THE WAGES OF VIRTUAL SIN: Financial predators

FRIAR BARNARDINE. Thou hast committed–
BARABAS. Fornication: but that was in another country,
And besides, the wench is dead.
– from “The Jew of Malta,” Christopher Marlowe, 1589/1590

Wars and calamities breed predators. Morality is almost always a casualty of the disorder following upon conflict and social upheaval. So we should not be surprised, however disgusted, that a new breed of predator has crawled out of the current financial wreckage. Desperate people facing the loss of their homes through foreclosure are an easy target. Some of the same unscrupulous operators who peddled subprime mortgages to people who could not afford them are now selling fraudulent remedies that purport to help homeowners avoid foreclosure.

According to the U.S. Federal Trade Commission:

Fraudulent foreclosure “rescue” professionals [aim] to make a quick profit through fees or mortgage payments they collect from you, but do not pass on to the lender. Sometimes, they assume ownership of your property by deceiving you, the homeowner. Then, when it’s too late to save your home, they take the property or siphon off the equity.

The scammers extract money from distressed homeowners in several different ways: by obtaining a fee in advance for promise of service; finagling a transfer of the property title to the ‘rescue’ firm by allowing the owner to remain as renter; claiming special relationship with or pretending to be the lender and having mortgage payments sent to the scammer’s address; and (illegally) charging a fee for modifying a mortgage under the new federal relief plan.

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THE WAGES OF VIRTUAL SIN: Diminished trust in borrowing and lending

LORD POLONIUS
Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
– from “Hamlet,” William Shakespeare, 1599/1601

Few of us have been following Lord Polonius’ advice. Credit is the lubricant of the modern economy. In the throes of a major financial collapse triggered by excessive credit formation we are being urged to spend and assume yet more debt to stimulate economic activity and job creation. If it is impossible to operate on a strict pay-as-you-go basis, the next best thing is to make sure you borrow from people or organizations you know and trust.

The relationship between borrower and lender has become so attenuated that even legal authorities have a hard time determining the identity of the lender. A lender of record on a mortgage may not be the property owner since the mortgage might have been bundled together with other such loans to form an asset base for a mortgage backed security that was sold to investors. “We don’t own the property,” [said] a spokesman [for a bank]. “We’re the owner of record, but the investors who bought the mortgage-backed securities own it” (NYT, March 8, 2009).

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Japanese Translation of Virtual Organization (PDF format)

Translator: Akira Kawaguchi Download the entire translation as a single ZIP file or individual chapter PDFs below. Complete Japanese Translation (ZIP file containing all chapters) Individual chapter PDF files - Forward by Translator - Profile of Translator - Preface to Japanese Translation (by Author) - Foreword (by Murray Turoff) - Preface - Chapter 1: Intimations of a New Order -…

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Preface to Japanese Translation of Virtual Organization

November 1, 2005 (Original article date)

Virtual organization presents two different faces to the world. One face reveals an ability to enhance the efficiency and effectiveness of management, and to achieve greater flexibility of action. The other shows the dissolution of traditional relationships in the course of realizing these desirable ends. In a word, virtual organization is a disturbing agent of social change and thus provokes ambivalent responses. It is most clearly evident as an innovation in business management, especially within multinational firms and in e-commerce. But virtual organization has implications for society as a whole and is thus treated in this book in its broad social context.

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Virtuality and the Financial Crisis: Part 2

Corrective measures envisioned by lawmakers in the heat of the financial crisis are directed toward strengthening oversight of financial markets. The regulatory system including the Federal Reserve, the Securities Exchange Commission, and other Federal agencies collectively may have been unable to detect the formation of a speculative bubble in the housing market; or perhaps the system detected problems but failed to act on a timely basis. Interest rates could have been raised to reduce the amount of credit available for house purchases, and abusive lending practices could have been curtailed giving potential buyers more accurate information about their ability to carry a mortgage, and thus reducing the chances of defaults and foreclosures later on.

Overhauling and strengthening regulatory oversight of financial markets is a sensible step, but not enough to prevent a recurrence of the frenzied pursuit of profit that precipitated the crisis. Not all mortgage lenders succumbed to the lure of higher profits through securitization of loan portfolios.

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