"Negro, Do You Know Who I Am?"

As I watched the predictable news pundit responses tonight about McCain’s Mississippi Maneuver, I was snatched back to the first of the year, when something between Obama and an agitated press corp made me compare Barack Obama’s reactions when provoked to the classic performances by Sidney Poitier in Guess Who’s Coming To Dinner and In The Heat Of The Night. Poitier’s characters acted as the moral authority in these pictures, rebuking prejudice through the only stance a black man could take in a movie in those days – coolly restrained rage crossed with a furious sense of righteousness.

There is a heightened level of agitation I am seeing, not just in John McCain, but in a large section of the American population, a visible anxiety about Barack Obama’s ever growing support that is now threatening to ratchet itself up to the next level – an outright racially based fear that these particular white Americans who say they support John McCain and Sarah Palin can’t seem to escape.

At the press conference he held yesterday to announce he was suspending his campaign to help his fellow senators wrestle with the Wall Street bailout plan, McCain’s eyes and his facial expressions told me what you already know - that his defiant stance was being backed by millions of his supporters, who had long been waiting for McCain to "show that uppity Negro" who was really in charge here. The way he looked at the camera when he said “I informed Obama of what I planned to do,” I could see his brain ticking – "negro, don’t you know who I am?"

I don’t have to waste time conducting any damn polls to tell you what kind of nervous jubilation is erupting in this segment of America tonight. For these people, McCain is their Great White Hope, the last obstacle between that black man and the Oval Office. So long as he doesn’t pop up as a suspect in the Jon Benet Ramsey case, he can do no wrong.

For Barack Obama supporters like me, watching their white hero in action, I get the same sense of preposterousness I have when I watch an obviously aged Clint Eastwood punch out men decades younger than him in his movies. But this preposterousness is laced with disgust, because I know the same thing you all know – white America has mastered the art of believing its own bullshit.

There is a scene in the movie In the Heat Of The Night, set in Sparta Mississippi, where a young, vigorous Sidney Poitier, who plays a Philadelphia detective, confronts the old Southern aristocratic banker who is responsible for the death of a wealthy progressive industrialist. Poitier got slapped hard across the face by the banker when he asserted his authority as an officer of the law, something the banker had undoubtedly done many times before to rebuke impudent, uppity blacks who threatened his way of doing business. It was Poitier’s arm slinging back automatically, as if by natural reflex, his brown hand cracking the aristocrat square across the face, that brings me back to this picture year after year.

I have watched this scene many times from the relative comfort of the new millennium, but isn’t until now that I really understand what that slap meant, and why John McCain is really doing everything in his power to avoid facing the movement that is Barack Obama. Suddenly withdrawing from the presidential debate to be held Friday in Mississippi has virtually nothing to do with the Wall Street crisis.

It was the white community's sense of shame that the civil rights movement exploited, because it was the only weapon they had. This white shame that the movement's organizers marshaled into a palpable moral authority literally disciplined America. This metaphorical visit to the woodshed is something these particular white people remember all too well, and are not interested in going through again.

To have to see that brown skinned face standing behind a White House podium for at least four years means that they are wrong, that their belief systems are wrong, that the bedrock of the principles by which they live their lives, which most certainly does not include any notion of true equality by black or brown people, are just plain wrong.

These are the things nobody wants to talk about, because the kind of kindergarten equality we have today is only tangentially related to an actual universal equality. Universal equality means anybody could potentially wield the power to retaliate, the power to dictate the agenda, and the power to rearrange the fabric of the lives we have come to believe are authentically American.

What black Americans want to see from Barack Obama, the thing that will let us finally look upon him as a fully formed man, are crackling, spontaneous reactions to this kind of bullshit, a reaction whose aggressiveness exploits the power behind him. A reaction that says in no uncertain terms that he means business.

His campaign managers know better than this, though. They know intimately the levels of depravity to which a lot of white Americans, including some of those who have decided to support Obama, can sink to in a hurry. So we won’t get to see Obama metaphorically cock his arm back when he is confronted with the rest of the bullshit that you know is about to come.

But what we will see is an increased level of agitation in McCain and his supporters as the eight million volunteers and the $400 million plus dollars that under gird the Obama campaign conspire to do what our standard bearer cannot – retaliate against the odious stench of race baiting, fight to dictate the American agenda, and work to rearrange the very structure of the lives we actually live until we finally begin to really become the Americans we think we are in our minds.

Debate Delay Dicey Decision

Here I was, planning on giving up going to the first night of my college class reunion, S. beginning to get ideas about a debate party of sorts, when my boy John McCain's picture popped up as I surfed through the New York Times website.

"McCain Seeks to Delay First Debate Amid Financial Crisis"

I had just finished listening to our resident teenager explain to her mother, with the slick smoothness of a TV defense attorney, why it was perfectly okay for her to go shopping in the middle of the afternoon ON A WEEKDAY when she is flagging her economics class (is this some irony or what?). Although, according to her, her grade is low only because there are some "slight discrepancies" between what she "knows" and the right answers to the latest test questions.

So when I saw that headline, I felt like I was reading about the teen-aged version of John McCain.

Being unpredictable has worked for McCain lately, keeping the Obama campaign off its stride. But once McCain goes over the limit with these kind of decisions, he'll turn from maverick to menace in a heartbeat.

Does it really matter if he and Obama go to Washington? They've been briefed personally by the two architects of the bailout plan on a daily basis. They've focused almost exclusively on national issues the last few months, as opposed to issues that are germane to their constituents in Arizona or Illinois.

McCain is in a tighter spot than Obama. Oppose the bailout to distance himself from Bush, and the public outcry will be deafening. Vote for the bailout, even a new version, and the shadow of the Bush presidency he's been avoiding all summer will come back to haunt him.

If you live with a teenager, you understand the power of pretext better than just about anybody. The pretext of postponing Friday's debate...

...opens the door to postponing the vice-presidential debate with Sarah Palin, who has never debated anything ever on a national stage.

You do the math.

Something tells me that yesterday's fracas over access to the network feeds touched a nerve in someone behind-the-scenes.

Whether I'm right or wrong about this surely won't matter for long, though, as McCain and Palin are apt to change their minds back at any moment - just like our resident teenage diva.

Homeownership Philosophy Americans Believe In Deeply Flawed

"NON-reviewable"

"Non-REviewable"

"Non-reVIEWable"

"Non-reviewABLE"


This is what you would see today if you could look inside my brain. This is the most ridiculous, most incredible part of the Treasury Secretary's proposed bailout plan that has seared itself deep into my synaptic nerves.

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

It wasn't until I clicked my mouse on one of my archived folders last night that I realized demonizing Treasury Secretary Henry Paulson's desire to operate a bailout fund was obscuring another part of the problem -that some of the fundamental philosophies American citizens believe in were also a huge contributor to this problem. The excerpts below were originally written between the spring of 2005 and the spring of 2007, just before the mortgage industry slump started, back when I was still an optimistic loan officer.

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I spoke to a woman in Birmingham yesterday [April 2007] who was interested in obtaining a mortgage loan for a home she wanted to purchase.

She worked for the Social Security administration. She made $37,000 a year (if I remember correctly, I am rounding this number up).

She wanted to know if she could purchase a condo that was about to come on the market at a below market price - $240,000.

I don't know if any of you own a mortgage calculator, but a $228,000 loan at 6.375%, which is a tad below par on a eight story condo carries a principal and interest payment of $1,421 if it is amortized over 30 years. Kick in the mandatory HOA payments of $250 per month and the payment jumps to $1671. Add the escrow for property taxes of $150 per month and you get a grand total of $1821.

$37,000 divided by twelve gives you a gross monthly paycheck of $3083. This is before Uncle Sam, Uncle FICA and Auntie Healthcare get their cut.

The front end ratio on this scenario, which is the amount of the mortgage payment divided by the income, is a whopping 59% The back end ratio for this particular borrower would have been 80 plus percent.

To put those numbers in perspective, the traditional qualifying front end/back end ratios for conventional mortgage loans is 28%/36%.

FHA, which is a little more aggressive, states that it prefers ratios of 29%/41%.

Do you think this borrower cared about that?

Now in all honesty, there is more to her story. She has been promoted to a new job, which starts next week. She has two other sources of income, although there is no way to prove that she actually earns an additional $14,000 a year selling real estate and cleaning office buildings.

If we could show this income, her ratios would fall to a more sensible, although still high, 38%/53% ratio with a total income of $4800 per month.

Three weeks ago [March 2007], I could have canned the Suze Orman schtick, stated her income, and gotten her a 97% loan to value loan, even though her credit score is only 553.

The rate would have been somewhere around 8.5% to 9.0% - but only for two years. Then it would start to adjust, and adjustable rate mortgages practically never adjust downward.

So someone who could only put down $8000 would be struggling to make a $2203 house obligation - the new principal and interest payment at 8.5% is $1783 - mostly because the lenders who make subprime stated income loans had been pretty good at gauging how much we were fudging the income numbers to make deals work.

She doesn't sell a house one month - or two - or loses the cleaning contract, or gets sick and can only work at her desk job, and she is fucked. The lender is screwed. Her neighbors are screwed.

The upshot of all of this? My email box is full of emails from her, lambasting me for the "cautionary tone" I took with her regarding the challenges she faced, especially in today's lending climate.

Why does a woman who has been out of bankruptcy less than four years ago want to do this to herself? She is not alone - I have stacks of files on my desk of people who want to buy houses they can't pay for, with - what else - no money down. And credit that is anywhere from shaky to downright shitty. But do they take my counteroffers, good solid pre-qualification letters that show them what they can qualify for and get 6 or 7 percent fixed rate loans?

Hell no.

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My best borrowers, believe it or not, are redneck men. Tradesmen, men who do the kind of work we'll always need, the kind of men who expect to work at least six days a week. They tell you up front, "hell naw, ain't no damn way I'ma pay more'n eight hunnert dollars a mont' for no damn houwse nowte."

These are guys who make 60K, 70K, 80K a year, and sometimes more, a whole lot more if they can get unlimited overtime. They don't dicker over a quarter point, so long as you lock them in at the rate you told them you would. And if you look at every mortgage they've ever had, even if they've been divorced, they are almost never late.

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In the mortgage business, one of the newer products [Mid-year 2005] is an "emerging markets" loan, that overs 100% financing to people with marginal credit histories who have no savings if they have had a job for the last two years. Its very similar to the original FHA home loan, except FHA used to require borrowers to contribute at least 3% of the purchase price. At least, until someone came up with the idea of creating a quasi non-profit organization for the sole purpose of "gifting" the 3% to the buyer if the seller was willing to pay an administrative fee that essentially made the FHA loan a 100% product.

The emerging markets product goes FHA one better in is guidelines - if you have a borrower who claims to have a part-time job, you can simply write down the job title and are allowed to add secondary income in an amount up to 25% of the borrowers verified income, which is essentially a license to qualify an already marginal buyer for more house than they can afford.

Do you know who calls within six to twelve months of closing a loan to do a cash out refinance? These same people, who now have little or no equity, if they're lucky and the purchase appraisal wasn't puffed, who had no reserves to speak of when they bought the house, are now fucked - who can they call to help them out? If they knew anyone with any money, they wouldn't have needed a 100% loan in the first place.

But Nationsbank and Wachovia and Citibank and Wells Fargo and the mortgage business in general gets to wave a banner proclaiming their commitment to helping lower income, credit challenged borrowers live the american dream of home ownership, when they know damn well that these loans will be refinanced at sub-prime rates, which will jack the payments up even higher, turning what was supposed to be a families gateway to future security into a very expensive albatross that they will never actually own.

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I'm in the mortgage business, and the loan I hate to make more than any other is the FHA purchase loan to a young black family who need to use a down payment assistance program to close the deal. Suze Orman is right - they have no business buying a house - the reason they're going FHA in the first place is because their credit was tore up from the floor up until they paid all their collection accounts. Which means they have no money left after making an earnest money deposit of $500 or $1000. NO MONEY. So after they've signed the paperwork and the funds to the seller have all hit the attorney's escrow accounts, they get a key to a house that they can't keep up if anything goes wrong.

Who do you think I hear from a year or two later, looking to refinance? Mr. and Mrs. Down Payment Assistance Program. They are in a jam, they are behind on their bills, the roof needed work, someone got laid off for a few weeks - all the things a cash reserve equal to three months mortgage payments (which is less than the traditional cash reserve definition of three months of household bills) would have probably cured.

If they had friends or family to turn to, they would have, but in most cases, they are related to the same people who couldn't help them put a down payment together for the house in the first place. The little bit of equity they have in their house is all they've got, but no home equity line lender will touch them. So they have to redo the entire mortgage to get their hands on four or five thousand dollars.

At the other end of the spectrum, I've done $250,000 loans at 12% for white people - business owners, no less - who offered me the obligatory bottled water (they had three cases in the pantry) while we filled out the paperwork. They didn't have any money either - just cash flow. And a tax lien only one brave Florida lender wanted to deal with. If they would cut out the trips and the extras, they could have rounded up the $400 a month payment they needed to make for just 12 consecutive months to the IRS to whack 4 or 5 points off that rate with a new mortgage. I guess drinking tap water is more passe than I thought.

The reality is, if you were to give the No Down Payment Family ten thousand dollars, or raise payday loan borrowers incomes by a thousand dollars a month, the same guys who always end up with all the money will soon have it. Mr. & Mrs. 12% only need $50,000 to retire their debt - might as well throw that one in as well - their travel agent has some brand new travel packages to the latest luxury hotspots.

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Every other group in the animal kingdom accepts the fact that some of its members will occupy the low end of the totem pole, or remain at the bottom of the pecking order.

Blaming congress for our personal shortcomings isn't even a shot in the right direction. All of these ways to bleed a borrower dry depend on the borrower feeling the NEED for things they WANT. Nobody NEEDS a $1200 a month car payment, but you would think they gave BMW 745i's away around here the way they pop up at every stop light.

I can't think of one portable electronic device that is a necessity - including cell phones - yet most of us think we can't live without them, that our kids won't be safe if we can't have a way to instantly contact them at all times. Unless you work in the field, which most of us don't, you don't need them. I have a phone on my desk and two at home. When I forget my cell, I don't even miss it.

The most expensive meal I ever ate growing up cost less than ten dollars at the local Western Sizzlin'. My father could take all of us out for steak dinners on Friday nights for less than thirty five dollars. The last time we all ate together the bill was almost a hundred and fifty dollars at a casual dining restaurant - the kind of place we would have dressed up for thirty years ago.

$5 coffee concoctions, $100 athletic shoes, 80 inch TV screens - all of this good living everyday will kill us dead if it doesn't bankrupt us or smother us in our own fat first.

In the meantime, I will be watching Mr. Non-reviewable himself, Henry Paulson, author of "The Audacity Of Debt" proposal, like a hawk. Fixing a ridiculous situation with an even more ridiculous proposal is about as stupid as it gets. If all of these investment bank problems are surprises to the people who who run the banks, how do you even know if $700 billion is enough?

Because as bad as some of the loans were that I and my fellow loan officers made, every step of the mortgage process is, was, and always will be reviewable.

The Fed's Bailout Plan: Illustrated Version

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY
TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as ____________________.



Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.



(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;



(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;



(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.



Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.



(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.



(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.



Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.




Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.