One of the first, and critically important, things drilled into me by management when I first started selling equipment financing was determining who the actual owners were of businesses seeking our services. And, what was always to be avoided was any entity run by personnel who weren’t principals, or otherwise not having some kind of significant equity in the enterprise.
Business ownership, or other forms of equity, were significant because, in times of trouble those not facing financial loss or exposure had far less to lose than those who did. One's with perhaps nothing more than their jobs at risk, were obviously more likely to desert a sinking ship than those whose personal security might be severely reduced or even entirely lost.
Additionally, financial-decision making and operation was far more prudent and efficient among owners than employees in almost every case because “other people’s money” is always far easier to spend than one’s own.
I bring this up today because two more glaring examples were disclosed today, showing how financially frivolous, irresponsible and outright uncaring about taxpayer’s money this administration actually is.
According to Les Christie of KITV, Idaho Falls, ID via Drudge: ”Borrowers who received help through the government's main foreclosure prevention program are re-defaulting on their mortgages at alarming rates, a federal watchdog said in a report released Wednesday.”.
A Home Affordable Modification Program (HAMP) began four years ago. Since then, nearly 1.2 million mortgage modifications have been completed. To date 306,000 borrowers have re-defaulted on their loans and more than 88,000 are now at risk according to the Special Inspector General for the program’s quarterly report to Congress.
It was additionally found that “the longer a homeowner stays in the HAMP modification program, the more likely they are to default. Those who have been in the program since 2009, are re-defaulting at a rate of 46%.”
Originally launched by the Treasury Department at the height of the foreclosure crisis, it aimed to help as many as 4 million borrowers avoid foreclosure by making their payments more affordable through reduced interest rates, extended loan terms or, in some cases, reduced mortgage principals.
What’s more: “As of April 30, taxpayers have lost some $815 million on the permanent mortgage modifications that have re-defaulted, the inspector general reported. As part of the Troubled Asset Relief Program, Treasury allocated $19.1 billion to the HAMP program. So far, it has spent $4.4 billion.”
And even worse: “Nevertheless, the government has extended the program for another two years, until the end of 2015.”
So, here we have an administration that doesn’t care about how much of other people’s money it blindly tosses away for political purposes, either due to outright stupidity or total disregard for proven results. Because its now repeating the same horrendous mistakes as in Project Acorn, another of the incumbent’s inane giveaways stemming from the Housing and Community Development Act of 1977 that many claim is an underlying cause of the real estate losses that spurred the recession we have yet to fully recover from.
Add to that some input from Jamie Dupree of The Atlanta Journal-Constitution’s ajc.com also via Drudge which says that “four different officials inside the tax agency who "work" in Washington, at IRS headquarters, but actually live in Dallas, Minneapolis and Atlanta.”
Mr. Dupree points out that these four people “fly to and from Washington, D.C. by plane, and bill the taxpayer for that travel - and it is not a temporary situation, but has been going on for years.”
There’s specific information about the costs these people run up, as well as much other data about the staggering waste of the public’s funds, so I’ve included a link to the text which is well worth reading: IRS execs ran up 'extremely high travel expenses' -- commuting to DC by plane
So, in conclusion, it’s been proven to me many times in my business career that other people’s money is far easier to spend then one’s own which is pretty obvious. But even business people with no investment tend to be fairly careful because most would prefer to keep their jobs.
Politicians, however, aren’t even really employed and don’t have “managers” or “owners” to whom they report that can discharge them at any moment in time. So, it makes perfect sense to me that they couldn’t care less about what happens to other people’s money, especially if it gets them the votes they need for election.
That’s it for today folks.
Adios
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