A seed planted by a man named Martin.

On April 4, 1968, almost forty years ago, Dr. Martin Luther King Jr. was assassinated. This month, on January 15 1929 he was been born in Atlanta, Georgia, and the country that witnessed his long dedication and arduous path to martyrdom that has become his mark on this earth stops for a few hours to light a candle on the third week to remember him with respect.

I don’t believe I am capable or even authorized to write about the life of this man and reflect about the true measure and dimension of his life. But that is OK. Others have done so with more prose and flavor than me, perhaps with more right as well. But I think I can share a thought or two with my readers about a life that has become a beacon of hope for humanity, a beacon that was extinguished by the hand of a criminal who represented the worst in all of us, but a beacon that continues to shine to this day.

It is easy to reflect on his life and lose the real meaning and reach of what he did. One remembers the tired and angry faces of those who marched with him and may reach the erroneous conclusion that he was fighting a black cause alone. Don’t get me wrong, his immediate goal was to raise the living condition of those who shared his roots and his race, but his train was not meant to stop at that station. His goal was to liberate all of us. I don’t care if our skin is white or brown, if we suffer an injustice he died for us as well.

This month, as we sit and watch the normal political controversies that surround our nation’s electoral primary process, we see a new nation, the 21^st Century America, taking shape in front of us and we have no recourse other than to marvel at the vision that sustained Dr. King on his way to eternity. We now know what maintained his hope: “I have a dream,” he said in Washington on August 28, 1963, “that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” For the first time in our history we see an African American and a woman vying for the top leadership position in the country and we believe it is possible that they might succeed.

Of course, there are still those who hate and wallow in the mud of prejudice because they have no other reason to express their weak beliefs and confuse tradition with inaction. But those sands of ignorance and misunderstanding are being wiped out by a tsunami like ocean of faith in the American future. And there are many more that are willing to raise their eyes and see now the top of the mountain that became Dr. King’s sole revelation at the time. We don’t know the details of where this newfound hope is going to lead us. We cannot fathom the end of the road in terms of personalities, actually that is irrelevant, but we are absolutely sure that this new paradigm is the harvest from the seed planted by a man named Martin who was not afraid to die for his dream. Death, after all, befalls us all sooner or later; immortality only a few.

And that is my point of view today.

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La semilla sembrada por un hombre llamado Martín.

El cuatro de abril de 1968, casi cuarenta años atrás, el Dr. Martin Luther King fue asesinado. Este mes, en Enero 15 del 1929 había nacido en Atlanta, Georgia, y la nación que fue testigo de su larga dedicación y ardua senda al martirio que se ha convertido en su huella en esta tierra se detiene por unas horas para encender una vela en la tercera semana del mes y recordarlo con respeto.

No creo que soy capaz o siquiera autorizado para escribir sobre la vida de este hombre y reflexionar sobre la dimensión verdadera de su vida. Pero eso está bien. Otros han hecho lo mismo con mas prosa y sabor que yo, tal vez con mas derecho también. Pero yo creo que puedo compartir un pensamiento o dos con mis lectores sobre una vida que se ha convertido en un faro de esperanza para la raza humana, una luz que fue extinguida por una mano criminal que representaba lo peor en todos nosotros, pero un faro que sigue brillando hoy día.

Es fácil reflexionar sobre su vida y perder el significado verdadero de lo que hizo. Uno recuerda las caras cansadas y enojadas de aquellos que marchaban con él y podemos llegar a la conclusión errónea de que lo que hacia era luchar por una causa negra solamente. No me entiendan mal, su objetivo inmediato fue mejorar las condiciones de vida de sus raíces y su raza, pero ese tren no se suponías que parara en esa estación. Su objetivo fue liberarnos a todos nosotros. No me importa si nuestra piel es blanca o carmelita; si sufrimos una injusticia él murió por nosotros.

Este mes, mientras nos sentábamos y observábamos las controversias que rodean al proceso de nuestra primaria electoral contemplamos una nación, los Estados Unidos del siglo 21, que toma forma en frente de nosotros y no tenemos otro recurso que no sea maravillarnos de la visión que sostuvo al doctor King en su camino a la eternidad. Ahora sabemos que mantenía esa esperanza: “Yo tengo un sueño,” dijo en Washington en Agosto 28 de 1963,”que mis cuatro hijos pequeños algún día vivirán en una nación donde no serán juzgados por el color de su piel sino por el contenido de su carácter.” Por primera vez en nuestra historia vemos a un Americano Africano y a una mujer compitiendo por la posición mas elevada de nuestra nación y creemos que es posible que puedan ganar.

Desde luego, todavía existen algunos que odian y se revuelcan en el lodo del prejuicio porque no tienen otra forma de expresar sus creencias débiles y confunden la tradición con la inacción. Pero esas arenas de ignorancia y falta de entendimiento están siendo eliminadas por un tsunami oceánico de fe en el futuro de los Estados Unidos. Y hay muchos otros que están ansiosos por alzar sus ojos y ver el tope de la montaña que se convirtió en la única revelación en aquel momento para el Dr. King. No sabemos cuales son los detalles de la dirección en que esta nueva esperanza nos va a dirigir. No podemos definir el final del camino en términos de personalidades, en realidad es irrelevante, pero estamos absolutamente seguros de que este nuevo paradigma es la cosecha de una semilla plantada por un hombre llamado Martin que no temía morir por sus sueños. La muerte, después de todo, nos afecta a todos mas tarde o mas temprano; la inmortalidad solo a unos pocos.

Y ese es mi punto de vista hoy.

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A point of View - Enron V: the home mortgage crisis. Part II

In our previous edition we started on the road to a new Enron type metaphor regarding the current crisis in the housing industry. Today we continue with a bit of history back then that should help us understand where we are right now and why. History, as you know, is a great teacher that we should listen carefully, although sometimes we don’t.

Circa the summer of 1976. The place: the Washington Hilton Hotel, the same where a few years later there would be an assassination attempt on the life of former President Ronald Reagan that fortunately failed. The event: the American Bankers Association’s (ABA) Operations Convention. Witness to the event representing his banking employer: Yours truly. Just for the record: I had more hair and it was darrker. Don’t we all?

The Operations Convention of the ABA was attended by the banking folks who make sure that your checks and money get where they are supposed to go and no place else. Approximately five hundred bankers from all over the nation were sitting enjoying lunch, getting fatter and listening to the keynote speaker of the moment. That is a problem with keynote speakers: they get paid but no one remembers their names after a while so I don’t recall who it was. Do you remember the name of your school graduation speaker? No problem with me. Give me the dough and forget the spelling of my name. I would not be offended.

As we finished listening to one more of those presentations and tried to leave the large banquet hall to attend several workshops we were shocked to find that the doors had been locked from the outside by a group of community activists who had placed red ribbons around the doors and would not let go until they had an opportunity to sit down and discuss their community economic grievances with the president of the ABA.

Why, would you say, did these folks resort to such severe tactics to talk to the top banking honcho? The answer, not curiously unconnected to the red color of the ribbons placed around the doors ,was the alleged practice of “redlining” by most of the banks represented there. This term, so we know what we are talking about, was a name given to the common practice by bank officials and risk managers to circle certain areas of a map of the city where they conducted business with red ink to indicate that the folks who lived there, worked there or did business there were excluded, “redlined” so to speak, from banking services. And interestingly enough, it happened also that those disqualified folks were typically living In the inner cities, were minorities or elders who could not afford to move out and follow the white flight to the suburbs.
To make the bad case worse, banks were willing to accept deposits from those residents or their local or state government institutions, but when it came time to lend the money back to them, well, that was much different. I think you get the picture and these community activists were not a happy bunch at all. The end of the story was, of course, that the president of the ABA talked to them and we were allowed to return home to our honeys. No one was arrested or hurt. The entire episode had been a public relations campaign on the part of the activists to deliver a message to us not to continue to do business as usual.

And not only did the bankers listened, but so did the Federal Reserve Bank, the Federal Deposit Insurance Corporation, the State Bank Commissioners and Congress. The result was the 1977 Community Reinvestment Act (CRA) that forced banking institutions to leverage their financial relationships with their neighbors or face numerous penalties and prohibitions to open new branch offices or expand and merge. As a result of that law many community groups sued large banks and won and the face of bank credit in the United States changed forever. What we see today in this new crisis is the same face, different features.

Of course, my life changed as well. As soon as I returned and told our Chief Executive Officer about my unpleasant hostage experience and the non-business mood of the activists in the convention hall he decided to appoint a bank vice president to the newly created job of Community Reinvestment Officer. Yes, you guessed right: it was me. For the next several years I spent many hours of my professional life meeting folks who had one or another beef against the banking system and, I hate to admit, were quite correct in their position.

It is not difficult to see what was going on. Minorities did not have easy access to banking facilities. If you were getting Social Security your money could not be deposited in your banking account because you could not afford one. The Social Security would have to mail you a check, thus delaying collecting your meager pension or risking theft of the check from your mailbox or, in the best cases, cashing the check in a check store that would charge oppressive fees. Older folks got a triple whammy: small pension amounts to begin, late check cashing and high check cashing fees. It may have been called social, but as far as security was concerned it was a joke.

Those were the lean years. Credit was scarce and banks had to pony up with new services to regain the confidence of their constituents. “No-fee” checking accounts for retirees and minors; low interest loans for home ownership and car loans. The computer credit “expert programs” that made automatic decisions on credit based on programmed discriminatory practices had to be modified to the point where a computer rejected application for credit had to be passed on to a human to review the reason and in many cases reconsidered. And most important, no redlining. Whether you lived in a poor neighborhood, were a single parent, that was no reason to deny you credit. And if you had no paycheck to prove your income, having a cash job would be sufficient. At that point things started to move on.

We will return in our next issue to consider the next phase of the crisis. In doing so we will try to explain the difficulties in solving this crisis.

But that is, for now, my point of view. In the meantime, have a great holiday season.

By Paul V. Montesino, PhD, MBA

A point of View- Enron V: the home mortgage crisis.

As the holiday season approaches, we know that sooner or later we will witness a reenactment of Charles Dicken’s “A Christmas Carol” with all of what that beautiful story brings to our enjoyment of the season. And part of that powerful story is the confrontation with the ghosts from Christmas past lodged in the nightmares of the mind of Mr. Scrooge. Well, this season we are encountering the specter of another past in our own minds. This one is called Enron. And there is one big difference: Enron was a conspiracy of a few against a crowd of the many but this one has the characteristics of being played by and entire chorus of deaf toned singers that suddenly found themselves out of synch with musical reality. Follow my tune please.

Five years ago, it seems only yesterday, we completed a series of four articles trying to explain to our readers how a conspiracy of intelligent financial folks who should have known better helped create a financial nightmare that affected the lives of many blameless Americans. Whether losing their jobs and careers, or their much needed funds for retirement and college tuition for their kids, I am sure that by now those folks who lost so much in the collapse of the Enron company still show the scars of the wounds created by greed and fraud. Now, I am afraid, “the monster has resuscitated and is baaaack!

Every winter, like clockwork, we get the sound advice to get a flu shot to protect us from a new strain of the influenza virus. I have the suspicious feeling that these newfangled viruses are actually created by some retired marketing genius from Detroit who used to work for the automobile industry and likes to come up with a new virus model every year to make money. And, not to outdo those creative folks, it is possible that the new Enron bacteria has resurfaced as a new stronger strain of stupidity and greed as well. The new version is called “the home mortgage crisis.”

The basis.
One of the biggest if not the biggest of our life dreams is home ownership. When you finally can call the place where you live your own, you stake your possession on a piece of land of this huge continent of the free. You have arrived and people give you a seal of community approval. A home is a man’s castle so to speak and is, of course, a woman’s also. Home is where we belong. The responsibilities you acquire with that deed are large and proud.

Of course, there is a big difference between owning a home and owning a mortgage. With the latter you owe a large part of what you own; with the former it is the other way around but, who cares? Not too long ago, our President boasted that home ownership in the United States was on its way up during his administration and he was mighty proud of it. Of course, Mr. Bush was not keeping his eye on the housing ball any more than he has done on other issues that have become traumatic during his tenure and this foul ball hit the bleachers indeed. It seems that the number of home foreclosures during his administration have also hit the ceiling, but he would not own to it. But enough of word games. This article is not about the President; his home is secure.

The current mortgage crisis is the result of released market forces that collided like converging multiple trains at a central crossing: increasing home property values and increasing property equity (the difference between what the home is valued at and what you owe the banks,) a rising appetite for all kinds of consumer goods, the availability of easy credit, the proliferation of credit cards, unbridled appetite by mortgage banks, mortgage lenders and investors. And last, but not least, an immature conviction that all of those factors would eternally go up and never come down. There was no ceiling to hit.

Unfortunately the balloon busted precipitously and we are now witnessing a large size financial debacle that has no end in sight. We will try to address each of the factors listed above in this and other future articles and then try to present a summary of what we see happening in the horizon. But in the meantime, however, have yourself a good weekend and relax. This problem is going to take much longer to be fixed than you will have to wait for my writings. These buzzards are going to be flying around us for a very long time indeed. Promise.

And that is my point of view today.

By Paul V. Montesino, PhD, MBA.