19 November 2011


They want to make money. That's what every business wants.

Traditionally, the most stable, steady profit-making enterprise for banks has been lending money. Sure, there's much higher yields to be made from speculative, high-risk investments and money manipulation, but to ensure the continued health of a bank it needs a solid portfolio of dependable low-risk loans.

And, one of the primary reasons that the economy is still so stubbornly sluggish is that banks are sitting on piles of cash that they aren't lending out. Because of that, companies can't expand, they can't hire new workers, people can't build, buy or sell houses. For any free market economy to survive it needs constant activity fueled by money - more often than not in the form of loans. It's like the proverbial shark that will die if it doesn't keep swimming.

So why was it so enormously difficult for Eva - who I live with - and I to refinance our house recently?

We are about as close as it gets to zero risk borrowers and yet trying to get a bank to take our money was a Herculean task.

We bought our house eleven years ago, not quite at the bottom of the market but near enough to it that our property is still well above water. For our refinance, we were attempting to borrow approximately 15 percent of the current appraised value of our house. (And, according to three different realtors the official appraised value was laughably low compared with current real market value.) If our house burned to the ground, the lot alone would be worth at least two or three times the amount we were asking for.

And we're excellent customers. We have never missed, or even been so much as a day late with any payment.

And the whole point of refinancing in the first place was to cut our monthly payments - by about half - which would make it even less likely that we would miss a payment or be late with one in the future.

So we called up Harris Bank - our then current lender - reminded them of what good customers we've been and told them we wanted to refinance.

They turned us down flat.

On the one hand, what incentive did they have to give us a lower interest rate when we've been paying a higher one for the past eleven years? That would have meant they'd be making less money off of us.

On the other, they were risking losing a couple of very good, reliable customers at a time when banks are claiming that the going is tough for them, and making no money at all from us.

I pointed this out to them. They said sorry, that's the way it is.

Too bad for them. Bye bye Harris.

Thanks to the tenacious, patient and expert efforts of a fantastic mortgage broker, Eva and I jumped through numerous flaming hoops, shoveled the requested shit out of the Augean stables of our finances - being self-employed didn't help - and prevailed. We refinanced our house down from a five percent loan to a three-and-a-half percent loan, cutting our monthly payments in half. (If any of you need a really good mortgage broker I can send you the name and contact information for ours.)

So, I've got to ask, why?

Certainly banks ought to be more cautious than they were over the last decade when it comes to lending money for houses. They got severely burned making stupid loans to pretty much anyone who asked for one for any property no matter how ill-conceived the whole deal was, or how unlikely the person taking out the loan was to be able to pay it back. They figured that the property market was going to continue going up and up and up forever, so even if the loans blew up, they'd still be left with property worth a lot more than they'd loaned out for it.

They were wrong.

So now, to avoid it happening all over again, a lot of banks have put into place internal regulations that make it very difficult for them to loan money to anyone - not just the people who probably shouldn't be taking out loans in the first place.

But because banks' lending business has slowed to a crawl and they still want to make money, they are returning to the other, even riskier, financial juggling activities. Sometimes those do chalk up huge gains. But they also can cause enormous, rapid losses that are horribly destructive.

Apparently banks, and the various government agencies that oversee them, and Congress (of course) haven't learned anything from the recent and ongoing debacle.

The fact that Eva and I had such a difficult time refinancing our house may seem like a little thing. But it is a symptom of a much more severe malady that is not merely getting in the way of our country's (and big chunks of the rest of the world for that matter) economic recovery, but setting us up for the next big fall.

14 November 2011


I've had cause over the past couple of months to think about my past more than usual.

On the personal / mortality side of things: one aunt died. Another has been diagnosed with what is possibly her terminal illness. It was the seventh anniversary of my mother's death. For the first time in my life I spent a week in the hospital due to something that could have killed me.

There aren't a whole lot of pictures of me from my first nine years of life. That's because November 7 this year was the 50th anniversary of my family's house burning down in a wildfire that gave us little time to evacuate, much less take much of anything with us. The only thing other than memories that I have left from the years before the fire is this:It's the cooled puddle of a silver or steel or some kind of vase that melted in the house and that my mom scraped up from the ashes when we were allowed to go back and sift among the smoldering ruins.

Then there's the personal / political side of things. Occupy Wall Street makes me think back to the days when I was a student radical in the '60s and '70s. I've been watching the new History Channel show "Vietnam in HD." Growing up when I did - a teenager in the late 1960s, eligible to be drafted in 1970 when kids just like me were being drafted in large numbers and sent to die in Vietnam - did a lot to make me the person I am today.

I went to a book launch party not so long ago for an anthology of short stories called "Send My Love And A Molotov Cocktail," edited by my pal Gary Phillips. One of the contributors, John A. Imani, had written a story set during antiwar demonstrations at UCLA in 1972. I'd also been at those demonstrations.

The launch was held at The Southern California Library, "...a people's library, dedicated to documenting and preserving the histories of communities in struggle for justice..." I poked around in the library's archives, just looking at the labels on the boxes of collected materials. There were a number of collections that were familiar to me, that possibly even hold leaflets or newsletters or posters or articles that I wrote, edited, distributed or hand cranked the mimeograph machines to help print.

I have my own collection of printed materials from those days. I plan to go through them and see if the library wants any of them. And I've got a collection of "buttons" that I hadn't looked at in many years until I just now took this picture of some of them:It pleased me to think that some part of my past might be preserved in that collection, that I may have contributed in some very small way to the historical record. And I do recall those days fondly, though I think of them as neither the good old or bad old days, just as days like any other - a mix of good, bad and mostly just getting by.

I like to think that I lack nostalgia, that in my mind the good days are still ahead of me, that the next book I write is going to be my best, that I get handsomer and more desirable with age - okay, well, maybe that one not so much, there's only so much self-deception that even I can muster.

Nostalgia is almost always made up of convenient lies and selective truths. It is good to remember the past - ideally with all its blemishes, failures, ugliness, beauty and triumphs acknowledged - but it is seldom of any use to dwell in it.

If you're reading this and hoping that I'm somehow going to wrap it up in a way that makes sense of it, that has something significant to impart, sorry you are S.O.L. The only lessons I've learned from any reflecting I've done on my past, the past of others or the past in general are that there is nothing whatsoever that can be done about it and that you can't let it get in the way of trying to do things better in the future.

Oh yeah, and that the future is pretty much out of your control, too, but you can't let that stop you from trying.

I guess I just talked myself into getting back to work on the next book.