Accountability

Is it just me, or have we as a nation decided accountability is no longer important? Crimes go unpunished, poor behavior is accepted, and commitments broken.

No one is perfect, but do you think we could try a little harder to keep our word and expect others to do the same?

I’ve watched the Economic Stabilization Act debate and I can’t help but wonder if we have lost our way.

The entire picture is rather complicated and I suspect only a handful of experts truly understand it. What we do know for certain is the value of real estate portfolios have decreased. This has caused a drain on cash reserves, cash flow and cash deposits required by Federal regulations for bank and financial institutions. The failure of one company results in further adjustments to others and the downward spiral begins.

The biggest problem remains with real estate values. Prices have not yet stabilized in some major markets, and it’s impossible to fully assess true value in a declining market. Uncertainty has caused panic and overreaction.

The run-up of prices was simply due to poor lending policies driven mostly by well intended government mandates. Starting in 1977 and modified in 1995, the Community Reinvestment Act created an artificial market by allowing more people to buy homes, even though they couldn’t afford them. The result was inflated prices and the only correction is readjustment of prices, particularly in major cities and southern states where we saw increases up to 50% a year. Prices must come down to normal appreciated values that should correlate to home buyers’ and investor ability to pay.

So what does this have to do with accountability? I believe that Congress and some corporate opportunists are the culprits. Congress interfered with free markets and had insisted on higher levels of homeownership. In 2004, Congress became aware of questionable accounting practices inside Fannie Mae/Freddie Mac and was confirmed by the SEC, and yet appropriate reform of these institutions didn’t happen.

Today we see a lot of finger pointing, denial of facts and government socialistic intervention. My question is, why do we as homeowners and taxpayers have to take on the burden from poor leadership and perhaps corruption without satisfaction the culprits will pay in one form or another? We can only hope for justice.

With that said, the good news is that most fundamentals of the economy are sound, in particular the Sioux Falls area. Remember job growth and investment are the keys to continued economic success and we have plenty of both going for us here.

Just for the record, our model at The Tony Ratchford Group is “to do as we say we will, finish what we start, show up on time and maintain a polite and respectful demeanor with all those we encounter.” We expect to be accountable.

For more information or reference regarding The Community Reinvestment Act (CRA) of 1977 and 1995, read an article by Ronald D. Utt, Ph.D. Time to Reform Fannie Mae and Freddie Mac, June 20, 1995 www.heritage.org/Research/GovernmentReform/bg1861.cfm

Happy Dreams!
Tony