We've entered a fascinating new phase of the Great Recession, differing from those stale, dull times where the world economy teetered on the brink of meltdown. This fresh-faced new phase of the slow-mo Keystone Kop disaster is the "Fraudclosure" one. Instead of Banks just failing and a solid recession and semi-systematic unemployment, we have something new – all those mortgages bundled up in investments are a wee bit hard to foreclose on because of bad record keeping, fraud, and general incompetence.
Yep, first too many mortgages with questionable terms, and now that everyone wonders where their money has gone, no one is actually sure who to foreclose on legitimately. Illegitimately of course we're seeing some foreclosures, and that's making news enough to slap people in the face with the fact the bungling bureaucratic banker meltdown isn't done yet.
I could rant about the people behind this mess, about the need for better laws, and of course the need for jail time. But instead I'd like to rant on the fact some people are ignoring this.
You can't ignore something like this because it is going to affect your career. This is big. Just as big as the . . . last banking disaster.
First, you can't ignore it because this kind of messed-up maelstrom of monetary malfeasance can suck all of us into another recession. It doesn't matter if you don't have a house and don't work in banking, this is a case of people not knowing who owns what among a lot of questionable investments. That kind of destroys confidence in the economy and institutions involved in the economy – and if it turns out this lack of confidence is warranted and a lot of mortage-backed investments are total messes and no one knows who owns what, it could be a disaster for the global economy.
Secondly, even if the economy doesn't melt down, if you don't working banking, you may find it affects you negatively. A bank that melts down doesn't purchase new hardware, doesn't hire ad agencies, doesn't hire IT gurus – in short, doesn't put money into the economy where you may work. A bank that melts down may also mean your money goes into limbo and you're dealing with the FDIC.
Third, you don't have any direct work with banking, you may find you're doing peripheral work. A company providing hardware to a bank may be being your company's microchips, a bank may be providing benefits through the insurance company you work for, etc.
Fourth, if you end up needing loans, refinancing, etc. another bank crisis is going to make it pretty bloody hard on you to put the cash into your stash. When banks are busy trying to find out if they actually own what they thought they did, they're going to be a might distracted. This also slows down other people launching businesses, of course.
Fifth, if you work in law . . . put on your party hat. I've already heard the "Fraudclosure" mess called the Lawyer Full Employment Act. Go get 'em legal eagles.
So pay attention. This is not abstract and distant and boring, this is the economy and your life.
Also it gave us the cool term "Fraudclosure." Really, go on and use it . . .
– Steven Savage