The Great Depression Online




Great Depression Online Archive Issue:

From Fool To Knave

Great Depression Online
Long Beach, CA
May 27, 2008

Inside This Issue You Will Discover…

*** An Incredible Eyesore
*** The Eyesore’s Malefactor
*** From Fool To Knave
*** And More

An Incredible Eyesore

Several months ago residence of an affluent Sacramento neighborhood were overcome by a remarkable irritation.  They’d witnessed an incredible eyesore sprout up from the ground like weeds following a spring rain.

We say this in both a metaphorical and literal sense, for that was – in fact – the source of their irritation.  Namely, the weeds…a vacant house with a front yard full of them.  To quote the former owner of the eyesore, Sharon Helmar…neighbors were “appalled.”

What makes this story particularly rich is not so much the weeds growing in the front yard, or the affluent neighbors that were offended by it; rather it’s the individual who was responsible for the untidiness.  And the folly they wrought that brought it to be.

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The Eyesore’s Malefactor

Laura Richardson is your garden-variety Democrat.  That is to say she’s of a political persuasion that says there is no right or wrong, it’s all relative.  That almost everything’s right – sometimes.  And often what’s absolutely right at one time is spectacularly wrong at another.  So, too, what’s spectacularly wrong at one time is absolutely right at another.  In fact, there are many different ways to interpret what’s right and what’s wrong…but doing so should always be to your benefit. 

With that in mind we got quite a chuckle last week when we opened a local paper, The Daily Breeze, and discovered that Laura Richardson – U.S. Congressional Representative, former California Assembly-member for a Long Beach District, and former Long Beach City Council Member – was the eyesore’s malefactor.

“Rep. Laura Richardson lost her Sacramento home in a foreclosure auction two weeks ago and left behind nearly $9,000 in unpaid property taxes,” reported Gene Maddaus, for the Daily Breeze.

Richardson, D-Long Beach, appears to have made only a few payments on the house, which she bought in January 2007 for $535,000.

“After buying the home, Richardson hardly had time to live in it.  Three months later, Rep. Juanita Millender-McDonald died and Richardson - then a freshman member of the state Assembly - launched a campaign to replace her in Congress.

Richardson won the election, pouring in $77,500 in personal loans to her own campaign.  Around the same time, she stopped making payments on the Sacramento house.  The bank issued a default notice in December, and the home was sold at a public auction on May 7 for $388,000.”

From Fool To Knave

The wonderful thing about a credit induced asset bubble is that it makes geniuses out of fools.  Foolish decisions are forgiven by rising asset prices, which enables more foolish decisions. 

But it’s hard to tell precisely when the inflection point has been reached.  There’s a brief moment of weightlessness when the upward momentum stalls, just before gravity takes hold.  And it is here, in this brief moment, where the accomplished fool thrives at doing what they do best…being a fool.

How the fool takes responsibility for their foolishness demonstrates whether they are just a fool or both a fool and a knave.

“‘I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement - with no special provisions,’ Richardson said in the statement.  ‘I fully intend to fulfill all financial obligations on the property.’”

We always find it amusing when an official statement is at odds with the facts.  Here, Richardson’s official statement sounds good, if only it were so, but…

“That would come as a surprise to James York, the Sacramento real estate broker who bought Richardson’s house at auction.

York produced a trustee’s deed confirming that his company, Red Rock Mortgage Inc., owns the house.

“When he bought the house…, York assumed responsibility for Richardson’s unpaid property tax bill of $8,950.79.

“‘Tell Laura I'd be happy to have her pay my property tax,’ York said.

“The real loser in the deal was Washington Mutual Bank, which issued Richardson a $535,000 loan with no money down in January 2007.  By the time the default notice was issued, Richardson was underwater on the loan.  She owed about $575,000, including $18,000 in missed payments.

“Washington Mutual ended up writing off nearly $200,000 of that debt to get rid of the property.  ‘They took a beating,’ York said.”

But that’s not all, there’s more…

“One of Richardson’s first votes upon arriving in Congress last fall was on the Mortgage Forgiveness Debt Relief Act of 2007.  The bill helped homeowners by preventing the federal government from charging income tax on debt forgiven in a foreclosure, such as the $200,000 forgiven in Richardson’s foreclosure.”

From this we’ve gathered that Laura’s a perfect fit for Congress.  Where in D.C. they say…  Ask not what you can do for your country, but what your country can do for you.

Of Helmar’s dealings with Richardson during the sale of the house, “She was not a polite lady.  She had our Realtor in tears.”

Sincerely,

M.N. Gordon
Great Depression Online

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