kyi

 
Monday, Feb. 24, 2013 started out as a typical day for me. I woke up at 7:30, made toast and began calling my business partners. I like to call them before they get into the office on Monday to ask how their weekend went and see what they have coming up in the days ahead. It’s something I have found to be beneficial because it shows them I am up early and that I actually care about them outside of the business we do together. Once I ate breakfast and went through my phone calls, I showered and got ready to head into the office. During this time, I was beginning to wonder why I hadn’t gotten any morning emails — not just from the partners who promised to email but also the typical emails I get every weekday morning. I thought maybe my wireless Internet was down or that the phone update I did the previous night had something to do with it.

Still, I hit the highway and headed into the office. Typically on Monday, the office has the usual morning buzz: phones ringing, keyboards clicking and colleagues saying “good morning.” On this particular Monday morning, that buzz was nowhere to be found. Then the receptionist said, “The phones, Internet and email are all down, and we don’t know when they are coming back on.” It was 9:30 a.m. When servers are down at a financing company, it’s devastating, to say the least. Aside from phones and email, we also rely on the daily numbers from the stock market and bond market. Those essential numbers aren’t the same figures that can be found on CNBC, CNN or Fox News — they are from markets usually only finance experts see, and they come to our special internal server. When the Internet is down, our phone and email don’t work and neither does that server. We didn’t realize how much we relied on it until we had no access. The server didn’t come back on until 4:30 p.m., when the 25 emails I had stuck in the Matrix finally came through, and office buzz returned.

That night, I began to think about what had happened during the day. We were stuck in limbo — there was nothing any of us could do to fix what was happening. Something we depended on but paid no attention to had suddenly broken and froze us in time. I then thought about my last blog post on Mel Watt and how he alone is in charge of one of the biggest variables in our American economy. Don’t get me wrong: Mel Watt does have his constituents who help him make decisions and policies, but at the end of the day, it’s Mel Watt’s decision.

Mel Watt, while appointed by President Obama, is no way the same. What I mean by this is that the president cannot make end-all, be-all decisions (except in a time of war) without Congress, the Senate or the American public voting on it. Mel Watt is under no political control; his decisions on how the FHFA functions are final. I’m not saying that his best interest isn’t in the safety of the American economy or that he’s not a smart individual — the president would not have appointed him if he wasn’t. My point is that given the power Mel Watt has, are you willing to continue not paying attention? What happens if he develops a political agenda regarding the FHFA, and the system essentially breaks?

Gross Domestic Product (GDP) is a measuring stick of economic growth; it calculates the total number of goods and services sold annually. GDP is tracked on a quarterly basis. Roughly speaking, housing contributes 2.2 percent of the country’s GDP, which accounts for almost $334 billion. This housing contribution also includes new construction: each new single-family detached home supports 3.05 jobs, and each new multifamily unit supports 1.16 jobs. Based on these multipliers and the latest available data on housing stats prepared by the U.S. Census Bureau, the current amount of construction is supporting an estimated 1.5 million jobs (Bipartisan Policy Center). Ninety percent of this housing is insured by Fannie and Freddie, who are under the conservatorship of the FHFA, which has one man in charge: Mel Watt. Last time I checked, this country is coming out of a recession with a current unemployment rate of 6.6 percent; 1.5 million jobs is a lot, given the facts.

These numbers aren’t meant to strike fear — they are merely facts. I, for one, am proud that America has product that contributes to our GDP and isn’t outsourced. This is a domestic good that we as an economy buy into and support. The more we contribute to housing, the more goes back into our economy — house cleaning, construction workers, contractors, loan originators, painters, lawn companies, pest companies (all goods and services). I use Mel Watt as my example because it’s a name you can easily Google to learn more. It’s an important name to know because he is in control of a very powerful entity that is crucial to our economy. We rely on our American economy, and we cannot continue to ignore it because it’s confusing. What I can promise is that this economy will prosper and it will fall again — any history book can tell you that.

I was stuck in limbo on Monday after my server crashed because we were not aware of its power regarding email, phone and Internet. Let’s not make that mistake when it comes to knowing what and who contributes to our American economy. The finger pointing following the 2007 financial meltdown should suffice as a good example. If the FHFA is just as important as Congress, the Senate and the Federal Reserve, why is there an uproar to take FHFA right under its feet by ridding Fannie and Freddie? Would this be good or bad for our economy? What’s so good about Fannie and Freddie? What do they actually do? In the next installment of the Mortgage Story by Victor B.R., I will tell you why some caucuses want Fannie and Freddie out, why they have been around so long and why they are going to be around for a while.

Frank Underwood has some thoughts about being left in the dark…

Thanks for reading,

The Mortgage Story By Victor Brown-Roberson

Questions, Comments, down below or press the bubble up top

 

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