President Bush: Government Bailout Necessary…!

September 24, 2008

…but as the President speaks and says that “our entire economy is in danger” – unless you pass my $700 billion bailout proposal – the question I ask is – is it really $700 billion or will it (in the end) be more like 3 Trillion?

According to CBS News: Speaking in dire terms, President Bush on Wednesday warned Americans and lawmakers reluctant to pass a historic financial rescue plan that failing to act fast risks wiping out retirement savings, rising foreclosures, lost jobs, closed business and “a long and painful recession.”

Now by no stretch of the imagination am I making light of one of the most serious financial issues of our time, but I keep hearing Forrest Gump in my head saying, “Now I know I’m not a smart man, but…”  Well the “but” is when has a government financial projection ever been what they projected it will be – ever?

Bush is right in that we may not only be facing a recession but the possibility of a full fledged depression is not that unlikely.

He spoke just after inviting Democrat Sen. Barack Obama and Republican Sen. John McCain, one of whom will inherit the mess in four months, and key congressional leaders to an extraordinary White House meeting Thursday afternoon to hammer out a compromise.

“Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold,” Mr. Bush said in a prime-time address from the White House East Room that he hoped would help rescue his tough-sell bailout package.

The question remains – is the actions that are proposed too little too late.  Every presentation on ethics I make has one central theme – EVERY CHOICE HAS A CONSEQUENCE.  We, as a country, relished in the glow of a robust economy balanced on the back of an illusion.  We had leadership from both parties and substantial financial institutions who seemed to be more concerned about growing a false economy than taking the measures that all agree today would have made sounder financial sense.

As an example – today I had a conversation with a Realtor (as I am in the housing market as I write this).   He suggested that mortgage rates would never be lower and that after the bailout – the housing market pricing would stabilize hence home prices are at their bottom.  I must admit (while he may be right – guess there is always that possibility) I had to laugh.  Now, I don’t know about the interest rates, but this I believe – housing prices will continue to slide for two very clear reasons:

(1) the number of people who can qualify for a mortgage is shrinking even as we speak.  Fewer people are finding increases in their income and many should not have qualified in the first place – hence a smaller population of potential buyers.

(2) an over abundance of inventory.  Now I just sold my home in Texas within three days after it was listed for above asking price.  For that I am thankful to God and feel blessed.  But, as I moved to a different part of our country I found that it is a buyers market.  More homes than buyers makes that true.  The other part that I have found is builders and Realtors are having a difficult time adjusting their thinking about pricing – they still think it is worth what they thought it was.  Yet, I’ve seen homes on the market for now over 600 days with no purchase prospect in sight.

But – the realtor told me that we have to pass this “bailout” otherwise, we will face a disaster.  Afterall, he stated, “our economy is built on the ability to borrow against our house.  If you need to buy something new or put a kid through college – you use the equity in your home as a second mortgage to pay for it.  Otherwise, how else would you get the money?”  He made that statement and ask that question with sincerity.  What was amazing was – he could not conceive of another way to meet financial obligations.

Perhaps we have forgotten sound financial principles.  As a business ethics speaker, I admit I forgot those principles in my past and the price that I paid was significant.  We should pray that the bailout works – for the cost of failure will be much higher than most of us would care to dream.

QUESTION: Do you support the “bailout” and why?

Maverick Residential Mortgage – From #1 to Implosion In ONE Short Year! Comments By Ethics and White Collar Crime Speaker Chuck Gallagher

February 10, 2008

I recall with vivid detail my first meeting to a wonderful organization – Success North Dallas. As I entered the room as a guest I noticed with keen interest the gathering of a large group of movers and shakers in the greater Dallas, Texas area business community. Frankly, I feel pleased to have been invited.

That particular meeting recognized a young man who caught everyone’s attention – Bob Johnson – the Chairman and CEO of Maverick Residential Mortgage – who had just been named by the Dallas Business Journal as one of the top 100 fastest growing businesses in the area.


News Release from 2007: Maverick Residential Mortgage, Inc. was selected as 48th highest winner of the 2007 Dallas 100 Entrepreneur Awards at an impressive awards banquet Nov. 7. Executives and representatives of Maverick learned of their impressive finish at the gala held in the Morton Meyerson Symphony Center in the Arts District near downtown Dallas.

Sponsored by the Caruth Institute for Entrepreneurship at the SMU Cox School of Business, the 2007 Dallas 100 Entrepreneur Awards honor the 100 top entrepreneurial businesses in the Dallas market.

Maverick Mortgage, one of the nation’s fastest growing and most dynamic privately held firms, was named the number one ranking company among the 60 fastest growing firms in Collin County last May.

“Barrett Owens and I are indebted to each and every one of our executives, loan officers and support professionals in all of our branches nationwide and in our corporate office,” said Bob Johnson, Maverick’s Chairman and Chief Executive Officer. “To finish as high as we did in the mortgage profession that has seen more than 180 companies close its doors is a tribute to our people’s commitment to fair business practices, dedication to doing their jobs to the best of their ability and beyond, and to their undying accountability to customers and industry partners such as builders and realtors. I hope that every Maverick holds his and her head high in the aftermath of this impressive ranking.”

Now, less than one year later CBS 11TV reports that Maverick has put out an official statement that informs us of the complete shutdown, 401K information to former employees, with a back-date to January 16th.

Dated January 26, 2008 – “Maverick is closing and your employment is terminated effective January 16, 2008.”

What Happened? According to a report from Jack Fink – CBS 11 reporter the following quotes were used in an article (a full copy can be see through the above link):

Maverick CEO Bob Johnson acknowledged the company couldn’t meet its payroll because of major cash flow problems. He said they discovered the cash crunch last week.

“We had no clue it was coming,” said employee Greg Baker. He said he’s beginning to wonder how he’ll put food on the table for his wife and three young sons.

“Everyone was stunned. There were tears. There was shock,” he said.

“We’re definitely trying everything we can to be able to handle that and that’s part of where we are right now — is getting our arms around how much cash we do have available for those individuals,” said Johnson.

Toward the end of January it was reported that both federal and state investigators are looking into why Maverick Residential Mortgage shut it’s doors.

According to a CBS 11 report:

In a letter to employees dated Jan. 25, company CEO Bob Johnson said that the payroll could not be funded because Maverick Residential Mortgage has “experienced unforseen business circumstances” and that their “employment is terminated effective Jan. 16.”

Now, the company’s CEO has asked federal and local law enforcement to investigate. Johnson said that the issue will not be resolved quickly, but he is committed to clearing Maverick Residential Mortgage’s name.

Back To Our First Meeting. Like most I was startled by the announcement. However, I recall the meeting with Bob Johnson at Success North Dallas. We were introduced and politely he asked what I did. My reply – I help companies avoid white collar crime. As a business ethics speaker and white collar crime speaker – my job is to help companies understand how white collar crime takes place and implement programs to thwart fraud like that from happening. His response – “Hum, we’ve got a strong company, but maybe there’ll be a need for an ethics program some day.” And with those comments, he moved to another participant in the meeting, all of whom seemed to be lauding praise on his company and accomplishments.

Too Late! As a business ethics and white collar crime speaker, ( I find that all to often, corporate executives seem to think that actions like what Maverick Residential Mortgage experienced won’t happen to them. Every choice has a consequence. While fraud happens – there are steps that can be taken to minimize the likely-hood of white collar crime closing the doors of your company. While I regret what happened and the casualties that followed, I wonder if the outcome could have been prevented.

For now, law enforcement will have to do its job and there will clearly be more to come.

Your comments are welcome!

Ohio Foreclosure Crisis – We Need Help – Business Ethics Speaker Chuck Gallagher Comments

December 21, 2007

Texas Motivational Speaker, Chuck Gallagher 

According to the Wall Street Journal Law Blog (a wonderful resource), Peter Latman issued the following report:

How bad is the housing crisis in Ohio? So bad that the state’s chief justice is begging lawyers for help, and the state treasurer urges, “To anyone who wants to make a difference in the world, this is a defining issue of our time.”

Foreclosures have spiked in the Buckeye State, clogging the court system. And yesterday, Chief Justice Thomas Moyer urged lawyers to offer pro bono services to distressed homeowners, according to this NLJ story. “This is more than a legal issue; this is a social issue,” Moyer said, according to a news release. “People’s lives are being seriously affected and the legal community must respond with action.”

A group of lawyers met yesterday to discuss the creation of programs to help train lawyers with limited or no foreclosure-law experience. The Legal Aid Society of Southwest Ohio has estimated its attorneys have already helped save as many as 400 homes this year. And the Supreme Court has begun working with local courts to offer mediation services between lenders and homeowners to avoid foreclosures.

Ohio has among the highest foreclosure rates in the country. In 2007, foreclosure filings are up nearly 68% from last year, according to RealtyTrac.

Lawyers, help us out here. We know the great pro bono work lawyers do in areas such as the death penalty, natural disasters and immigration. But does the Chief Justice’s call to action resonate with you? Is the mortgage crisis, as Ohio’s state treasurer says, the defining issue of our time?

The Wall Street Journal asks if this is the defining issue of our time?  Probably not, but it is a crisis.  With mortgage fraud abounding and having been reported in this blog – it is evident that when money is too loose without appropriate controls – consequences will follow. 

Every choice has a consequence.  While, as a country, we enjoyed easy credit and appreciation in equity for homes, that equity can reverse and homes can be lost.  It’s time for reasonable controls to make sure that unsuspecting individuals not fall prey to preditory lending practices.

As a professional speaker, I speak to groups about choices and consequences along with ethics and fraud.

If you feel you’ve been the victim of mortgage fraud…feel free to comment.