How to simplify the appraisal process for everyone in today’s hot market

The housing market isn't slowing down anytime soon, and appraisers need to make sure they have the right tools to manage the high demand.

Who’s afraid of the PSPA?

Stakeholders are divided over whether, in light of proposed changes to its capital rule, the FHFA should retool its agreement with the U.S. Treasury and remove policies some say never belonged there in the first place.

Back to the Future of Mortgage Lending

This webinar will discuss what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

Logan Mohtashami on jobs data and the bond market

In this episode of HousingWire Daily, Logan Mohtashami discusses what the jobs data, changes in the bond market, and the Omicron variant could mean for housing.

Politics & Money

American Royalty and the upcoming revolution

I’ve been watching the preparations for the Royal Wedding with some interest. Not the preparations the British are making for their big event, but rather the lengths some Americans I know are going to in order to ensure that they don’t miss it. Why do we care? I saw the same thing happen during the time of Princess Diana. I didn’t get it then, either. But I suspect that the heads of our largest U.S. banks understand it. They, and other large American corporations, may be the closest thing we have to royalty in this country.

The idea of royalty contains within it something comforting for most humans. Many will seek out a king to follow (soldiers are our best examples). Others observe it from afar with stars in their eyes, like those who even now arrange the couch cushions for Friday night’s event. The idea that there is an ultimate leader out there who has your best interests at heart, who will protect you in times of danger, feed you in times of drought, give you a banner to stand proudly behind all as rewards for your loyalty can be very comforting to most of us.

The Founding Fathers chafed under the weight of those rewards. They took the slaves and common workers that they had brought over with them from England and carved out a new world, one without a king to answer to. They took away the colonists’ royalty and replaced it with an assembly of equals (well, not equal to them, but peers). Interesting, in hindsight, since every good capitalist knows that you can’t manage effectively by committee.

Not that kings are all that great. Travel the road back through history and you’ll only find a couple of exits where good kings rule. Most were cruel, inbred monsters that existed only to pursue Machiavelli’s goal of accumulated wealth. They held onto power by controlling the bloodlines and by capitalizing on their subjects’ natural inclination to cash the welfare or unemployment check and remain within their caste. It was evil, but again as Machiavelli pointed out, it was effective.

Machiavelli, of course, didn’t write The Prince for a king. He wrote it for a banker.

In American business, we operate monarchies. Sure, there are boards of directors who watch over companies and try to ensure that they operate in ways that are in the best interest of the shareholders (not that it always works). But the real power in our largest American companies rests in at most a few hands and usually in one pair. In most businesses, these kings rule over petty kingdoms, but in a few industries (oil, pharma, banking), these organizations rival the majority of countries in the world for annual revenue, assets and loyal followers.

I’m not saying it should be any different. A world run by committee didn’t work for the Communists and it won’t work for anyone else. There must be some desk where the occupant will proclaim that “the buck stops here!” Humans need this. I’m convinced of that.

I am suggesting that American corporations, even in the banking industry, can be run by good kings. These firms will work within regulatory guidelines to ensure the safety of the overall system, provide real service to their customers and earn brand loyalty. That’s not what’s happening today.

As we all look over the most recent earnings reports and contemplate the drastic fall in lending volume and the rise in bank profits, we should remember that Machiavelli is dead and the Medici bankers he served are no more. They fell prey to his mistaken assumption that the prince only exists to accumulate wealth and that this alone will sustain him.

In truth, the prince extends his reign by ensuring the currency of valuable goods and services. Paper profits earned in a stock market that cannot but rise in the face of big bank buying with cheap government funds is not real wealth. When it disappears, it will go in the blink of an eye. This does not serve the needs of the banks’ subjects, er…customers, either. They are grumbling today. Can a revolution be far away?

The first bank that starts really educating its customers on the financial products it sells, begins treating them like people they hope to serve instead of somewhat annoying sources of fee income and starts making loans again will rule the world. The bank may not attract the same audience a Royal Wedding does, but it will result in a much stronger corporate kingdom.

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