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March 10, 2014

No, Americans Are Not All To Blame for the Financial Crisis

“Among my favorite anecdotes of the mortgage-industry decadence that preceded the global financial crisis is the one about Ameriquest’s wind machine. A motivational tool for managers, it made its appearance in the late ’90s at an executive conference at Las Vegas’s MGM Grand Hotel, where the future subprime leader hooked up a powerful fan to a plastic tent. Inside, exuberant branch managers jumped around amid a cascade of cash, allowed to keep as many swirling bills as they could grab.

“That was how it went at mortgage-firm retreats: Here, a money-grabbing contest; there, a round of ritual chanting—“The power of yes! The power of yes!”—at a 2004 Washington Mutual gathering that was like the high ceremony of some bizarre money cult. Before long such incentivizing was part of the daily culture, if not official policy. Countrywide, for example, had a marketing program called the “High-Speed Swim Lane” that linked the bonuses of sales reps working in football-field-sized call centers to the volume of loans they originated. Compressing the programs initials—and cutting to the chase—employees nicknamed it “The Hustle.”

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Read full New Republic article here.

 
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