Elizabeth Warren’s World, and Mine

Federal Reserve Hearing

Some time ago in these pages I’ve expressed my grudging admiration for my native country’s Weberian, bureaucratic legalism.  The years I spent under that system should give me an advantage in a bureaucratizing America that’s still trying to domesticate latter-day cowboys. Nope.  American-style bureaucracy is way more suffocating, stupid, and sinister.

Recently, my wife and I applied for a very modest mortgage (refinancing) loan. Bank of America, where we’ve been customers for two-plus decades, desperately wants to make that loan. But can it? No. Or rather, maybe—but only if we supply, after reams and reams of documents verifying our income, assets, etc., the following information:

Provide a detailed and satisfactory signed letter of explanation regarding the following checks listed on the bank statements: 12/23, 1/5, 1/20 – $100.00; 1/12 – $5,000.00; ….

It goes on like that, for many more items. The full and satisfactory explanation of these particular items is that we pay the cleaning crew every two weeks. The 5K was our quarterly cocaine delivery. No, wait: it was an estimated tax payment to the IRS. It said that on the check. (We also explained it in a e-mail to the IRS but that got lost.) In any event it went from our BofA account through their system to the IRS. In other words, it stayed totally in house. Still, they want us to explain it. Plus, more information is needed on the income side:

Provide a detailed, signed letter of explanation regarding the source of the deposit of $ 1)$1,000.00; 2)$2367.18; 3)$400.00; 4)$165.00; 5)$150.00; 6)$45.00; []. Include documentation to support the source of the deposit.

They do have a point here. I have no idea who on earth would send me a check for $45: I’d never miss it if it hadn’t been sent. Before I accept the loan I demand a detailed, signed letter of explanation from BofA, including documentation to support the source of the deposit.

My saintly wife knows better than to let me anywhere near transactions of this sort; she handles them, with her infinite patience. But even she eventually threw in the towel. Why, she inquired in an I-give-up e-mail, do you want us to explain stuff that is in your computers? Lo, here comes the loan officer’s answer:

We completely appreciate your business and we know you qualify for this loan but we have federal guidelines to follow so we can re sell this mortgage to the government after we close. We know most of the answers but we need the answer to be written by our client for the reasons and explanations.

At one level, this is completely wrong. BofA appreciates our business only to the extent that the loan helps it to satisfy some federally invented metric. Its only customer is the government; the nominal customers are cannon fodder. Still, I feel for the guy and appreciate his candor: but for the government, this loan is a no-brainer. But for the government, they wouldn’t be asking us to affirm what they already know. At that level, he is totally right.

This is what life is like in a country with a socialized mortgage market and government-run banks: the most routine transactions become a bureaucratic nightmare (if, indeed, they come about). That can’t be good by way of getting the country going. But I’ve come away from the experience thinking that this m.o. isn’t just inefficient; there’s something creepy about it.

Personally, I don’t need a loan officer to tell me about the government-driven nature of bureaucratic idiocies that he, and his bank, and we would rather do without. However, you never meet an actual government agent in these transactions. Thus, most loan applicants will blame comparable experiences on the “big banks” (or, more erroneously yet, the poor wretches on the front lines). They may send letters to Senator Warren, who will deliver yet another stemwinder about capitalism’s betrayal of the middle class (or whatever). The system produces no gain for anybody except the political class and its hangers-on. You get the sinking feeling that it’s set up that way.

Likewise, only really nasty political regimes ask their citizens to affirm information that you’d think they already have. (Their gambit is that if you think they have it you’ll volunteer it: if they do and you refuse, they do bad things to you. But they don’t always have it; so everyone blabbers and the regime learns.) No private enterprise would ever do a thing like that on its own volition. The fact that American banks now do this on a routine basis—we know the answers but we need them in writing—ought to give one pause.

Whatever can be said about bureaucratic legalism, you never want to entrust it to Americans: they’ll turn it into a racket. They already have.