I. I remember doing loans for a contractor in the 1990s who was both incompetent and filthy rich.
Her entire source of business was from the State of California, as she was exploiting set-aside rules and relationships she had in the state government.
Despite this, she was still out of business in a few years and in severe legal trouble.
Prospect Mortgage: Lives by Kickbacks; Dies by Kickbacks.
II. A few years after the 2008 mortgage meltdown, a company called Prospect Mortgage seemed to surface out of nowhere.
They had a scheme where every buyer making an offer on a wide variety of listings had to get pre-approved by Prospect.
I recall feeling extremely frustrated when we had to just hand over our pre-approved borrowers to Prospect.
It turned out that Prospect was paying illegal kickbacks to brokerage and REO managers in exchange for their forcing buyers to engage Prospect.
Needless to say, Prospect is now out of business.
III. An acquaintance of mine who ran a large mortgage bank hired an executive away from Fannie Mae.
The guy was sharp and had a very strong resume, but he had no idea how to compete in a competitive marketplace after working for what was effectively a government-sanctioned monopoly for years.
He was gone in a few months.
IV. This morning, we learned about the indictments of contractors who were stealing from California’s massive fund to fix the homeless problem. Many more indictments are likely to come, as much of the $27 billion spent so far cannot be accounted for.
V. This post about the massive theft of Puerto Rican tax money is probably my favorite example of corruption, as the theft was so extreme and brazen: No Wonder Puerto Rico Can’t Afford A Reliable Power Grid. These guys will all hopefully end up in jail.
These are just a few examples of the graft and corruption we are seeing surface every day now. And this is why you should be delighted.
- There is a populist fervor to start auditing governments at all levels and to start exposing rule breakers in the private sector as well. So, by competing honestly, we will all avoid this inevitable fallout and repercussions.
- But this is the big reason: The business environment is changing faster than ever nowadays, with AI, new technology, new rules, stricter competition, and much else. So anyone or any firm that is coasting at all, while relying on corruption or sweetheart relationships of any type, will be forever left behind.
JVM has learned and changed more in the last two years alone than we did over the previous 17 years of our existence – and it is not even close.
Thank God we had to compete fairly and honestly, as we’d be left fatally behind by now if we had not.
