Thursday, September 18, 2008

BTMW -- "GLASS HOUSES" -- (POSTED 9-18-08)


Carly Fiorina, Wednesday, stated that neither John McCain nor Sarah Palin “[C]ould run a major corporation.” This is the same Carly Fiorina who, as CEO of Hewlitt-Packard, took a very viable, vibrant, major corporation, and through arrogance and hubris, ran that corporation into the ground. Accordingly, two words of advice to Ms. Firoina:

1) People in glass houses…
2) Buy a dictionary, and look up the word “chutzpah”.

[NOTE - You can now see my blog at . Thanks to all for your continued listening and reading!

Rick Shaffer]

BTMW -- "


Carly Fiorina, Wednesday, stated that neither John McCain nor Sarah Palin “[C]ould run a major corporation.” This is the same Carly Fiorina who, as CEO of Hewlitt-Packard, took a very viable, vibrant, major coroporation, and through arrogance and hubris, ran that corporation into the ground. Accordingly, two words of advice to Ms. Firoina:

1) People in glass houses…
2) Buy a dictionary, and look up the word “chutzpah”.

Wednesday, September 17, 2008


Given that we’re in the midst of a presidential election, even more fingers will be pointed and more mud will be slung trying to blame who’s at fault. But, the bottom line is, it’s not mainly the Democrats nor mainly the Republicans. Rather, the fault for the current mortgage crises/financial meltdown lies at the feet of both parties.

In 1999, Republicans in Congress pushed a law allowing brokerage companies/“investment banks” or other financial institutions, like Lehman Brothers, Bear Stearns, etc., to expand their presence in the investment industry, without the safeguards – i.e. regulations – that are required of commercial banks. And the then Democratic President – Bill Clinton, signed it. These regulations – thrown by the wayside – were put in place during the Great Depression, to prevent situations just like those that are happening today from happening! As a result, the investment bankers/financial institutions, now freed of most needed safeguards/regulations, got, for the most part, greedy (and were either ignorant of or ignored the colossal risks they were taking). The result – the credit crisis/financial meltdown we’re seeing now.

To make an analogy, think of the financial industry as an airline. Arguably, it’s OK to de-regulate the airline industry, from the standpoint of competition (who offers which and how many routes, who charges lower fares, etc., in the hopes of attracting more customers and making more money). If an airline fails due to bad marketing mistakes/excess risks, people get hurt (workers, investors in the company, etc.) but the public, by in large, isn’t – they just choose another airline. But to de-regulate the airline industry from the standpoint of safety, (allowing them to try and make more money by cutting back on well established safety standards and drastically cut back on FAA safety regulations and oversight, would clearly be ludicrous. If an airline was free to set its own safety standards, than many many more planes would crash, the flying public (not to mention those on the ground) would be in very unsafe, and the airline industry would be in danger of screeching to a halt.

Well, that’s what the deregulation of the investment industry in 1999 has almost led to. It removed the safeguards and regulations controlling investment bankers/financial institutions like Lehman Brothers, Merrill Lynch, AIG Et. Al. and let them, in effect, regulate themselves. The result – greed and ignorance took over in far too many cases, and these financial institutions began loosing altitude, fast, and were in grave danger of falling out of the sky, which very likely would have caused a very large portion of the entire economy to screech to a halt. Which is why the U.S. Treasury and the Federal Reserve have stepped in. Just as jumbo jets can’t be allowed to fall out of the sky, so too can’t jumbo financial institutions be allowed to crash.

What’s all this mean going forward? Well, first, the Feds will continue to bail out those companies –“the jumbo jets” – who are simply to large to fail and crash (such as Bear Stearns, AIG, Fannie Mae, Freddie Mac and other companies whose failure could undermine much of the overall economy. Smaller “planes” – Lehman Brothers, for example – will be allowed to fail, if necessary, since their “crash”, while extremely painful to workers and shareholders of those companies, won’t undermine the entire economy. Unfair? Quite possibly. The correct steps to take, especially given the financial realities facing the economy today? Most definitely.

A few more questions, and answers. Can the present administration “fix” the current problem? No. Certainly, they can take steps (like bailing out Bear Stearns, AIG, Fannie Mae and Freddie Mac) to prevent the economy from collapsing and the situation from getting worse. But, due to the de-regulation alluded to back in 1999, ‘the horse has already left the barn’, and we (the American public) are going to have to ride this recession (yes, folks, we’re in a recession) out, and wait for the economy to recover (best guess – at best, but unlikely, maybe one year; 2-3 years, much more likely). Not to mention, pay the bill (in higher taxes) for all of these Federal bailouts. Luckily, despite the “Chicken Little” predictions of far too many pundits and far far too much of the mainstream media, the U.S. economy is, at its core, strong enough to weather this storm, and recover (although, it will be a difficult ride).

How do we know such re-regulation will work (to prevent this happening again)? Because, the evidence is right in front of us. Large commercial banks, who were not (for the most part) completely de-regulated by the 1999 law, have weathered this financial storm (all things considered) fairly well. Why? Because they weren’t allowed to take the extreme risks investment banks and other financial institutions were allowed to take without having enough funds to back major losses and other safeguards in place. (An example – while Bank of America – like other commercial lenders, has (like virtually everyone else), taken their lumps – because they remained, basically, highly regulated over the last 8-10 years, they’re in strong enough financial health to purchase Merrill Lynch without any backing from the Federal government. (It should be noted, the fact that purchasing Merrill Lynch likely puts Bank of America into the ‘too big to fail’ category cannot be totally discounted as one of their reasons for making the purchase.) In any event, did Bank of America like remaining so highly regulated? Almost certainly not – especially as they watched Bear Stearns, Merrill Lynch, Lehman Brothers and all the other investment banks/financial institutions making money hand over fist up until a year or so ago. But, ultimately, remaining so highly regulated served them well.

Is Treasury Secretary Henry Paulson the right man to maneuver us through this very difficult time (at least until the Bush Administration ends in early ’09)? Well, frankly, the jury is still out. But, so far, he has not been afraid to use the powers at his disposal, and take some difficult and unpopular – albeit necessary – moves (for example, again, bailing out Bear Stearns and, more importantly, Fannie Mae, Freddie Mac, and AIG). Given that Paulson is a former CEO of Goldman Sachs, the hope here is that he acts much like Joe Kennedy Sr. did when he was appointed by President Roosevelt to head the then newly established Securities and Exchange Commission in 1934 (the point being, since, like Kennedy, Paulson worked in (and, without making any accusations – at least against Paulson – knows what liberties and risks the investment industry took to get us in this mess, he also may know better than others what needs to be done to ultimately fix it.)

Can the current Presidential candidates fix the current problems? Again, no. What they can do – whoever is elected – is to go back to the regulations of the financial industry prior to 1999 (and tell the lobbyist from the financial industries who will certainly fight this, where to go) so as to prevent this from happening again.

But, are either of the Presidential candidates even talking about what needs to be done to prevent this from happening again? Frankly, no. While both now agree that re-regulation is a must, neither has put forth any comprehensive plans for the deep re-regulation of the investment/financial industry (i.e. pre- 1999 regulations) needed to prevent this from happening again.

BTW – while, as noted, they’re all pointing fingers, only two of the Presidential/Vice Presidential candidates can really claim innocence in all this, and that basically only by default. In 1999, John McCain voted for the original Senate version of the financial industry deregulation law, but then voted against the final House-Senate compromise bill. Joe Biden voted against the original Senate version of the de-regulation bill, but then voted for the final House-Senate compromise bill. Neither Barack Obama nor Sarah Palin, were in Congress at the time, so we can only conjecture how they would have voted. (A guess – like McCain and Biden, ultimately, probably along party lines.)

Finally, and maybe most importantly, how does this affect you, the middle class consumer/investor? While we may sound like a broken record, our best advice is to do, for the most part, nothing. Your bank savings are FDIC insured (to at least $100,000, and in many cases, more) and your investment portfolio is safe (not against losses, of course, but against liquidation), even if invested, for example, through Lehman Brothers. Should you check your portfolio? Yes, definitely, but once or twice a year, just like you should in all markets, up and down, and compare each investment to its peers (a fund that under performs its peers for two straight years, for example, almost always should be replaced – whatever the overall market is doing.)

But, for monies invested for the long run – a minimum of five, but hopefully 10, 15 or more years, the worst thing you can do is market time (i.e. pull your monies out of the market “until it comes back.” Trust us, it will come back, but by the time you figure out it that it has, you’ll have missed much of the recovery, which is the worst way to manage your long term investments. Think of it this way – no matter how far “down” any of your investments are, until you actually sell them, you haven’t lost anything.

Or, perhaps another analogy will put it in better context: If you buy a home, planning on living in that home for the next 20 years, if the value goes down 2 years after you buy it, are you going to sell it, simply because your “equity” in the home has gone down (for the moment)? Of course not! Same with you long term investment portfolio.

Tuesday, September 16, 2008


In a recent blog, we noted how it seems like nearly every Tom, Dick and Harry, Inc. has been jumping on the “green”, “eco-friendly” bandwagon.
Now, the fact is that so much of this “eco-friendliness” in the private sector is,

· Merely wallpaper dressing that has virtually no effect on (and certainly won’t solve)
whatever environmental problems we have,
· Is often economically counterproductive, and
· In some cases, is actually environmentally counterproductive.,

is bad enough. One case in point – due to the additional ‘energy’ costs (i.e the amount of energy used) to manufacture and ship the supposedly “eco-friendly” Prius, when taken in total, a Prius is less “eco-friendly” than the supposedly “very eco-unfriendly” Hummer. And, when expected longevity (i.e. the total number of miles an owner can expect to drive the vehicle) is taken into effect, on a dollar cost per mile basis, the Hummer is much less expensive then the Prius.

However, at least this type of politically correct driven eco-friendliness is in the private sector, where consumers have a choice how to spend (and possibly waste) their money. More and more, however, such politically correct eco-friendliness is infecting the public sector, where we (consumers/taxpayers) don’t have a choice.

Two, local, cases in point. Beacon Street is a well-known major thoroughfare that stretches from Tremont Street in Boston all the way out to Route 128 in Wellesley Hills. For years, the portion of Beacon Street that runs between Park Drive, Boston, and Coolidge Corner in Brookline has mainly been a three-lane road (at least, in the westerly direction). And, every number of years, this portion of Beacon Street would be dug up and re-paved, as needed. Fair enough.

However, in the last reincarnation of this process, this portion of Beacon Street was not only repaved, it was also completely reconfigured. And, one of the major portions of this reconfiguration was the addition of a bikes only lane. What’s wrong with a bikes only lane? Well, in addition to the greatly increased cost (as opposed to just repaving the road and leaving the configuration as it was), what was mainly a three lane road was turned into a two lane road. Which (especially at Harvard Street, directly at the center of Coolidge Corner) took what had already been an area of often heavy traffic congestion, and made the problem much worse. The result: larger and longer traffic jams, translating into more vehicles stuck idling in traffic wasting $4.00 per gallon gasoline while spewing greater amounts of pollution into the atmosphere, then before the reconfiguration of the road. A big negative, from an environmental standpoint? Probably not. But certainly, the direct opposite of what the environmentalists supposedly are aiming for. And, despite what some environmentalists would try and argue, it appears extremely doubtful that there will be any ‘offset’ by some sudden increase in the number of people who leave their cars and trucks at home and now choose to ride their bikes up Beacon Street, simply because a bikes only lane is added to an approx. 1-mile stretch of the road (westerly direction only).

[Of course, this raises other questions – such as, what of the bikers who ride in an easterly direction, or those who ride beyond the approx. 1-mile westerly section of the road that has a bike path. They don’t matter… they’re on their own (sort of like a “’bikes only’” lane to nowhere”?) The point is, they – bicycle riders – appeared to be doing just fine on Beacon Street for decades without a bikes only lane. But, because political correctness now calls for at least the appearance of eco-friendliness, we (the taxpayers) had to spend untold thousands of extra dollars so that Brookline could have and (we’re going to take a wild guess here) feel good about the fact that they now have a bikes only lane along a patch of Beacon Street. (BTW: Not to get far a-field – But, if bicycle riders have a lane of their own on the road, shouldn’t they also have to obey the traffic rules of the road? Like, waiting for the green light to go across an intersection? Or does their ‘eco-friendliness’ make them immune?)

The second local case is even better (or, worse, depending how you look at it). As was reported in a Boston Herald story – “Bad spin for City Hall turbine”, on 9/10/08:

The [Mayor Thomas] Menino administration is turning red over efforts to go green as the bungled installation of a wind turbine on City Hall’s roof is running up a bill for taxpayers…

The turbine, the Herald reported, cost $13,000 to install – yet the electricity created by the turbine only creates “…enough electricity to power just 19 light bulbs.”

[Making matters worse, the City, in installing the turbine, apparently ran afoul of competitive bidding wars for projects costing above $10,000 – although, in fairness, it should be mentioned, the violation of the bidding law appeared to be more a mistake, than intentional.]

Trying to put a good face on the boondoggle, Mayor Menino’s Environment and Energy chief James Hunt (another aside – why does a city need an Environment and Energy chief?), stated, as the Herald reported, that:

“[T]he windmill project is definitely worth doing.

The energy saving may be small, but to showcase the potential of renewable energy in the city of Boston is far more significant.”

Frankly, with all due respect to Mr. Hunt, such waste of taxpayer dollars only serves to further showcase how politically correct eco-friendliness, well, wastes taxpayers’ dollars. (Indeed, in the future, if the city of Boston wishes to save electricity equaling 19 light bulbs, we have a very easy, low-cost, low-tech suggestion – find 19 lights in City Hall which really aren’t necessary (we’re willing to bet at least 19 can be found) – and simply, turn them off.)

Tuesday, September 9, 2008


As we’ve reported in previous blogs (7-7-08 and 3-23-08), the economic crises has, unfortunately, ‘infected’ the private college lending industry. Moreover, as most of the media (present company excluded!) has failed to report sufficiently (or, in some cases, at all) is the fact that the Federal government has guaranteed that there will be enough Federally backed college loans (at least this academic year) for students and their families who need them. So, the bottom line for most families is the following: check with and apply for private college loans – which often offer better rates than Federally backed loans – but DON’T count on them. Rather, be certain to line up enough Federally backed loans to cover your college expense needs. Two good places to start researching Federally backed college loans are the websites and . (Additionally, for information on college lending and financial aid in general – including numerous additional relevant links – check the BestMoneyinfo site’s “College Savings and Financial Aid” page. To access, go to the homepage, and click on the “Best Money info” icon.)

Despite (or maybe, even more importantly because of) the pinch in sources for college financial aid (of which, at least 60% remains in the form of loans), it is more imperative than ever that college students and their families adhere to the following dues and don’ts:

First, the things families should do:

-- No matter how much or how little money your family has or makes, apply for financial aid. There are at least two higher education loans – the Stafford loan ( and the PLUS loan ( that virtually every family is eligible for, no matter what their income level.
-- If possible apply for financial aid early – before the high school senior is accepted into college – and be sure to apply to at least two “dual safe schools” – colleges that they’re likely to get accepted into and that your family can afford.
-- Always include state colleges and universities – both in the state you live and in other states – amongst the schools you apply to. State colleges and universities are almost always more – and in many cases, much more – affordable than private ones. (Moreover, despite a lingering belief that state colleges and universities offer lesser quality education and training than do private colleges and universities, such is not the case. State colleges and universities, by in large, offer just as good education and training as do their private school peers, invariably at a much more affordable price. (Indeed, what a student gets out of college – both from an educational basis and a cost benefit analysis basis (i.e. how much their college education can/will further their career choices and money making possibilities and – is ultimately tied to what and how much the student puts into their college educations, wherever they end up going to school.)

Those are the things that you should do. Now, today, especially given that we are in a period where college financial aid sources are being squeezed, you will find an even larger number of so-called college funding/college financial aid “experts” out there giving poor – and in some cases, potentially disastrous advice – to the increasing number of ‘desperate’ college students and their families. Accordingly, it is more important than ever that college students and their families be fully aware of, and make certain that they avoid the list of things college students and their families are often urged to, but should never do:

--Never make any drastic changes to your retirement plan, and, never take out a larger mortgage (i.e. a loan secured against your home), in the belief that doing so will increase your family’s chances of acquiring more financial aid. These tactics virtually never work, and in the few cases where they do, the cost is not worth the benefit (especially given the fact that, as noted, the majority – if not all – of any financial aid your family qualifies for will likely come in the form of a loan or loans, rather than scholarships or grants).
--With the exception of 529 and Coverdell education plans (plans in which money is automatically invested in the child/student’s name – for more information on 529 and Coverdell plans, see, don’t invest college savings in or switch college savings into your child’s name. In most cases, the tax benefit is very small while the damage to your family’s ability to acquire (or acquire greater amounts of) financial aid can be very large.
--Don’t pay anyone to fill out financial aid forms for you, or help you search for financial aid. All of this information is available free of charge from college financial aid departments, federal and state financial aid authorities, and online.
--Last but not least, be certain to save for your retirement first. It may sound harsh, but you have to make sure you’re saving enough for your retirement before you save anything (other than gifts given to or money earned by your children) for your children’s college education. Your goal should be to save 20% of your gross income each year towards retirement (15% if you’re a teacher, fireman or in another profession that guarantees you a pension when you retire) before you start saving for college. Unfortunately, the harsh reality is that the overwhelming majority of middle class families in this country can no longer afford to save enough for retirement and for their children’s college education. Accordingly,
in most cases, families (mainly kids) today will be paying for college via financial aid, most of which will come in the form of repayable education loans. If you’re fortunate enough, have a high enough income (or both) so that you get to the point where you have excess money (over the amount you should first be trying to save for retirement that you can save for your child’s college education, invest it in one of the tax beneficial 529 or Coverdell programs (again, for more information, see ).

[NOTE: Much of the above information was gleaned from various portions of Rick Shaffer’s e-book, “Your Bottom Line – Fifty Steps to Firm Financial Footing”. (For more information, access the Best Money info icon via the homepage.)]

Wednesday, September 3, 2008


Throughout this election season, we’ve heard constant talk from the mass media about the “Red” States and the “Blue” States, ad infinitum. Fact is, the mass media has the colors wrong. As we mentioned on “The Money Show” nearly a year ago, despite that fact that the Presidential candidates hadn’t then yet figured it out, the real color that will most likely decide the election in November is green. And not “Green” as in environmentally green (despite the fact that nearly every Tom, Dick and Harry, Inc. has been jumping on that bandwagon). Rather, the most important color in this election will be the “green” we see on our currency, since, barring (heaven forbid) another 9/11, what will decide this Presidential election is, as the now well known saying goes, “the economy, stupid.”

What’s more, in today’s economic world, one of the (if not the) most important factors related to the economy is the raw material needed to produce energy, specifically fossil fuels – oil and natural gas (and to a somewhat lesser degree, coal). Moreover, despite what the Federal Reserve believes (indeed, it seems they always believe this) the U.S. economy’s biggest threat is not inflation. Rather, what we currently have is a form of fake (or “faux”) inflation, caused by artificially high-energy costs. And these costs are artificially high mainly due to the fact that radical environmentalists now in power (think Nancy Pelosi, for example) won’t allow the U.S. to even come close to fully utilizing its vast stores of fossil fuel resources.

Yet, despite the fact that those in power continue to block our taking full advantage of these energy resources, polls continue to demonstrate that most Americans want to more fully utilize these resources. Here’s where Governor Palin comes in. She too wants to take advantage of these vast energy stores (a large portion of them in here own State of Alaska), and she is very well versed on the topic. Indeed, on the day Senator McCain tapped her as his Vice Presidential running mate, one of the cable news networks ran an interview “Nightline” had conducted with Governor Palin about a year ago (which, unfortunately, was “bumped” by another story and thus never aired on “Nightline”) in which she very specifically, meticulously and eloquently laid out how:

· Alaska had been let into the Union in 1959 (as the 49th State), in large part because of its vast stores of natural resources, as well as,
· Alaska’s promise (in order to be granted Statehood,), that because of these resources, not only wouldn’t Alaska as a State be a drain on the Federal government, but, just the opposite, Alaska as a State would prove to be a major economic boon to the U.S. in general, however,
· Despite its desire to do so, Alaska is not being allowed to fulfill that promise, because of the extreme environmentalist policies of those in power in Washington, despite the fact that,
· The oil and natural gas stores in Alaska that are not being allowed to be tapped are mainly under, apparently, less than 10,000 acres of wilderness land in a State that is comprised of millions of acres of wilderness land, and,
· Despite the fact that the “danger” tapping these energy resources would pose to the environment is nowhere near what the extreme environmentalists portray, since such “dangers” have been greatly lowered over the last couple of decades as a result of advances in drilling methods, as well as other technologies and safeguards.

What, would happen if these Alaskan oil and natural gas stores were allowed to be tapped? First,

· The U.S. would be able to become much much more energy independent for decades, thus greatly lowering the cost of energy (with a resultant major positive effect on the U.S. economy), while, at the same time,
· Giving the U.S. time to develop other, permanent and economically feasible long-term solutions to the problem of energy sources (wind, thermal, and, most likely, some form of hydrogen and/or a combination of the above, or possibly (though less likely) a technology we’ve not yet discovered, while also,
· Permanently changing our foreign policy paradigm (think Saudi Arabia, OPEC, and the middle east in general) to boot.

From the standpoint of the upcoming election, the bottom line is, all of the above factors – which Governor Palin has shown herself to have a very strong and in-depth understanding of – will play very well with the American middle class, no matter what color State they happen to live in. (As an aside, all of this is true not withstanding Governor Palin’s teen-age daughter’s pregnancy, which, the harder the far left wing Democrats try and make a campaign issue, the more that far left wing Democrats will simply prove themselves to be exactly what they really are – extremely foolish world-class hypocrites.)

Now, we here at “The Money Show” disagree with Governor Palin on a whole host of policies, and, as (the polls illustrate) so too do a large portion of the American public. However, in addition to her in-depth knowledge of the energy realities talked about above, in her relatively short time in office, Governor Palin has, it appears, proven to be a pragmatist (one example – while she’s a pro-oil drilling advocate, she nonetheless took on the oil industry and her own State Republican party…and won.) Which demonstrates not only pragmatism, but pro-consumer pragmatism. And, as we’ve noted on "The Money Show" many times before, being a “consumer” is the one and only “special interest group” that all Americans belong to. Which means that, no matter what State (or “state”) you target, Governor Palin’s pro-consumer pragmatism in general, and her energy related knowledge and pro-consumer pragmatism in particular, will appeal (and very possibly, greatly appeal) to voters in both Red States and Blue States, alike.

Does that mean that picking Governor Palin as his running mate wasn’t a risky move by Sen. McCain? No, far from it – it was and is an extremely risky pick. But, if the economy continues to be at the center of this increasingly close election – and most indicators say that the economy will be just that – if John McCain does win the White House in November, picking Governor Palin as his running mate may prove to be the self-proclaimed maverick’s shrewdest risk-taking yet.

Tuesday, August 26, 2008


As we’ve pointed out on numerous occasions here and on “The Money Show”, the root cause of the mortgage meltdown/crisis/fiasco was a combination of 1) mortgage lenders basically throwing their core underwriting standards out the window (thus giving loans to countless homebuyers who could not afford their mortgage payments, and thus, the home they were buying), and 2) the packaging of these loans into all manner of investment products that were bought and sold on Wall Street with far too little regard for the possible risks these investment products held. The interesting – perhaps the better word is, frightening – part of the story is that, this mortgage phenomenon has happened numerous times before in U.S. history.

As Burton Frierson of Reuters points out in his excellent article, “Lenders should heed lessons” (published in the Boston Herald on August 15th):

…[M]uch of today’s problems aren’t new at all.

America actually faced six mortgage meltdowns between 1870 and World War II.

All taught the same lesson: Some loans should never be made.

“Apparently no single person on Wall Street knew about these six earlier blowups,” said Robert Wright, financial historian at New York University…
“If they had, they would have held back (on making reckless loans).”

Wright [added that] today’s mortgage-market woes and all six previous meltdowns “all happened for the same reason. [Mortgage] [o]riginators had incentives to make many mortgages as quickly as possible and not to really care about the borrowers’ long-term ability to pay.”

[While Frierson doesn’t mention this in his article, it seems quite apparent that most of those in the mortgage industry weren’t familiar with philosopher George Santayana’s famous statement: “Those who cannot remember the past, are condemned to repeat it,” which, appropriately enough, was first written by Santayana in a book entitled Reason in Common Sense, something far too many in the mortgage industry have lacked over the last number of years.]

Frierson’s article also illustrates that “securitization” – the packaging and selling of loan products – is also not a new phenomenon. Such mortgage securitization occurred six times between 1870 and 1940. And, like the present mortgage meltdown:

[E]ach [of these previous six] times, the market for mortgage-backed securities grew rapidly for a few years – then suddenly collapsed.

Additionally, Frierson’s article points out that, although not all experts agree, many feel that because of this tendency of lenders not to stick to proper underwriting standards during housing booms, laws need to be put in place that regulate and maintain mortgage underwriting standards, thus avoiding overheated real estate markets which, in virtually all cases, ultimately lead to real estate market busts, such as that which we’re seeing today.