“I’m Sorry Mr. Bernanke, But You Don’t Qualify For A Loan”

Little Girl‘The former Federal Reserve chairman, speaking at a conference in Chicago yesterday, told moderator Mark Zandi of Moody’s Analytics Inc. — “just between the two of us” — that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.” When the audience laughed, Bernanke said, “I’m not making that up.”  ~Oct. 3, 2014 Bloomberg.com

In an October 3, 2014 post on Bloomberg.com, here, it was reported that former Fed Chair, Ben Bernanke, was turned down for a loan to refinance his home.  This is a guy that now pulls down $250,000 a speech.  What’s up?

My take is that apparently Mr. Bernanke has not been reading from the Politician’s Playbook on Crony Capitalism which explains how our nation’ leaders meet their housing needs.

  • Our esteemed president learned long ago, if you want to get cash to expand your property, you consort with known sleaze balls and crooks. In 2005, Mr. Obama, then a junior senator and the wife of now-convicted felon, Tony Rezko, bought adjacent properties on Chicago’s South Side.  The deals closed the same day, and a few months later, Mr. Obama quietly bought a slice of the Rezco property to enlarge his existing $1.65M estate.
  • While former Connecticut Senator, Chris Dodd, co-author of the much reviled Dodd-Frank Act, was denouncing the “reckless, careless and sometimes unscrupulous actors in the mortgage lending industry” he was, at the same time, getting a sweetheart loan from Angelo Mozilo, president of Countrywide Financial, the poster child for reckless lending during the buildup to the financial crisis. As a member of the exclusive “Friends of Angelo” club, Sen. Dodd received a break on his interest rate and loan fees. [See story here.]  When he was caught with his hand in the metaphorical cookie jar, he angrily denied knowingly participating in Mr. Mozilo’s VIP Program, but later, in the face of mounting evidence to the contrary, claimed he thought the special treatment was just a “courtesy.” Yeh, right….
  • In 1999, then President Clinton and current president wannabe Hillary Rodham Clinton, agreed to purchase a $1.7 million, 11-room Dutch Colonial home in Chappaqua N.Y.  That’s a pretty heady price for being “dead broke” as Mrs. Clinton declared to Diane Sawyer in a June 2014 interview.  So they did what any self-respecting politico does – they called in favors.   In this case, Terry McAuliffe personally guaranteed the loan, and deposited $1.35M with the Clintons’ lender, Bankers Trust, as security. [See story here.] For those unfamiliar with Mr. McAuliffe, he was President Clinton’s biggest fundraiser; has a long list of unsavory friends and business dealings; and proving that the Virginia electorate is largely clueless, he is now the state’s governor.[1]

Memo to Ben:  Be careful here.  Getting a loan the old fashioned way, i.e. ethically, could get you ostracized from the Beltway Crowd.

The real story behind the bank turn-down is quite simple: Computers just crunch numbers. Bona fides are irrelevant.  They’d likely turn down Pope Francis too.  In the case of Mr. Bernanke, since leaving the Fed, he was now “unemployed.” This disqualified him immediately.  Reputation, future earnings, and all the cache’ the Fed Chair brought with him, amounted to nothing in the eyes of the bank’s underwriting alogrithms.

I can’t help but suspect that the lender who turned him down, or another one wanting to curry favor with the economic glitterati, will quietly make things right. ~PCQ


[1] Terry McAuliffe always reminded me of an adult version of Eddie Haskell in the 50s-60s sitcom, Leave it to Beaver. He was the kid with an angle; polite to adults, but a weasel the rest of the time.