Mini-Enrons

When Mr. W. & I were trying to buy our first home together (immediately after marrying I just moved into his bachelor condo), our mortgage was contingent on the renting of our condo. No renter being forthcoming, our real estate agent suggested we get a friend to sign a dummy lease to clear the paperwork hurdle with the mortgage company. We could afford the payments, so no one was going to be hurt. The matter was presented to us as simply jumping through a bureaucratic hoop. That's how we thought of it ourselves at first, and we actually did approach a friend, who agreed. In the end we didn't go through with it, though, concluding that even if this was "how business was done," it was still a fraud in which we didn't care to participate. The mortgage agent was furious when Mr. W. told him we weren't going to turn in a dummy lease.

You've changed your mind about the house. You don't really want it!

He fumed. Mr. W. assured him we really did want it, and the conversation proceeded something like this.

Agent:Then you know what you need to do.
Mr. W.: Tell you what, you spell out for me exactly what you want me to do, and I will do it.
Agent: You understand what's needed. I can't be the one to recommend it.
Mr. W.: For the same reason you can't say it, I won't do it.

Neither the real estate agent nor the mortgage agent were "bad people." We were astonished at the time to find how quickly and thoughtlessly we almost permitted ourselves to be swept into a minor fraud; and apparently we were the only people ever to balk at this little cheat. (In the end, having entrusted the matter to Our Lady, we got a legitimate renter three hours before we'd have lost the house, but that's not my point here.)

This memory was triggered a few days ago by Michele Malkin raising a point about the sub-prime mortgage crisis:

Economist Tyler Cowen points out the problem of predatory borrowing — something you never hear politicians spotlight. He notes, “As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications,” according to research on more than three million loans done by BasePoint Analytics. “Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers. Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter.”

The heart of the sub-prime loan matter isn't "predatory banks" but corruption. The corruption you get when you allow kids to get away with cheating and plagiarism in schools. The kind you get when people are over-regulated such that they lose their respect for the law. The kind you get when religious faith falls away and "honesty" becomes a somewhat hazy concept. The kind you get when you can expect a government bail-out for your every bad decision. We love to be horrified by the Ken Lays of the world, but are they any more wicked than the rest of us? They're just applying the rules we basically all live by on a larger scale because of their position. Those fraudulent 70% of loan defaults were mini-enrons, and who's outraged?

Anyway, I found myself asking, What Would Lincoln Do? And I found my answer in remarks from September 30, 1859, as his campaign was gearing up. He went to visit Wisconsin, where a lot of farms were failing, and said this:

Some of you will be successful, and such will need but little philosophy to take them home in cheerful spirits; others will be disappointed, and will be in a less happy mood. To such, let it be said, "Lay it not too much to heart.'' Let them adopt the maxim, "Better luck next time;'' and then, by renewed exertion, make that better luck for themselves.

And by the successful, and the unsuccessful, let it be remembered, that while occasions like the present bring their sober and durable benefits, the exultations and mortifications of them, are but temporary; that the victor shall soon be the vanquished, if he relax in his exertion; and that the vanquished this year, may be victor the next, in spite of all competition.

My vote to the first candidate who says "Better luck next time!" Or who dares to bring up the problem of corruption on the campaign trail.