Friday, December 26, 2008

Highly-Paid People Poo-Poo Profits

From the Washington Post, a passive-aggressive dig at for-profit loan modification firms. The gist: anyone who charges for a service that others do for free must be running a scam.

So, who are these angels dispensing loan modification miracles? Let's meet a couple.

"You don't need to go out and hire someone to help you," said Michael Gross, managing director of mortgage servicing for Bank of America. "It is very, at times, frustrating to find a homeowner who has paid a for-profit company $3,000 to $5,000 in an upfront fee, when they could have gotten the same or better assistance free."

I'm pretty sure managing director of mortgage servicing for Bank of America is at least a full-time job. Mr. Gross must truly have a heart of gold to work full-time for a for-profit company (especially a for-profit company on the dole).

"We are extremely concerned about the huge proliferation of for-profit companies making a buck on these people," said Laurie Maggiano, senior policy adviser at HUD's Office of Housing. The department has certified 2,300 nonprofit housing counseling agencies across the country, which are required have at least one year of experience administering a housing counseling program, Maggiano said.

I'm shocked that HUD has unpaid senior policy adviser positions. You would think with all those taxpayer dollars under HUD control, Ms. Maggiano could get at least minimum wage for her work.

Or, perhaps I'm being intentionally obtuse about the nature of a not-for-profit entity, mocking Ms. Renae Merle. As it turns out, the only differences between a for-profit and a not-for-profit is the manner in which they are taxed, and the disposition of net income (a for-profit has the ability to distribute some of net income as a return on capital to the owners). Both have bills and salaries to pay, and both provide services for a payment.

For-profit and not-for-profit are just two different business models, not a basis for delineating saints and sinners.

As for Mr. Gross and Ms. Maggiano? They are for-profit entities in their own right, providing services to the highest bidder and taking home extraordinarily large paychecks. The irony of disparaging quotes from that pair, along with Ms. Sarah Raskin, Maryland's commissioner of financial regulation, is that all of them work for entities that coercively extract payment for their services at the point of a gun.

I would not begin to defend fraud, if indeed fraud exists as you intimate, Ms. Merle. However, I sure don't need ethics lessons from people who profit from armed robbery.

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