[Trigger warning: This post has not been vetted by the Sensitivity Police. If you are offended by sarcasm, irony, satire, mockery, cynicism, acerbity, disdain, jest, banter, and other features occasionally found in normal, interesting, adult repartee, please discontinue reading this post, and find a safe space to curl up with a warm blankie.]
A Precocious Eight-Year Old. The Q-Law website site is now celebrating its eighth birthday. When I first began the site, much of its content was informational and educational, e.g. articles on broker risk management, real estate basics, title insurance explained, etc. Essentially it was a compilation of many years of my real estate teaching and training. However, when it came to my blog site, where I was free to engage in the occasional rant, I was initially tentative and uncertain, not wanting to step on toes. Fortunately, that hesitation soon disappeared. Q-Law is now a precocious eight-year old, and relishes stepping on toes.
Big Bank Muse. Beginning in 2010, I became emboldened to comment on what I was observing in the banking and finance industry, in which loans were knowingly made to unqualified buyers for the purchase of homes they could not afford. I must admit that stepping on the toes of Big Banks, like Goldman Sachs and big lenders like Countrywide, came with little risk of offending the sensibilities of most readers, as the industry had already developed a reputation as an institutionalized version of Bernard Madoff.
Big Government Muse. Next came the government’s overreaction to all the years of financial abuse that had been occurring under the collective noses of the U.S. Treasury Department, the Securities and Exchange Commission, FINRA, the Federal Reserve, the FDIC, and the Comptroller of Currency, not to mention their counterparts on the state level. One got the impression that up until 2007/2008, U.S. regulators had the same approach to regulating as Captain Renault had toward gambling in Casablanca.
As the regulatory pendulum swung wildly toward increased control – as if there were already not enough controls – the political left rushed to create the Dodd-Frank Act, in response to Rahm Emanuel’s credo, “Never let a good crisis go to waste.” The result (in my opinion) was to create a massive compendium of new laws, metaphorically reminiscent of the 1958 sci-fi flick, The Blob, consuming everything in its path. You could run, but you couldn’t hide.
Lest anyone suggests the above description is political hyperbole, let me point out that for the past several years, the international law firm, Davis Polk, has been keeping a Dodd-Frank “scorecard”, documenting the government’s success (or lack thereof) in promulgating the rules necessary to give life to this behemoth. Here are the figures as of July 19, 2017, the seventh anniversary of the legislation:
- “Of the 390 total rulemaking requirements, 280 (71.8%) have been met with finalized rules and rules have been proposed that would meet 30 (7.7%) more. Rules have not yet been proposed to meet 80 (20.5%) rulemaking requirements.
- Over the past year, 6 rulemaking requirements were met by previously proposed rules that were finalized.
- As of the seventh anniversary, 26,430 pages of Dodd-Frank-related rulemaking have been published in the Federal Register – 15,363 pages of final rule text and explanation, and 11,067 pages of proposed rule text and explanation. An average Federal Register page has approximately 1,010 words, so regulators have formally published more than 28 million words about Dodd-Frank-related rules.”
I submit that even the most partisan of observers would have to admit that a 2300-page bill, with 26,000+ pages of regulations – and counting – that cannot be fully implemented seven years after its passage, may be just a tinch too cumbersome.[1] By comparison, another partisan-backed bill, the Affordable Care Act, was only 974 pages. Both of these laws were enacted in 2010, at a cost in trees that is still being tallied.
In Search of Another Muse. So now, after Big Bank and Big Government hubris have been sufficiently contained, I am in need of a new Muse for 2018. However, contrary to my past cynicism, where I would metaphorically poke my finger in the eyes of banks, bureaucrats, and buffoons, I suspect 2018 will be different.
Following the 2016 election, and throughout 2017, there has been a palpable upswing in confidence about the future; people, professions, and industries, are no longer frozen by inaction for fear of regulatory overreach, and uncertainty about the future. So in place of the occasional rant, dripping with sarcasm and disdain, I hope to focus more on “the glass being half full”. Topics such as the economy, finance, real estate, and housing, will be given more attention, as there is much to discuss, and it’s generally upbeat.
However, I reserve the right to post an occasional tirade about the news media and social media, the twin Sirens of todays’ society. The former used to be reverently referred to as “the Fourth Estate”, assuming a noble role, dedicated to protecting the people from government abuse. In my opinion, that is no longer the case today, and has not been the case for several years. But since the 2016 election, the mainstream press has given up even the façade of neutrality. This is most apparent over the Internet, but is also obvious in the print media, where front page stories are barely disguised opinion pieces. As a result, it is difficult today to believe anything touted as “news”, unless one first vets the author, their political bent, prior articles, and their reputation for intellectual honesty.
Equally problematic, but more insidious, is social media, since it preys on the gullible, needy, immature, uninformed, and impressionable. This is not to say the prior adjectives describe all of its users – just those it preys upon, i.e. those who are sufficiently dependent to guaranty its exponential growth.
With social media, virtually everything is opinion, and what validates it as “newsworthy’ is little more than a popularity contest (aka “going viral”) as measured by the number of hits, tweets, or likes, the author receives. Fracturing Karl Marx’s quote about religion, today, social media has become “the opiate of the masses”. And although I’ve not demographically researched the issue, when I see mesmerized adult pedestrians refusing to even look up from their smart phones while crossing a street, I’ve concluded that this addiction is not just limited to the young and impressionable. In all seriousness, the dependency on social media appears to have created an out-of-body experience for some, such that they depart the self, and are transported to another level of reality. At some point this cannot be a good thing, as it replaces independent thought with group-think, which appears to play a part in the death of free speech, discussed here, here, and here.
Going Forward. So for 2018, my mission and Muse, will be to follow, discuss, and undoubtedly editorialize, about developments in real estate, economics, and finance, as we move from an era of economic inertia, to one of growth and optimism. And with an occasional detour for a cathartic rant over one thing or another. Just because. ~PCQ
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[1] It passed the House without a single Republican vote and received only three GOP votes in the Senate. Wall Street Journal, July 20, 2014.
