Wednesday, August 15, 2012

Break the Chains

Yesterday Vice President Joe Biden again made headlines over his controversial remarks to a crowd in Virginia when he told his audience that Mitt Romney and Paul Ryan will put people "in chains," while unchaining Wall Street.  The remarks drew a lot of attention partially because they were made to a largely African-American audience and because they highlighted Joe Biden's general disconnect with reality--he apparently believed that he was giving the speech to a crowd in North Carolina although he was actually speaking in Virginia.

Romney's campaign has demanded an apology, and I agree with him. Insinuating that Romney/Ryan and their supporters want to enslave people is a horrendous lie.  But I think that perhaps the more significant part of Biden's remarks have been overlooked in all of the furor--the part where Biden claims that the GOP pair want to "unchain" the banks and Wall Street.

Anyone who has read this blog for any length of time knows that I am completely and fully against Dodd Frank.  In fact, I started this blog just prior to the passage of Dodd Frank--my first post was April 29, 2010 and Dodd Frank was signed in July of 2010--in an attempt to spread the word about how dangerous and destructive this piece of legislation would be to the financial health of our country.  Now, two years later, Biden is sneering that Romney wants to "unchain" the banks by repealing the legislation.

So much is wrong with Biden's statement.  The mere fact that he is applauding business being "chained" is symptomatic of what is wrong with this country.  Unemployment is over 8% officially and is much higher if we count the people who no longer look for work. Thousands of small businesses like mine are now closed.  Once successful companies that sold products to the real estate market have locked their doors.  Community banks have closed their mortgage departments because they do not want to have to deal with the rigorous restrictions that Dodd Frank is imposing on entities that sell mortgages.  We have created a huge new bureaucracy with unprecedented powers.  And Biden is celebrating the fact that businesses operating in what is supposed to be a free country are now "in chains." 

No one who does not work in real estate will ever understand the real human cost of what has happened in the mortgage and real estate markets over the last four years.  Nine years ago, I was invited to attend an open house for a very successful local builder.  He had constructed a custom, multi-million dollar home for a prominent local businessman.  Because the home was unique, he had asked his customer to allow him to put the home on display for one weekend. The open house was a ticketed event so that the community could see the home; all of the proceeds were donated to benefit a children's charity.

I lost touch with the builder--he was never a client of mine although I did know both him and his wife socially through organizations of which we were both members.  But this spring I was talking to a long-time acquaintance/client when the builder's name came up in the conversation.  "It's terrible what happened to him.  So sad," my client said.  I had surmised from some things I had seen in the community that the builder had been suffering from financial problems, so I assumed the client was referring to a bankruptcy, but I asked him what he meant.  "You didn't hear? He committed suicide two weeks ago," my client said, adding that the builder couldn't see a way out of his financial problems.  I was stunned, but as I contemplated his suicide I realized that there probably was no way for this man to come out of his financial problems.  Like many of the rest of us, he probably came to a place where he finally had no hope at all and for him, suicide appeared to be the best option.

That's partly what makes Biden's latest comments so infuriating.  By implying that Romney will "unchain banks and Wall Street and put y'all in chains," he is also implying that Obama has set us free.  So exactly how do regulations that destroy small business and cut off access to capital make us free?  During the same four years that I have watched Dodd Frank strangle the life out of legitimate sources of credit, I have watched title loan companies and cash for gold businesses proliferate in our community.  Are the people who can no longer get a credit card but who can easily find a place to sell their gold jewelry better off than they were four years ago?  The truth is that Americans are going to borrow money--either from habit or necessity.  The only question is from whom. 

Yesterday I got a phone call from a doctor who had gotten a construction loan for his dream home.  The home is now about two weeks away from completion, and he can't get permanent financing to take out the construction mortgage because his credit score is 679.  Because he owes more than $417,000 on the construction note, he needs either a jumbo loan or a second lien to pay his obligation to the bank and at 679 he does not qualify for either even though he has a good credit history and plenty of income to cover his obligation.  At the end of our conversation he told me that he wanted to look into private "hard money" to see if a private lender would loan him what he needs for a second lien.  Four years ago, a man in his position would have never considered going to a private lender for a second lien on his residence because he could have gotten a fairly inexpensive second lien or a jumbo mortgage.  Now, expensive private money is his only option.  I wonder whether he would agree that he is more "free" under Obama.

I am hoping very much that the Romney/Ryan ticket will prevail in November, and I also hope that if they do win the election that Romney and Ryan will make a sincere commitment to repeal Dodd Frank in its entirety.  If they are able to do that, they won't just be taking the chains off of the banks--they will be breaking the chains that the Obama Administration has used to bind all of us. That would be something to celebrate. 

Alexandra Swann is the author of No Regrets: How Homeschooling Earned me a Master's Degree at Age Sixteen and several other books. Her newest novel, The Planner, about an out-of-control, environmentally-driven federal government, was released June 28, 2012. For more information, visit her website at Frontier 2000.

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