Last night, I heard quite an enlightening segment on the foreclosure crisis on The Newshour (PBS. But, yes , I “heard” it – in my car, on KERA, our local NPR station, in its radio broadcast of The Newshour). Here’s the description of the segment:
NATIONWIDE FORECLOSURE INVESTIGATION | Some lenders have put a temporary hold on foreclosures and state attorney generals have launched a joint investigation to sort out problems with questionable documents. Paul Solman gives details on the flawed paperwork.
Here is what struck me. In addition to bad decisions, and what appears to be instances of outright fraud, what also happened was very rapid change in technologically empowered processes.
The technology was changing so rapidly, with electronic copies of, and transfers of, legal documents, in such massive numbers, that the cautions and protectives simply did not keep up with the technology shifts.
And I remembered back to the excellent book by Juan Enriquez, As the Future Catches You: (How Genomics and Other Forces are Changing Your Life, Work, Health, and Wealth). Here are a couple of quotes from the book:
Many are unprepared for… the violence and suddenness with which… new technologies change… Lives… Companies… Countries…
Technology is not kind. It does not wait. It does not say please. It slams into existing systems, and often destroys them – while creating a new system.
In other words, if I can put it simply, what technology makes possible, that possibility will almost inevitably become reality. And we fall behind in adjusting. This is very good for innovation, but it can be very bad for protectives and cautions.
In the case of the world of big, big money, it appears that new technologies lead to great opportunities, but also to an environment of sloppiness, overwhelm, and “we can’t keep up,” all of which has resulted in serious consequences.
And when this happens, those prone to fraud come in and do more damage.
(Remember the Michael Lewis quote from The Big Short: “There were more morons than crooks, but the crooks were higher up.”)
In the report on the Newshour, the segment described how there were so many transfers of documents, so many documents shredded, so many foreclosures processed by foreclosure mills, that the bad effects could be…devastating. (see also the editorial The Foreclosure Crises, in this morning’s New York Times).
But part of the blame is caused by this: our simple inability to put protectives in place in the face of very rapid change – change made possible by technological innovation and advance, used by an unprepared profession.
And, if we read carefully, I think that Enriquez reminds us this will happen again, and again…