Treasury Secretary Henry Paulson has outlined the Bush blueprint that proposes revamping the regulation of the nations financial oversight. Is this plan beneficial to the real estate, mortgage and title industries? Furthermore, how will this impact Wall Street, if at all?
Is this, as Paulson claims, good for “working Americans?” See our previous REALonomics post.
Watch the Paulson video here.
President George Bush wants to overhaul the regulation and control of America’s financial markets. Under the Bush plan, the Federal Reserve (Chairman Bernanke) will become the designated controller of our economic markets and be fully responsible to regulate their stability.
In addition, Bush wants the central bank to poke its regulatory nose inside the tent of every part of the financial services industry in the United States. All financial services, not just commercial services, will be under the scrutiny and powers of the central bank.
The Crowning of Mr. Bernanke
Under the Bush scenario, Bernanke will be coronated as the royal controller of all currency, money management, commerial banks and every type of financial institution in the United States. The Fed, under Bernanke, will become the market stability regulator, something like a throttle control on an engine, empowering it to tinker with every aspect of lending in the country.
Included in the plan is a knee-jerk reaction to the sub-prime lending debacle that designates another bureucratic office to oversee consumer lending issues to insure standardized compliance.
This plan evokes a number of questions the real estate industry must ask itself. Are we federalizing the economy, such as many second and third world countries have done? Is this the socialization of lending in the United States? MORE IMPORTANTLY, what does this action, if implemented mean to the real estate, mortgage and title industrys? Will such action actually benefit the economy and the consumer or, will it serve to further stagnate growth, delay recovery, stiffle free market innovation and release us all from entreprenuerial solutions?
Let’s Remember not to Forget
Let’s not forget that the former Federal Reserve Chairman, endorsed and encouraged sub-prime lending before his convenient departure from office.
Let’s not forget that one of Bernanke’s financial aces has alwasy been to print more money, thus further weakening the value of the dollar in the international markets.
Let’s not forget that in the past the markets corrected and self-regulated themselves, weeding out corruption and bad practices.
Let’s not forget that history clearly demonstrates that intrusive federal tampering with the free market system inevitably leads to a weaker stock market.
Let’s not forget this is an election year and the heat has been turned up in the political kitchen forcing politicians to create solutions to the mortgage mess for the American consumer.
All of us should take a close look at what is occuring and ask ourselves if the solution Bush proposes is the right one and whether long term financial and market stability should be put into the hands of Washington.
REALonomics believes that too much federal control and regulation of the monetary supply and the financial markets is like giving it the power to regulate and ration water.
Stefan Swanepoel, one of the real estate industry’s preeminent thinkers has teamed up with REALonomics as an Author and Analyst. “It’s a privilege for REALonomics to have someone of Stefan’s reputation and stature within the industry joining us as a periodic Author and Analyst,” said Donald Teel, Founder of REALonomics.
Swanepoel publishes the TRENDS Report annually, which highlights the movements and changing facets of the real estate industry on an annual basis. No one researches more about change and trends impacting the residential real estate industry than Stefan Swanepoel.
Stefan has penned 13 Books, whitepapers and reports including the 1998 Amazon.com bestseller, Real Estate Confronts Reality (1997), the sequel Real Estate Confronts the Future (2004) and of course the TRENDS Report.
His academic accomplishments include a bachelor’s in science, a master’s in business economics and diplomas in arbitration, mergers and acquisitions, real estate, computer science and marketing. Stefan serves as Chairman and CEO of RealtyU Group, Inc., the largest career development company in the real estate industry educating over 350,000 agents every year.
Of late, Swanepoel has spearheaded the RealEstateWiki as a repository for all things real estate.
Watch for Stefan’s REALonomics posts which will appear approximately once a month.
Enjoy this excellent slide show that highlights Greg Fisher’s “Top 10 Basic Business Principles.” All of these principles are applicable to the real estate industry.
See Greg Fisher’s blog. This presentation is Copyright ©, Greg Fisher.
REALonomics spends just about every day talking with Broker/Owners from the Atlantic seaboard to the Pacific coast and from the Great Lakes to the Rio Grande. It’s our business.
REALonomics is one of the few voices calling for Broker/Owners to take their business and markets by the throat and recapture control of their situation by ditching antiquated models in favor of transitioning to new transparent, consumer-centric, open-market models that don’t suck-out what little profit is left, if any.
In the midst of the industry’s mortgage and market chaos a few owners appear to be going fetal and saying “That’s the way it goes…I’m waiting and praying for a turn-around.”
REALonomics is a bit edgy…we ride the rim of the business model discussion orb, hoping to pull owners out of the spinning vortex of financial distruction to the edge of new thinking that tells them, you can make a lot of money in this business but not the old way. We deliberately drag owners into a new universe of thinking, hoping they will jettison the old in favor of the new.
We espouse “New Real Estate Model Math” because the old traditional economic model will no longer a financial return commensurate with the risk owners must take. The bulbous anotomical component of an owner’s physique has been flapping in the wind for some time…just ask them. Yesterday’s ecomomic model for real estate brokerage produces RED spreadsheets at almost every level.
Our industry is fraught with issues that harm owners and run counter to consumer needs. However, the amazing thing about this is that we can actually control most of these issues but it will take enormous will power and determination. We cannot succumb to the paralyzing influences of the C-est La Vie mentality.
Have owners been too good to their agents, too patient and tolerant with their franchisor’s lack of delivery, too involved in their local network to build effective business models that work? The anwer is yes, owners have given too much and tolerated too many industry policies and practices that cut them off at their financial knees. For a long, long time, owners have been singing the C-est La Vie anthem. But now it is time for owners to start demanding something for themselves from the industry.
What should owners demand and from whom?
- Increasingly strict educational and business qualifications for agent entry and continuance in the industry.
- Higher costs and fewer agent members of NAR and local associations. There are simply too many of us and we need to create labor-market balances.
- An end to the model control policies that create DOJ lawsuits we finance. We create market control models that inevitably get struck down.
- Franchisor warranties that deliver real ROI to broker/owners in exchange for their risk and financial investment.
- Transparent 24/7/365 national property data delivery models for all consumers. Transparency will create more wealth than control.
This is but an embrionic list. Each item contains many facets and between the lines are myriad financial, operational and administrative details.
Many owners are flat worn out! Tapped! The oil has been drained from their financial engine and they are running metal-to-metal. Some owners are expended and extended beyond their physical, emotional and financial limitations! Yes, some are even disallusioned, disparing and dispressed to the degree that the only response they are giving is C-est La Vie.
While the whimper of some is C-est La Vie-like, other owners are waking up each day mad as hell and screaming, “I’m not going to take it anymore! I’m going to do what’s in my best interest because if I don’t, I’m dead in the water.”
The downturn is good, forcing self-autopsy on the industry. Tough times produce required innovation. When we are pushed to the edge our natural survival instincts kick-in and the will to survive ultimately overcomes what once seemed insurmountable.
Yes, I hear the whimper of acquience. At the same time, there is an increasingly growing number of others who are raising their trumpets in a battle-blast that calls owners to rally around the cause of industry change. I hear the whimper of trumpets.