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| Thursday, June 18, 2009 |
| How a Prophet of the Financial Meltdown Has Fared Since Her Fateful Prediction |
 The Wall Street Journal article: Revisiting Paris checks in with Paris Welch Romero a former mortgage company employee in Southern California who warned the government - "Expect fallout, expect foreclosures, expect horror stories," when asked to provide her assessment of the mortgage industry (before the bubble popped). Like millions of Americans, Paris Welch Romero is between jobs right now.
She went to take a test on Tuesday for a job near her home in San Diego. Her unemployment benefits are about to run out. She's hanging tough, but the odds are against her. She doesn't have a college degree, and the one business she has a lot of experience in, mortgage lending, is in the tank.
It may not be apparent to the naked eye, but Ms. Romero's hard fortune underscores not only how the mortgage fiasco has triggered a financial and economic crisis in this country, but how the debacle, at least in Ms. Romero's case, trampled someone who had the good sense to see wrongdoing and sound the alarm.
That's because unlike most Americans, Ms. Romero, 47 years old, saw clearly how substandard mortgages would be the undoing of the financial system. And unlike many so-called experts with advanced degrees and lofty, influential positions, Ms. Romero sounded a bell with regulators.
At the height of the housing bubble, Ms. Romero worked for a family-run mortgage company in one of the nation's hubs of dubious housing finance, Southern California.
In January 2006, in response to a call for comment on proposed guidelines for the slew of new mortgage products then flooding the market, she wrote a brief but direct email to the Office of the Comptroller of the Currency summing up her expectations.
"Expect fallout, expect foreclosures, expect horror stories," she wrote. |
| posted by Boston Gal @ 9:44 AM *
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| 4 Comments: |
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Boston Gal,
This is a very timely story given that the focus right now is on overhauling oversight of the financial industry.
The truth is, until the incentive structure changes, we'll continue on the boom and bust roller coaster that we've seen in the last decade.
Regulations (and proper enforcement) will help, but as long as there is money to be made, companies and individuals will find a way around the rules.
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Thanks Boston Gal! I'm honored.
Paris Romero (nee "Welch")
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The comment about integrity is so apt. Greed ruled for too long. Limiting executive comp to some reasonable number of say $5M should restore some order to the system.
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Forget Limiting Executive Pay. that is just wrong and unAmerican.
It is not an exec's fault that people took out too large a mortgage than they could afford even with a job. It is not an exec's fault that someone default on a loan when they lost their job. The solution is not removing incentives.
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Boston Gal,
This is a very timely story given that the focus right now is on overhauling oversight of the financial industry.
The truth is, until the incentive structure changes, we'll continue on the boom and bust roller coaster that we've seen in the last decade.
Regulations (and proper enforcement) will help, but as long as there is money to be made, companies and individuals will find a way around the rules.