ray mathoda

It is a well known fact that most if not all asset bubbles are characterized by significant speculative investment activity (and by this I mean investors with very short investment timeframes and expectations). And this was certainly true of the US housing market (and other overinflated housing markets globally) over the last few years. It’s impossible to know exactly how much of the housing market was driven by speculation, as no agency tracks this issue…and even if they tried, it’s impossible to verify someone’s intent. But I sit back and wonder if our society has gotten too lax on “personal accountability”.

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2 women walk into a hospital with acute stomach pain. One is a highly paid lawyer at a top law firm who is covered by her company’s health insurance plan and the other is a working class American without health insurance. Both women get the exact same diagnostic tests and medical care, and both stay in the hospital for the exact same number of nights. Do the two women pay the same amount for the health care they consume (in total, including payments made by the insurance company on behalf of the lawyer who has health insurance)? Likely not, if the above happens in the USA. (more…)

One of the fatal flaws of the Bush approach/policy framework that I would love to see Barack Obama change…is this idea that it is America’s job to spread Democracy around the world. As a student of Democracy and child of the largest Democracy in the world (India), I do believe in and love Democracy. However, just like Capitalism….Democracy, too, is a flawed, chaotic, and imperfect system and I just don’t think it’s America’s job to tell other countries what political system is best for them.

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I worked at Indymac Bank for a little over 4 years till July 2008 when - after the FDIC took management control of the Bank after a “run on the Bank” was (unfortunately) triggered by Senator Schumer’s leaked WSJ letter (discussed in a prior blog) - I resigned from my position as Chief Administrative Officer. My role had put me in charge of the “People” and “Expense/Cost” functions of the Company…but thankfully (I guess – given the massive blame game going on against anyone involved in the lending industry) I was not involved in any way with making loans.

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I was trying last night to have a mellow evening at home after a full day of work. The full day of work was quite an experience after spending 3 blissful months ‘Exploring my Zen’ (as I like to call it) following the collapse of Indymac during the Summer. So here I was…cuddling with my 2 freshly bathed (and good smelling) Great Dane’s Lara and Tank…watching TV. But what I saw on CNN shocked me.

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In late June this summer, about 2 weeks before the “failure” (i.e., inability to continue to be in business without third party support) of my ethical and well run employer Indymac Bank, I – then a Senior Executive at the Company - read in horror a letter that New York Senator Charles Schumer had sent to two key regulatory bodies - the Office of Thrift Supervision (Indymac’s primary regulator) and the FDIC - and that his office had “leaked” to the Wall Street Journal. We had been fighting hard to adapt/save our business and as many jobs as possible for 12 hard months since the capital markets froze up in the summer of 2007….and this Schumer letter looked like a possible death warrant for our business. “When it rains, it really pours”, I thought.

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One of the fundamental reforms that is nowhere to be seen on the horizon…that I believe is absolutely critical to addressing one of the key root causes of the current crisis of confidence in the global financial markets is the lack of any significant education on the topic of personal finances and money management in middle/high school and college curriculums worldwide, including in the US.

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