Thursday, October 25, 2012

Why, as a Small Business Owner, I Am Voting FOR Mitt Romney, and Not Just Against Barack Obama

During the month of October, I have been doing a series on the reasons why I am voting FOR Romney and not just against the current president. The first two installments of this series dealt with why, as an evangelical Christian, I am supporting Mitt Romney.  Last week, I wrote about my reasons as a freedom-loving American for voting for Romney.  Today, I want to list some of the reasons why, as a small business owner, I am voting FOR Mitt Romney and not just against Barack Obama. 

I have been self-employed for 14 and a half years.  In 1998, when I was 27 years old, I cashed in an IRA with a little over $10,000 and opened a mortgage broker company in El Paso, Texas.  My father had been working for another mortgage broker company in town, and he wanted to come into the company too, so we became partners. All we had to work with was the money in the IRA, so every penny had to count.  I found two offices that we could sublease, fully furnished, for $245.00 a month to include utilities.  We could not afford a computer, but the sublease did include a used portable Brother typewriter which we used heavily.  My father and I split the cost of a multi-purpose fax/copy machine.  We filed our incorporation papers as an S corporation in the state of Texas and we were in business. We didn't have a copier, but we had our fax machine for single paper jobs, and I drove to Kinkos several times a week to make copies of the loan packages we were sending out for approval. We did not have a refrigerator, but I brought our lunch and soft drinks to work each day in a Styrofoam cooler. 

In 1998, the Texas home equity law had just been passed, and the overall housing market was pretty healthy, but competition was stiff.  We had to prove ourselves to earn every deal.  We did not have any money for advertising but I knew that through hard work and diligence we could prove ourselves and build a business, and although for the first year and a half we barely made enough to survive, within less than two years we were making enough to lease our own office suite and a copier and to purchase an office-size fridge. Within five years we were able to purchase our own building.  By 2006, half of my family was employed by the company I had started with $10,000.

Owning a business is one of the most work-intensive, grueling journeys that any person can undertake.  In good times, competition is fierce.  In bad times, there is barely enough money to pay the bills.  In all times, a successful small business owner can expect to work long days, week in and week out.  For most of the 14 and a half years that we have had our mortgage company, my normal workday was 10 hours Monday through Friday, and I came to work many Saturdays and Sundays.  Our business is one in which there are strict deadlines--especially since we did primarily purchase transactions in which borrowers had contracts with deadlines that had to be met.  Any additional work that I did in the community, such as the service on boards of various organizations, had to be done outside of those hours.  The borrowers had to be taken care of and their transactions had to be closed in a timely professional manner because our service was the primary commodity that we sold.

Anyone who thinks that all small business owners are rich has never owned a small business.  I am now 42 years old.  I have never owned an expensive car--my last three cars have been Honda Accords.  I have never taken a nice vacation.  The last time I took a week off was in 1998 when my youngest brothers graduated from BYU and I took a week to go be with them in Utah.  Little did I know that I would never be able to have that much time off work again.  Over the past four years, as the economy has continued to crash and mortgage guidelines have tightened until qualifying is nearly impossible, I have seen my income shrink dramatically but my hours in the office have not decreased commensurately.  Our industry has been buried under a tsunami of regulations, paperwork and federal licensure requirements so expensive that I could no longer afford to keep a New Mexico license as well as a Texas license.  I have looked around several times over the last few years with the idea of changing industries because the mortgage industry is such a mess, but everywhere I go I find other small business owners who are being buried under their own sea of regulations and paperwork, or whose businesses are strangling because of the overall poor health of the economy at large.

Small business owners are truly the engine that moves the economy. We are productive because we have to be.  We don't get an "A" for effort or extra credit just for showing up.  We earn our own paychecks with our direct efforts every day or else we shut down.  Our reward for long hours of toil is that we get to come back and do it again tomorrow--we have made enough money to cover our office expenses and keep our homes out of foreclosure.

When I opened my business, I knew that it would be a lot of work, although honestly I was unprepared for the extent of the work and also for the fact that it would never get easier--I naively believed that sacrifices made in my twenties would be made up for with a life of greater comfort later.  But I believed that opening and growing a business would provide security for the future.  My father was fired from his job when I was a teenager, and the horrible financial problems that our family faced redefined many aspects of our lives from that time forward.  As a small business owner, I believed that I was building something unique from which nobody could "fire" me.  I might have individual disagreeable customers who did not like me and who did not come back, but I reasoned that if I worked hard and provided good service, I could build a strong business of repeat customers. I was not intimidated by my competition because I knew that I could compete and carve out a place for myself in this industry and that as long as I maintained a good reputation, I would be able to work. In that I was correct.

What I did not factor in was the runaway government regulations from newly created agencies full of overpaid, bloated bureaucrats that could destroy my industry and regulate me into oblivion and that no amount of hard work, or good service, or good will in the community would make even the slightest difference. And unfortunately, that is exactly what I have seen happen.  This past January, when President Obama illegally appointed Richard Cordray--a recess appointment while the Senate was not in recess--as the head of the Consumer Financial Protection Bureau, he activated all of the massive powers of the CFPB, including the power to finalize new mortgage regulations and forms.  So I sit here today, typing this post and wondering why I invested so many years in building a business that the government could wipe out with a few computer strokes and a 2000 page + piece of legislation called the Dodd Frank bill.

For that reason, I am dedicating today's post to 4 specific reasons that I am voting for Mitt Romney on November 6th.  I am listing them in no particular order.  Any one of these reasons would individually be enough for Gov. Romney to secure my vote; taken together they are very motivating for me:

1. Mitt Romney has promised to fire Ben Bernanke.  I met Ben Bernanke last year when he was in El Paso to meet the troops at Fort Bliss.  As the 2011 Chairwoman of the El Paso Hispanic Chamber of Commerce I was invited to attend a luncheon round table of small business owners, and I sat next to Chairman Bernanke for about two hours at Carlos and Mickey's Restaurant.  As the small business owners complained that they could not get credit from banks because of new regulations, Bernanke responded smugly that any small business owner being denied credit because of new banking regulations should question the banks further since new regulations do not impede small businesses from getting credit. (Sure they don't.)  For more on this see Lunch with Ben Bernanke Part I. 

Bernanke's Federal Reserve has been the author of regulations which have specifically and purposely destroyed the mortgage industry--discriminating against small business owners and in favor of Wall Street Banks as "legitimate" loan originators, so I am not a fan.  But while his mandates have hurt me, his quantitative easing policies are damaging the entire country.  Right now, as a result of QE3, mortgage interest rates are in the 2.75% range for 15 year fixed mortgages while 30 year mortgages are in the low 3's.  Bernanke claims that quantitative easing does not cost taxpayers any money whatsoever--the Federal Reserve buys Treasury bonds and will resell them when the economy improves.  But in fact, he is hurting taxpayers, because he is buying Treasury bonds from the U.S. Treasury--the taxpayers--at a volume designed to force the interest rates down artificially low, which in turn causes mortgage rates to drop to artificially low levels so that Fannie Mae and Freddie Mac--also owned by the taxpayers--can make thirty year mortgage loans at 3% interest rates.  Fannie and Freddie (the taxpayers) will be servicing these loans long after interest rates have risen back to normal levels.  Does that sound like a good monetary policy to you?

The Obama Administration would argue that this stimulates the housing market and helps homeowners but I strongly disagree.  In El Paso, where mortgage values never saw the rapid appreciation of other parts of the country and therefore also did not see the degree of depreciation that other areas have experienced, property values continue dropping.  Every home I have had appraised this summer, with one exception, has appraised for less than expected.  Those homes being appraised now which were appraised last summer are appraising lower than they appraised in 2011--not exactly a banner year for real estate. And in my conversations with underwriters from Texas--a state not nearly as hard hit as many others--I have determined that property values are dropping around the state. So quantitative easing is not shoring up property values.

It is also not helping the average homeowner. The people who are refinancing into these historically low interest rates are certainly happy to get the loans, but they don't NEED the loans.  In order to get a refinance with one of these incredibly low rates, borrowers have to have plenty of documentable income, good credit, good assets and equity in their homes.  Borrowers who fit that description already have low interest rates--they are just getting a LOWER interest rate.  Borrowers who are struggling because they are out of work or they can't make their payments must take their chances with a loan modification which they may or may not get.  The legitimate need of many borrowers who really do need help because they are in mortgages they cannot pay due to job loss or reduction of income has given rise to a plethora of frauds and scams as unscrupulous con artists have taken the last savings from those who are desperate in exchange for help that is not coming. And then there are the millions of homeowners who are not desperate--they have not missed any payments and they are not going into foreclosure--but  refinancing to a lower payment would make their lives easier.  Most of them don't qualify under the stringent new requirements. 

While the low interest rates do not impact everyone, the inflation that quantitative easing produces does affect all of us.  From rising food costs, to rising prices of commodities, to rising gas prices, we all feel the effects of inflation.  Those same families who don't experience the benefits of the low interest rates notice that they have much less money every month due to rising prices.  Bernanke and his monetary policies need to go.

2. Mitt Romney will repeal Dodd Frank.  Dodd Frank was sold to the American people as a populist effort to reign in Wall Street and the big banks, but Governor Romney was exactly correct when he said that Dodd Frank was the biggest "kiss" the Wall Street Banks had ever received.  In reality, Dodd Frank discriminates against small businesses and community banks in favor of the Wall Street Banks.  I personally bank at a local bank--as a result of Dodd Frank they closed their mortgage department last year because they cannot comply with the onerous new regulations. From new forms that change disclosure of costs to make bank loans artificially appear less expensive than broker loans, to new forms and procedures required only of brokers, each part of Dodd Frank dealing with mortgages is written to favor the Wall Street banks at the direct expense of smaller competitors.  And the regulations and paperwork that we have seen until now are just the beginning--after the election the qualified mortgages are about to be unveiled which will effectively regulate average American families out of homeownership and which will make it impossible for small mortgage businesses to remain operational.  Like so much of what we have seen from the Obama Administration, Dodd Frank does the exact opposite of what it purports to do--it concentrates wealth and power into the hands of an elite few while stripping everyone else of their opportunity to work and compete in the mortgage industry.

3. Mitt Romney will repeal Obamacare.  I am particularly infuriated when I hear liberals smugly talk about companies with no health insurance as moochers.  In 1995 my mother was in a horrible accident where she was run over by the family van.  Because of the severe financial problems, she had no health insurance and, other than the surgery to repair the extensive damage done which included multiple broken bones, she had virtually no health care.  When we started our business, I knew that eventually I wanted us to have a good health insurance policy.  I had to wait until we were making enough money to pay the premiums, but after we got established our company set up a small business policy with Aetna which provided excellent coverage for everyone employed here.  The business paid 100% of the premiums.  A couple of years ago, we had to let the insurance go because we could no longer afford the premiums, and so now I am uninsured again--not because I don't value health insurance, but because the economic polices of this Administration have made it impossible for me to afford it.  I cannot afford to pay fines in lieu of insurance to a government that is increasingly taking every additional dollar for taxes while regulating more and more strictly how much I am allowed to earn.  If Gov. Romney wins this election and gets the economy moving, I will be glad to go out and purchase health insurance again, but when I buy it and what I purchase should be my decision and mine alone.

4. Last but certainly not least--Mitt Romney understands that small businesses matter.  He said correctly that the policies of the last decade have heavily favored Wall Street corporations over small businesses.  I cannot speak for every industry, but I can certainly affirm that this has been true for my industry.  The fact that he understands this and recognizes that those of us who have small businesses are not going to work the hours we work and make the sacrifices we make only to be buried under regulations and see every extra penny consumed by taxes tells me that he has a proper perspective on the role of business and business owners.

On November 6th, I am going to go to the small, rural polling area where I have voted in every election since I was eighteen and I am going to cast my ballot for Mitt Romney and a straight GOP ticket.  The outcome of this election will determine what my job title is in January of 2013.

Alexandra Swann is the author of No Regrets: How Homeschooling Earned me a Master's Degree at Age Sixteen and several other books. Her  novel The Planner, about an out of control, environmentally-driven federal government, is available on Kindle and in paperback. For more information, visit her website at http://www.frontier2000.net.






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