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Alan Greenspan Animal House and the Scandal That Never Ends

As I’ve tried to make sense of the Robo-Signing, Document-Backdating Foreclosure Scandal That Never Ends, a couple of things have popped in my head: Animal House and Alan Greenspan.
Stay with me here. Imagine Greenspan as Flounder, the callow freshman trying to pledge Delta House. The Delts persuade Flounder to loan them his father’s car, then take it on a spree, smash it up and return it much worse for wear. The only explanation they have for Flounder: “Hey, you fucked up. You trusted us.”
Greenspan was no neophyte back in the 1980s when, between government gigs, he signed on as a consultant to Charles Keating’s Lincoln Savings and Loan. But he did seem to have a sense of innocence about him, that same starry-eyed idealism he’d possessed a few years before when he’d penned an article in Ayn Rand’s journal declaring that no company could afford to risk its “reputation for honest dealings and a quality product” by “letting down its standards for one moment or for one inferior product; nor would it be tempted by any potential ‘quick killing.’ ”
As Lincoln Savings came under fire, Greenspan wrote a letter to regulators pronouncing the management of Keating’s S&L as “seasoned and expert.” The S&L, he said, was “a financially strong institution that presents no foreseeable risk” to the Federal Deposit Insurance Fund. Lincoln eventually perished in a conflagration of recklessness and fraud, costing taxpayers $2.66 billion.
Now imagine Keating, before heading off to jail, taking Greenspan aside and explaining: “Hey, you fucked up. You trusted me.” In the for-real world, Greenspan told the New York Times: “I don’t want to say I am distressed, but the truth is I really am. I am thoroughly surprised by what has happened to Lincoln.”
Despite his distress, the episode didn’t seem to have much of an impact on Greenspan’s thinking. As Fed chairman — the Dean Wormer, if you will, of the financial system — he still maintained a certainty that markets and bankers could be trusted to protect consumers and investors from fraud and folly. His inaction during the housing boom, many critics say, allowed predatory lending and wild speculation to cripple the economy.
Greenspan is no longer in the picture. He spends his days as a sort of professor emeritus, explaining there was nothing he could have done to prevent what he calls a “once-in-a-century credit tsunami.” It’s hard, though, not to detect a whiff of Greenspanian idealism in the forces that have helped bring about the current controversy over the tactics used to speed the banking industry’s foreclosure machine.
Foreclosure has traditionally been a laissez-faire activity. The feds have mostly left it up to the states to oversee foreclosures. Many state courts and administrative agencies, though, aren’t equipped to handle the flood of filings or to assess the propriety of the paperwork submitted by banks and other “loan servicers.”
But why worry? Why worry whether brand-name banks will do the right thing when it comes to taking away people’s homes? Don’t they want to maintain “a reputation for honest dealings”? Why would they be tempted by the potential for a “quick killing” via foreclosure — instead of, say, modifying homeowners’ loans and helping to keep the stream of income from the loans coming in?
There’s the problem. The banks often no longer own the mortgages they’re servicing. The rights have been sold off, through securitization, to investors around the world. The banks still service the mortgages, but they earn little simply collecting payments from month to month. The real money is in defaults: late fees, legal fees, inspection fees, pricey insurance. These add-ons can total thousands of dollars per loan, consumer groups say, and sink homeowners who are barely getting by so deep in default they have little chance of recovering.
Which is why, consumer advocates claim, the honor system hasn’t worked well in terms of the Obama administration’s effort to get banks to rewrite borrowers’ loans on more affordable terms. It may also be why some banks may have given in to the temptation to flood courts with inaccurate or perjured documentation.
The evidence suggests that the foreclosure scandal is more than a few procedural snafus. It’s a serious problem, driven by the “anything-goes” culture of fraud that’s permeated much of the mortgage industry over the past decade. Solving the problem will take more than putting banks on Double Secret Probation. It will take a change in philosophy: Trust — whether among frat boys or bankers and regulators — should be earned, rather than assumed.
Michael Hudson is a staff writer at the Center for Public Integrity and author of THE MONSTER: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America – And Spawned a Global Crisis .

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The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America–and Spawned a Global Crisis
by Michael W. Hudson

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The Hangover from Americas Bailout Party Video

“Flounder: You _______ up — you trusted us.”
-Otter in the movie Animal House.
Let’s face it, we screwed up.
In the decade before 2008, the financial world was like a presidential inauguration ball.
On Inauguration day, there is a ball where only the closest insiders and Washington power players get invited.
There are also a lot of parties around town, so just about everybody in Washington feels like they were part of the event.
For a decade, Wall Street was playing funny money games. They were allowed to grant themselves multi-million dollar bonuses, and many Americans also felt like they were invited to the celebration.
Real estate prices were soaring. People were flipping houses and condos. People with lousy credit and no income were living in nice houses. Almost anyone could get a loan for anything.
Stock prices were going up and pension plans were getting fatter. State and local governments had lot of money to throw around and could cut taxes without anyone really noticing.
We had easy money and reaped many benefits without hard work or sacrifice.
We were living in fantasy land.
The fantasy is over. We woke up to a nightmare.
A nightmare that our nation has not yet dealt with.
People with addictions go through a process called “bottoming out.” They reach a point where they realize their actions are hurting themselves or others. They get help and dramatically change their lives.
Because of the Wall Street bailouts, America never got the chance to “bottom out.”
Like a drunk who keeps “having a drink or two,” America has not really dealt with the problems that got us in the mess.
Like an addict who keeps using, we are setting ourselves up for repeat failure.
I’ve been reading Maria Bartiromo’s new book, The Weekend That Changed Wall Street. A better title might have been “The Weekend that Changed the World.”
It was America’s chance to bottom out. We didn’t. To paraphrase Otter in Animal House, we screwed up. We mortgaged the future to make Wall Street happy today.
I liked Bartiromo’s book. One of her insights jumped out at me.
In talking about the fall from grace that some Wall Street insiders felt, she noted “When the wealthy falter, there is a deep shame that the average person cannot grasp. In that world, you are either in or you’re out.”
That line explains everything. Wall Street was in. They had the right lobbyists and had an alumni association from Goldman Sachs, including Treasury Secretary Hank Paulson, doing their bidding in Washington.
Those who came from Wall Street looked out for their own. They made sure their Wall Street cronies were paid back, 100 cents on the dollar.
The rest of us were out. And we have stayed there.
Unemployment remains around 10% and underemployment is even more chronic. Sales of existing homes are at a 15-year low, despite some of the lowest mortgage rates in history. It’s almost impossible for a Main Street business to get financing and state and local government entities are looking at severe cuts in revenues and services.
We’ve spent trillions in bailout money and all we got was “One day older and deeper in debt.”
Although it sounds gloomy, I’m not a gloomy person by nature. With focus, hard work and resiliency, people can overcome any obstacle.
Including what Wall Street and Washington did to us.
People can solve problems by taking a hard look at themselves and making changes.
Washington is afraid to take that hard look or make real changes. Our political “leaders” won’t do anything that cuts off the campaign contributions and lobbying money that Wall Street provides.
My next column will give a concrete plan for creating wealth without Wall Street. You can see signs of it. Concepts like Move Your Money, http://moveyourmoney.info/ are catching on. People are starting to pay down debt and look at creating their own businesses.
We weren’t really invited to the big Wall Street party. But we sure wound up paying for it.
Now it is time to recover from the hangover.
Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award-winning financial columnist and Huffington Post Contributor.
You can read more about Don at www.donmcnay.com
McNay founded McNay Settlement Group, a structured settlement and consulting firm, in 1983, and Kentucky Guardianship Administrators LLC in 2000. You can read more about both at www.mcnay.com
McNay has Master’s Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University.
McNay has written two books. Most recent is Son of a Son of a Gambler: Winners, Losers and What to Do When You Win The Lottery
McNay is a lifetime member of the Million Dollar Round Table and has four professional designations in the financial services field.

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The Best Back To School Movies By Farr

I’m experiencing that familiar and inevitable “back to school” feeling.
No matter how many years pass since the end of my formal education, I still get the same sensation every time September rolls around.
Part of it comes from seeing my own kids off for another academic year, which always makes me sad.
It’s not all bad, though. This annual moment of transition actually serves as a useful reminder for us parents that much as we might like to hold onto our children, ultimately they must progress and make their way on their own…as must we all.
So, on the plus side, this date on the calendar signifies fresh starts and new possibilities, a renewed desire to explore and express our own distinct talents in more effective and (hopefully) beneficial ways.
And just where do we learn to strive in this way? From our parents, certainly- but also in school.
The ultimate formative experience in my life, school was where I first began to recognize what I was good at, and where I might fit in. It shaped my friends, my interests, my career, my entire outlook.
School was also where I found my first mentors, those rare teachers who made learning fun and exciting. These were virtually the first adults outside my family that I connected with in a truly personal and meaningful way. You knew these people appreciated you for yourself, not because they happened to share your blood or like your parents. Throughout my life, these few, very special human beings have never really left me.
Given the profound significance of education in our lives, it’s no surprise there’s no shortage of movies on the subject. So now, I humbly submit ten of my own favorite films about school, learning, and those mostly noble souls who teach.
Goodbye, Mr. Chips (1939)- Told mainly in flashbacks, “Chips” traces the life of a beloved schoolmaster who serves over fifty years in an English public school. Reminiscing about his personal life and long career, the shy, unassuming Mr. Chipping (Robert Donat) also recalls his unexpected courtship and marriage to his stunning and spirited wife Katherine (Greer Garson). A nostalgic paean to Old England and a deeply affecting story of honorable service, “Chips” succeeds admirably, mainly due to British actor Donat’s touching performance. Donat broke the Oscar sweep of “Gone With The Wind” in 1939, stealing the Best Actor statuette from under Clark Gable’s nose (and ears). In addition, beautiful English ingnue Garson became an overnight star in the small but pivotal role of Chips’s enchanting wife. Though sentimental by today’s standards, this is a grand and moving classic for the ages.
The Browning Version (1951)- On the eve of his retirement from an all-boys boarding school where he is widely despised, ailing classics teacher Andrew Crocker-Harris (Michael Redgrave) realizes that he has failed to communicate his enthusiasm and the depth of his passions in the classroom. Scorned by his wife, Millie (Jean Kent), who’s openly cavorting with popular science instructor Hunter (Nigel Patrick), Crocker-Harris appears stoically resigned to a cheerless existence. But a guileless act of kindness eventually changes him in ways no one quite expected. Anthony Asquith’s mournful, absorbing ensemble drama was adapted by Terence Rattigan from his own play. Redgrave, in one of his greatest screen performances, is magnificent, communicating both the unrelenting severity and turbulent inner sadness of Crocker-Harris-who keeps a stiff upper lip about Millie’s infidelities, the headmaster’s disrespect for his years of service, and his own failed ambitions. With a stirring turn by young Brian Smith as Taplow, Crocker-Harris’s chipper, well-meaning student, “Browning” is an outstanding drama about suffering and redemption that will stay with you long after the gut-wrenching graduation speech.
To Sir, With Love (1967)- In this triumphant urban drama, Sidney Poitier plays Mark Thackeray, a determined teacher out of his element in a tough London high school. Initially facing apathy and resistance from his students, Thackeray ditches the lesson plan and speaks directly to their inner characters, transforming his unruly charges into hopeful–and grateful–young people. Made the same year as “In the Heat of the Night” and “Guess Who’s Coming to Dinner”, James Clavell’s marvelous film-a huge hit in 1967-succeeds largely because of its lead actor. Shattering age-old stereotypes about race in all his roles, Sidney Poitier exuded nobility, strength, intelligence, and humility. Never with a chip on his shoulder, never self-pitying, he commands respect-Thackeray’s students call him “Sir”-showing anger only when provoked by others’ ignorance. “To Sir With Love” is a lasting testament to that impressive strength of character, and a demonstration of how it can be cultivated in others.
The Prime of Miss Jean Brodie (1969)- Blindly devoted to her pupils and fiercely determined to imbue her gray 1930′s Edinburgh surroundings with passion and color, Scottish schoolmarm Miss Brodie (Maggie Smith) is very much her own person-a spirited, eccentric freethinker given to divulging her personal life and politics in the classroom. But she soon runs afoul of the rigid headmistress (Celia Johnson), who’s determined to see Brodie out the door of her exclusive girls’ school. English actress Smith captivated viewers in 1969 with her Oscar-winning portrayal of the title character in director Ronald Neame’s outstanding film. Based on a novel by Muriel Spark, this hit film doesn’t shy from presenting Brodie’s misguided enthusiasm for Mussolini, nor her affair with a married man (real-life hubby Robert Stephens). A poignant character study of a woman whose incomplete life and untamed spirit combine to blur her judgment, the movie is a fabulous showcase for Maggie Smith’s dazzling talent.
The Paper Chase (1973)- Like most of his peers, brilliant first-year Harvard law student James Hart (Timothy Bottoms) lives in fear and awe of crusty, demanding, no-nonsense Professor Kingsfield (John Houseman). Seeking his favor and respect prove challenging to this ambitious attorney-in-training, and things get even more complicated when Hart falls for Kingsfield’s daughter, Susan (Lindsay Wagner). At a time of heightened competitiveness in academia, James Bridges’s “Chase” makes for relevant as well as highly pleasurable viewing. Set in one of the most demanding environments–Harvard Law School–the film portrays learning at its most intense, where the depth and breadth of the curriculum represents a marathon, testing the brain and body’s endurance. Timothy Bottoms is wonderful as the student who may be in over his head, but Oscar winner John Houseman, as the remote, brilliant law professor who strikes terror in his charges, is the real reason this film scores a solid A.
Animal House (1978)- At Pennsylvania’s Faber College, stiff-shirted Dean Wormer (John Vernon) is fed up with the raucous antics of Delta House, an anarchic, thoroughly debauched fraternity with no sense of decency, decorum or, apparently, brains. So he hatches a plan to strip the Deltas, who are led by a group of seniors including Otter (Tim Matheson) and John “Bluto” Blutarsky (John Belushi), of their credentials, enlisting the help of their hated, upper-crusty rivals at Omega House. The original “party animal” teen movie (despite its “R” rating), John Landis’s outrageous feature-length prank has enough gross-out humor, slapstick yucks, and all-night beer chugging to put a drunken smile on anyone’s face. Matheson and co-stars James Widdoes, Peter Riegert, and Bruce McGill bring sheer lunacy to their roles as leaders of a riotous frat house for rejects, losers, and academic failures. But it’s Belushi’s gonzo portrayal of Bluto that remains iconic, and helped make the former “SNL” cast member a big-time comic star. Irreverent, subversive, and totally inappropriate, “Animal House” depicts the college experience most of us never had, but kind of wish we did. Watch for Kevin Bacon in a small early role as a young pledge.
Au Revoir, Les Enfants (1987)- In director Louis Malle’s semi-autobiographical masterpiece, young Julien (Gaspard Manesse) dislikes the Catholic boarding school he’s forced to attend by his mother (Francine Racette), but she reasonably insists that war-torn, Nazi-occupied Paris is no place for children. Indeed, the horrors of the conflict remain at a safe distance until the arrival of new student Jean Bonnet (Rafael Fejto) who carries a dangerous secret. Julien and Jean gradually become close friends, so that when the war finally does intrude on their cloistered environment, the lives of both boys are changed forever. Director Louis Malle’s masterpiece is a subtly drawn, wrenching tale of childhood innocence lost to the madness of war. Malle expertly evokes this nightmarish period in his country’s history, and teases pitch-perfect performances out of both juvenile leads, as their relationship evolves from one of mistrust to friendship. The film’s deeply felt, highly personal quality resonates, as we discern that Julien is based on Malle himself as a boy. Among the supporting cast, Racette excels as Julien’s affectionate but distracted mother, while both Francois Berleand and Philippe Morier-Genoud shine as the priests who run the school. A moving and important film for the ages.
Stand and Deliver (1988)- Based on real-life events, this inspirational drama concerns Jaime Escalante (Edward James Olmos), an Hispanic math instructor who institutes an advanced-placement calculus course in an under-resourced East L.A. public school. With a mix of humor and tough love, Escalante pushes a motley group of barrio kids to excel beyond their wildest dreams. Superbly directed by Ramon Menndez for PBS’s American Playhouse, “Stand” is a cut above most motivational storytelling, because it bypasses sentimentality in favor of a more complex, authentic tone. Olmos is a marvel as Escalante, a brilliant but idiosyncratic educator, and he deservedly nabbed an Oscar nomination. Among a dynamic supporting cast, Lou Diamond Phillips also impresses as the troubled youth who faces a choice between gang life and academic glory.
Election (1999)- Tracy Enid Flick (Reese Witherspoon), a compulsively anal, unapologetically driven high school student, runs for class president of her Nebraska high school, while teacher Jim McAllister (Matthew Broderick), unable to help himself, consistently works to undermine her. Alexander Payne’s smart, savage, satirical battle of wits stands out starkly from the standard run of bland contemporary comedies. Witherspoon is priceless as the cloyingly perfect schoolgirl everyone loves to hate, and Broderick also scores as the counselor who’s instinctively compelled to pop her bubble. Payne, who won an Oscar nod for his screenplay and would go on to helm the critically acclaimed “About Schmidt” (2002) and “Sideways” (2004), puts his prodigious talent on full display here, actually drawing inspiration from Budd Schulberg’s “What Makes Sammy Run?”, a landmark 1950′s TV production about a slimy, ruthless Hollywood player. This comic sleeper certainly wins my vote.
To Be and To Have (2002)- Shot in a one-room schoolhouse in rural France, this priceless documentary portrays the magical innocence of children and the loving dedication of one teacher, Georges Lopez. Set to retire after 35 years, Lopez instructs, engages, and inspires several grades of schoolchildren in the course of a school year, touching all their lives. Any parents out there should quickly lay their hands on Nicolas Philibert’s sublime “To Be,” an intimate and heartwarming study of hands-on education in a tiny classroom. What would be a daunting task for most of us is, for Georges Lopez, the application of a natural gift to a highly rewarding purpose. Georges’s innate connection with the twelve children under his care is humbling, and the wistful expression on his face at the end of the school term will put tears in your eyes. An indelible film experience.
For over 2,100 outstanding films on DVD, visit www.bestmoviesbyfarr.com
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