Everyone this week is talking about the feud between The Daily Show’s Jon Stewart and CNBC’s “Mad Money” moron, Jim Cramer. It’s pretty clear by the moniker, I am not a fan of Jim Cramer. Even before I heard his ridiculous answer to a caller this week calling for the demise of warehouse lenders and the entire channel of mortgage originations they deliver.
Now I have discussed on BiggerPockets a number of times how the big banks hate mortgage brokers and would love to gain back the huge portion of mortgage market share they lost over that 20 years…and oh, how they’ve tried. Mortgage brokers are a tenacious bunch and most of the banks underhanded attempts have failed.
Then came the meltdown…
Broker were blamed for everything from the subprime meltdown to the foreclosure crisis. Wrongly, I might add. It was Wall Street who designed, securitized, and got ratings for subprime mortgage derivatives…and then begged for mortgage brokers through wholesale lenders to provide them with the loans.
The mortgage brokers did what they were asked to do…and, yes, Wall Street paid them handsomely.
But not near as handsomely as they paid themselves. And let’s not forget if Wall Street had not created the evil monster of subprime loans, there would have been nothing for mortgage brokers to sell.
So for Jim Cramer to come out this week, and say, and I’m paraphrasing here; “Warehouse lending that supports non-depositor wholesale lenders who get there loans from the mortgage brokers is bad business. It’s time to do away with that business model”….is disingenuous at best.
He was asked a question about the demise of the mortgage broker side of mortgage originations by a caller who right included in his question the worry of “no competition to the big banks” if these warehouse lines, mortgage wholesalers, and mortgage brokers disappear.
Cramer dismissed this part of the question because I’m sure he has no problem putting 100,000’s of workers on the street if this side of the industry were to die. His flippant answer was not to worry about “monopolistic” mega-banks taking the entire mortgage market for themselves.
Wait a minute…
Wasn’t Wall Street greed and companies “too big to fail” the real cause of the mortgage crisis?
As Jon Stewart so perfectly put it with a unbelieving, sarcastic, question put to Cramer on his show while interviewing him, “You didn’t know about 35-1 leveraging?”
Of course he knew…and he didn’t report on it because it made all of his friends to much money.
But now that the subprime gravy train is over, and his friends can only find work at Bank of America or Citigroup…kill the mortgage brokers, the non-depository lenders, and the warehouse lending that makes it all happen.
The truth is Cramer is still trying to deflect the cause of the crisis on to anyone other than himself and his pals and obfuscate the real culprits….mega-banks and Wall Street securitizers.
He makes me sick…
I hope the Obama administration can see through this and make warehouse lending easier so this side of the industry that does in fact foster competition and better price for consumers can survive.
At at time when this country needs as many people buying and financing houses as it can find, killing off the most productive side of the mortgage industry is just plain stupid.
Leave it to Cramer the Stock Market Moron to support it.
Until next weeek….