Fixing the Mortgage Mess

I'm not very optimistic about fixing the mortgage mess. It looks like no one has any really good ideas and the politicians are not willing to accept the reality than the pre-bust housing market was artificially created by easy credit, speculation and a whole transaction fee industry willing to pass the problem on to the next guy. For the foreseeable future the housing market will be smaller, slower and more conservative.

Early experience with private workouts is not very encouraging. It appears a large number of people who get workouts soon fall behind again and eventually end up in foreclosure anyway. Not long ago the president of a local bank was on the radio expressing his concern that five states are causing most of the problem and that even there traditional fixed rate mortgages were very stable.

Republicans seem stuck on the "Moral Hazard". It also seems to be the basis of most of the opposition. No one wants bad or reckless actors to benefit from their own reckless actions.

Democrats seem stuck on giving something to anyone to save everyone. If you want to give me some money to help my neighbor, I'm ready to take it.

I have a suggestion (actually two).

First, instead of offering to simply "keep people in their homes" by letting someone else pay for part of their house, how about offering to sell people in trouble a house, but require they buy a house they can actually afford. The government then has a house it can sell to someone else, possibly at a loss but at least there will be activity in the market and no one gets something for nothing.

As an alternate, I suggest establishing government insured shared equity mortgages, and converting as many loans as practical to this type of loan. This way the government has a method of recouping at least some of our money they spend by capturing it when the house is sold in better times. The potential appreciation of the underlying asset will allow the government to eventually sell the mortgage to recoup at least some of our money sooner.

In both of these instances you avoid a large part of the Moral Hazard because the people getting help have given up something of value for that help without wrecking their lives. Hopefully learning something in the process.

Cellophane Mayor

Recently our mayor declared;

“I’m done. I have implemented transparency.”

-- New Orleans Mayor Ray Nagin

He's so transparent everybody sees right through him.

We citizens of New Orleans have been treated to a long running soap opera involving, the Garbage Guru, The Head Witch, Trashanova and the Opaque Cellophane Mayor. It is ridiculous, absurd, humorous and all the time tragic. A Greek chorus of people have called it Theater of the Absurd. All it would take is for someone to act like an adult, but no one seem to be able to.

It's all the sadder because it represents nearly every thing that happens in New Orleans city government, usually behind closed doors.

Farewell Bob.

New Orleans first Inspector General resigned today and we are the worse for it.

Robert Cerasoli, Former Inspector General

I wish him well, and hope he overcomes his health problems.

Mr. Cerasoli was dedicated to establishing the Inspector General's office on an solid footing, independant of the incestuous relationships that infest New Orleans.

Like many people in New Orleans I had high hopes for the IG's office. I had a few personal contacts with Bob Cerasoli, socially, randomly and electronically, they gave me even more hope. He always seemed completely focused on his mission, perhaps a litle too focused.

I have always thought the most critical test of the Inspector General's office would be when Cerasoli moved on. If the ancien régime can control the sucession, they can effectively neutralize the Inspector General, much like the history of the State Inspector General or the now defunct Office of Municipal Inspection. I had hoped that Cerasoli would be around to hand pick his sucessor, sometime after the next mayoral election. That just didn't work out.

Our next challenge is to replace the irreplaceable. Perhaps it's a blessing that the people who hired Cerasoli are still in place and those he hired and trained are the nucleus of a professional staff. It will be hard to hire a political flunky to replace him, it will be harder to to find someone with his qualities.

Honor among theives?

Not long ago Oliver Thomas upped on the "Don't Snitch" pledge and refused to even talk to DoJ officials after making very pubic admissions of guilt and pledging to make it right. He isn't even a good "Stand Up Guy". A "Stand Up Guy" would have "taken the fifth " from the beginning and "taken the fall" for his crew.

I am in many ways antique, I believe in nineteenth century ideas of honor, like the VMI honor code which says simply,

A cadet does not lie, cheat, steal, nor tolerate those who do.

Similarly the United States Military and Air Force Academy codes are virtually identical.

The college of William and Mary established a similar code in 1779 and during orientation every student pledges;

As a Member of the William & Mary community I pledge, on my Honor, not to lie, cheat, or steal in either my academic or personal life. I understand that such acts violate the Honor Code and undermine the community of trust of which we are all stewards.

At the beginning of every elected official's term they are "sworn in". The President takes an oath which says,

I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.

I wonder why we, in Louisiana and New Orleans don't enact a similar tradition, making it an offense, punishable by summary dismissal, for any elected official not to "rat" on anyone who either makes an illegal offer or takes one.

As an Servant of the People of the State of Louisiana I pledge, on my Honor, not to lie, cheat, or steal in either my public or personal life, nor tolerate those who do. .

I am not naive enough to believe that the crooks won't take the oath and snicker up their sleeves at the fools who elected them, but at least we could employ "secret shoppers" to ferret out the potential crooks.

Boyz and their Toyz

Recently there has been a sort of mini brouhaha over Inspector General Robert Cerasoli's requisition of some fire arms.

Robert Cerasoli, Inspector General

The initial report did raise my eyebrows, but the TP story quoting Odom and reminding people that the Police Monitor was under the IG's office put it in perspective for me.

How many NOPD officers have been convicted of murder?

Two I can remember,

Len Davis and

Antoinette Franks.

Were there others? There were other officers who have been implicated in a number of serious and violent crimes including beatings and rape.

C. Ray Nagin and Chief Riley

Considering how much fun Ray and his BFF AKA 'da Chief had playing with their machine guns I think he's just jealous Bob is going to get his picture in the paper with a machine gun.