Barry Ritholtz writes a satirical Op-ed for Barron’s Magazine, thanking the Government for enabling Wall Street, helping them create this financial crisis. In his piece, Barry includes the failure of Congress to protect honest appraisers.
The article starts:
We on Wall Street feel somewhat compelled to take at least some responsibility. We used excessive leverage, failed to maintain adequate capital, engaged in reckless speculation, created new complex derivatives. We focused on short-term profits at the expense of sustainability. We not only undermined our own firms, we destabilized the financial sector and roiled the global economy, to boot. And we got huge bonuses.
But here’s a news flash for you, D.C.: We could not have done it without you. We may be drunks, but you were our enablers: Your legislative, executive, and administrative decisions made possible all that we did. Our recklessness would not have reached its soaring heights but for your governmental incompetence.
The article continues citing one specific area Washington failed to act that relates to appraisers:
2005-’07: Unscrupulous home appraisers found that they could attract more business by inflating appraisals. Intrinsic value was ignored, so referrals kept coming in. This helped borrowers obtain financing at prices that were increasingly unsupportable. When honest appraisers petitioned both Congress and the bureaucracy to intervene in the widespread fraud, neither branch of government acted.
I would only quibble with the statement that unscrupulous appraisers thought they could “attract more business”. I think it was much more dire than that. He should have said, “for many appraisers the only way to stay in business was to inflate appraisals”.
Manager of Appraisal Specialties