Tuesday, July 13, 2010

Government of the People for the People

Abraham Lincoln once famously stated that "Government of the people, for the people, by the people shall not perish from this earth." But what happens when the people lose faith that their government is actually representing them.

The Dodd Frank bill goes up for a vote on Thursday. With Scott Brown, Olympia Snowe and Susan Collins (all Republicans) promising to vote for it, the Democrats now have the votes pretty much assured. That is not a surprise--the passage of this bill has been a foregone conclusion since the healthcare bill passed in March amid lots of screaming from voters and contention. Financial reform was obviously much less contentious although I have been surprised at the passion of those on both sides of the political aisle who disagree with this bill.

But today, as we wait for the inevitable final vote which make this massive, intrusive legislation the law of the land, what I see is that even those who are most opposed to the bill seem convinced that their representatives do not represent them.

The National Association of Mortgage Brokers is sending out a final call to action asking all of their members to contact their Senators and ask them to vote against the Dodd Frank bill. The letter that NAMB has prepared contains talking points regarding the damage the bill will do. Note the first paragraph: "I write to you today, as your constituent, urging you to carefully weigh your vote for the Dodd-Frank Wall Street Reform and Consumer Protection Act. I have outlined in numerous letters and calls to your office the harm this bill will have on consumers, my customers and your constituents. A vote for this bill will do more to harm consumers and will be remembered by voters for many years to come."

The NAMB letter concludes with, "As a small business mortgage professional, I will undoubtedly be adversely affected should this bill pass, at a time when I have already suffered greatly throughout the economic downturn. But in the end, my consumers will be the biggest loser because of reduced competition in the marketplace and the lack of available credit."

While I do commend NAMB for a final effort, and I believe that it is our duty as U.S. citizens to remain engaged and involved with our government, I have to wonder about the wisdom of sending a letter that essentially says, "Even though you have ignored my repeated pleadings not to pass this bill, I am just letting you know that you are going to put me out of business when you do this." Acknowledging that they have ignored the grassroots efforts of the industry implies an understanding that they are not going to listen this time either.

This attitude was also reflected an email being sent out by Mortgage Trends with the subject line, "Act Now, before Congress Acts for you in July." The email starts with "Our industry is going down in flames RIGHT NOW unless we do somthing about it. One thing learned in the past is letter writing campaigns and phone calls have been completely ineffective." The author of the email is asking recipients to subscribe to a third party validation system which, he promises, will allow Congress to see that the industry is capable of acting as its own watch dog. The fact that registration for this system does not require a credit card or any fees to participate lends credance to his assertion that his system is about showing politicians that our industry is capable of policing itself. But if they don't care about our letters or our phone calls, and they don't care about the numerous mortgage credit restricting guidelines which have been implemented over the last two years, why would politicians suddenly respond to yet another campaign to "clean up the industry."

I emailed both of my Senators and my Congressman regarding the financial reform bill. I used strong language--words such as "evil" and "socialist"--because I wanted them to understand that I am completely opposed to this legislation. I knew before I wrote that my efforts would fall on deaf ears because I know their voting records, but I did it anyway because it is important to participate in the process. I got three generic emails back telling me that this bill is wonderful. On July 8, my Congressman, Harry Teague, sent out an email to his constituents who had emailed him on the subject of financial reform. It reads, in part, "Over the last few weeks, a bi-partisan House and Senate Conference committee has worked to create legislation to address dangerous Wall Street banking practices and help protect American consumers. Through this process it was important to me that their final product hold the big banks that caused our current economic mess accountable and protect the average New Mexican from predatory practices. I was pleased when the final bill, the Wall Street Reform and Consumer Protection Act, met my standards and I was proud to vote for it on the House floor...This bill ensures that taxpayers on Main Street won't be forced to pay for mistakes made on Wall Street, as those most responsible for these mistakes grow richer by the day."

In reality, we know that actually the opposite is going to happen. The biggest banks will be such an integral part of the financial system that they are indeed too big to fail. And since the Bureau of Consumer Financial Protection will have governance over both the smallest players in the industry--the self employed mortgage brokers--and the largest, and it will write regulations which will govern both, we can be pretty sure that Bureau will soon be adhering closely to the golden rule--he who has the gold makes the rules.

That is part of the problem we have right now. Huge corporations, including bank holding companies, can afford lobbyists to get their message across to law makers and regulators. But small business people, including mortgage brokers as represented by the National Association of Mortgage Brokers, and small mortgage banks as represented by the Mortgage Bankers Association, don't have the money to pay top notch lobbyists. All we have is our voice--our letters, our emails, our grassroots lobbies in Washington D.C. I participated in six lobby trips with the National Association of Mortgage Brokers, and I was always amazed by the open lack of interest that our legislators displayed toward us. We after all, paid our own expenses to go to Washington D.C. to meet with our elected officials to let them know about the issues that mattered to us, and yet, so often, the legislators let us know that they were not very interested in what we were there to say. We were just a grassroots lobbyist, rather than a top notch Washington lobbyist. The distinction between the two is the difference between having your income capped (us) and getting to keep all of the yield earned on interest rates when you sell a closed mortgage loan (them).

Lincoln said that government for the people shall not perish--not government for some people, or government for lobbyists, or government for corporations. Making trips to Washington D.C. as a grass roots lobbyist may not make any difference, but making a trip to the voting booth in November could. We still have a voice, and we need to use it. Laws can be changed, revoked, replaced and undone, but that will happen only if the people in Washington passing the laws actually understand that our government is representative, and they represent us.

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