Why Banks CEOs should have public performance reviews - OPEN LETTER TO PRESIDENT OBAMA

Dear President Obama,

I am writing this letter because of my frustration with banks over the last two years. I have surrendered. I have just stopped my efforts to assist clients with loan modifications.

I am a real estate broker in California and for the last two years I was trying to help tens of people to save their properties. I worked with anyone, from regular folks trying to save their only residence to property holders of multiple, multimillion dollar properties. At the end I felt like an Orwellian horse working harder and harder in vain towards the goal that cannot be accomplished.

It was a Friday evening a week ago. For months I was spending 100 hr weeks trying to move my clients’ cases forward. The number of my “by referral only clients” grew significantly. I enjoyed the respect of someone who can get to lenders through back doors and get clients relief they needed. However, my business had a tremendous fault. The number of my clients was increasing much faster than the number of cases I was able to close.

That’s true, I was not taking cases that just required filling up an on-line applications. In spite of my in depth knowledge of processes and procedures of key lenders and contacts developed over time, I finally realized that I am on a Mission Impossible.

From day one I knew that I will not get rich doing loan modifications. From day one, even when it was still perfectly legal here in California, I was not charging my clients upfront fees. I knew that lenders’ activities were so unpredictable that no-one could foresee the final outcome.
But as a former scientist and engineer, I got caught up looking for a better solution. I had this engineering desire to find a more efficient way of doing modifications. That ominous Friday, I made my decision to walk away from loan modifications. I was supposed to finalize a few cases I was working on for a long time.

My hopes came to a grinding halt. Despite my experience and connections I developed, day after day from early morning to late evening I heard over and over polite statements: “Sir, this form does not have the number “2008” filled up in the line so and so and it is already 2 month old. Please fax us a correct form; No, we have not received this fax. Can I give you a fax number?; we have only June and July statements and it is already August; there is no signature here, there is not date there, etc, etc, etc.

And despite the fact that in anticipation of these questions, I kept sending new statements ahead of time. And despite that I knew that signatures and dates were there, and the number 2008 and 2009 were all there and despite that I could tell bank reps where to go on their computer screens to find information they said that did not have or did not see, I heard day after day, call after call, “Sir you need to resend…”. That Friday, I finally realized that I was Don Quixote of La Mancha trying to fight wind mills. I realized that during the last two years lenders mastered ways of how to say no and not what I naively expected they should - ways to offer real solutions to their clients.

But even if I got through all obstacles and landmines created “by our neighborhood banks,” they reserved the best answer for the end. Once I thought that finally our paper work was absolutely perfect, I would hear a statement: “Sir, we thought your client qualified, but the investor said ‘no’ and of course there is nothing that we can do”. And you didn’t know on the day we started the process what loan investor requirements were, did you? You needed me and our client to jump hoops for 6 to 18 months to find out?

And then I finally understood! This is the banks’ way to increase employment and reduce joblessness! It is part of the stimulus plan to create jobs with no purpose! No-one ever expected to solve anyone’s mortgage problem. It was all about the jobs. What a fantastic idea! To siphon more tax payers’ funds to create gigantic IT centers with hundreds of IT and customer service employees whose only purpose is to take tax payers on a journey at their own expense. Do I sound frustrated? Yes, I am. Do I exaggerate? No. It is beyond me to understand how banks can justify these huge “cost centers” serving no real objective and post multibillion profits every quarter.

It is irrelevant why people need loan modification - should they receive them or should they be offered - for the purpose of my call “for bank CEOs to have public performance reviews”. I am assuming that loan modifications are important. Otherwise you and your government would not support them. That’s good enough for me.

I follow closely your administration’s attempts to come up with a “stick” to encourage lenders to do loan modifications and enforce directives and incentives already in place. I also know how large corporations operate. I spent many years working for a few of them, before I decided to be a “small businessman”. I worked on three continents and “labored” as a part of many economic systems. I settled in California’s Bay Area as I saw it as the most dynamic and future oriented “country” in the world, both socially and economically.

I am not an economist, but I can observe and think. Communism did not lose its historical battle with capitalism because of Reagan’s brilliance (as a matter of fact, I do believe that there was greatness in his ability to follow his beliefs and set of principles) and Gorbachev’s missteps (control without fear? What was he thinking about?). Communism lost, because persons at the top of hierarchical systems could not figure out how to productively occupy millions of their followers. It was the dynamism of American system letting people do what they can do best (unfortunately, it allows for self destruction as well) that excited (and still does) millions of minds in the US and around the globe that tipped scales of history.

No, I am not criticizing your effort to “correct” the course by injecting funds to the economy and centralizing certain functions. The reason I voted for you and still am in the shrinking group of your supporters is because you impressed me with your ability to grasp facts, analyze and draw conclusions. I saw you and still see as the best qualified politician to take on the challenges we are facing and feel comfortable entrusting our future in you.

Not to lose the American way to evolve and reinvent itself it will be necessary to limit central functions again, hopefully sooner than later. It will not be easy as large institutions including governments develop a sense of self-preservation. We observe great corporations grow and fail once they cut and destroy mechanisms that made them grow in the first place. We see governments grow and not able to shrink themselves back to the size (we don’t have go even abroad to see it today – just look at us in California!). But it has to happen.

So, why do I care about banks? Obviously banks crossed the line of being just “private enterprises”. If they were, we could leave them alone and let them self destruct. After all most of large corporations fail to grow sooner or later, assuming that they have no monopoly or government backing. Banks protect their independence of private enterprises while being supported by government’s pay outs and tax payers’ funds. As long as public funds are used to bail out banks there should be much closer scrutiny of how and why banks are spending their resources.

The “loan modification spending binge” is an insult to every American. Tremendous funds are being committed and results are laughable. Show us, how and why you are spending these funds. It is not because you want to help.

To all Bank CEOs (insert your name here): Obviously loan modifications were not your objective. But let assume for a second that they were. If it was the case, you should be fired! All of you! It should not take two years to build non-working systems to process millions of loan modification applications.

Do you know how many millions of transistors have today’s computer chips? Do you know how much more complex and difficult they are to build? And it is happening every day. We design and build hundreds of complex computer chips every year. And do you know why it is possible? It is possible because it is done by a competitive industry that is not supported by government give-aways. The industry that allows for the positive selection, where best engineers and managers move forward and those mediocre are discarded and not just pushed to the top.
I agree, starting new processes and handling hundreds of thousands of new clients is not easy. However, it could be accomplished by competent executives knowing how to build and run a modern enterprise, assuming of course that they were serious about their objective.

I do not expect you to voluntarily develop transparency that you owe the American public. And this is why you should be forced to explain yourselves. You are partially public employees, as you are using and mis-using public funds. So you should prove to public that you deserve to be entrusted with those funds in a first place. You should have public performance reviews and this public input should be a major factor of your review by your Board of Directors.

Dear President Obama,
Getting banks to show greater financial transparency will not be an easy task and the need for such scrutiny should not be seen as a good excuse to further grow the government. But I am sure that it can be done and that you can devise appropriate solutions. And as soon as you get our financial system back on track I will send you a letter reminding you to shrink the government back.


Sincerely,

Artur Urbanski, Broker

I Met Stalin

I MET STALIN

Yes, he was the real one. He was dead, had a large mustache and was smiling with his benevolent, innocent smile. I noticed that he was short as his counterpart in the Red Square mausoleum, Lenin. That’s all I could really see. How little I could see and how little I knew at the time!

But let me start from the beginning. A few weeks ago, San Francisco Chronicle published an article “Pickled dictator tour’s first stop: Tiananmen Square” that caught my attention. It is about the hot tourist spot “Memorial Hall” where the preserved body of Mao Zedong is displayed. The article included a list of 10 embalmed leaders of communist states. Today you cans see only 5 of them. Other 5 bodies were removed and, either buried, or cremated. While I have seen only 4 of them, I realized that I am probably one of the few in the Western Hemisphere today who has seen the embalmed body of Stalin. It was a beautiful sunny day in 1959 and after many hours meandering with the crowd through the Red Square, I entered the mausoleum and seen, Stalin and Lenin. I was 7 years old at the time and remember it vividly. I was with my Dad (he was the student at the Leningrad’s Naval Academy at the time), my Mom (more about her later) and my older sister. We were part of the tour to Moscow with a group of my Dad’s colleagues from the Academy. What struck me was the size of Lenin’s and Stalin’s bodies. They definitely looked small. In 1961 as a result of continued post-Stalin political thaw started by Khrushchev, the body of Stalin was secretly removed and buried outside Kremlin wall.

Here, I was to start my story of 10 “pickled men”, and possibly comment on the birth and growth of the Communist system that was embraced by the half of the world’s population in 100 years after Marks and Engels devised the system concept. In 60-ties and 70-ties it was the system to fear! Not a surprise they we tried to find the way to stop it and became embraced in the second Indochina war. But I will comment on it another time.

All of this changed last night when I met the monster again. I was just about to start working on this post, but I decided to watch a DVD of a Polish movie “Katyn”, I had just received. The movie was shown last week as a part of the Polish movie festival in the Marin County, CA. I couldn’t make it so I ordered the DVD instead. The movie is about 22,000 of Polish officers killed on Stalin’s order in the spring of 1940. In one of the movie scenes there is a huge Stalin’s picture filling up the office of the NKVD officer.

This face with a large mustache and a benevolent smile. The monster who was responsible for killing millions of people of different nationalities, but who also created a powerful fatherly image by mastering a personality cult and taking all credit for saving Soviet Union from the Hitler’s army invasion. His image as Russia’s savior was so powerful that even people whose parents he killed admitted to crying and grieving after his death! He was even considering killing his top military man General Zhukov as he thought he was getting too much credit! Seeing the Stalin picture again evoked memories, suddenly the story of 10 leaders became very personal and centered on Stalin.

But back to my viewing of Stalin’s body. It was 1959, I was 7 years old and it was my third trip to Russia. I remember all of them vividly, but especially the first one in 1957. It is amazing how little I knew and understood then. I hope my age was the excuse. A train trip to the Russian border, walking back and forth on a crowded station at 4 AM, the wall clock in the little train station of Terespol and waiting for the train. This wall clock engraved in my mind for ever; I could not believe how slow the clock’s handles were moving forward. Russia’s ( Soviet Union then) train tracks have a different width than most of other countries in the world, so crossing the border required disembarking. But at the same time –train schedules were not existent. Can you imagine that the trip from the Soviet border to Leningrad (St. Petersburg today) took us 3 days and nights? We were in a lonely carriage attached to different trains pulling it forward and then leaving it on “bocznica” for hours. I didn’t realize how brave my Mom was to make this trip. Luckily two smiling faces of my sister and I elicited the help of Russians. I still remember how charming and helpful they were. Dragging me and my sister to Soviet Union in 1957... It took me years to realize it how epic this event was. The war with Germany ended in 1945. Soviet Union invaded Poland on September 17, 1939 two weeks after Germans did and moved the Polish border West to where it is today (it one point Poland occupied a vast territory from Baltic to Black Sea and even Moscow for a very short period in 1620, even Moscow was part of Poland). At the end of 1945 Stalin closed the border stranding hundred of thousands of Poles in the Soviet Union unable to reconnect with their families and return to the shrunken homeland. The border didn’t open again until 1956. Those who could were moving west going back to their homeland, looking for their lost families. I have two aunts who were stranded in Russia, one from 1948 in the infamous Magadan gulag when NKVD could not find her husband, the Home Army officer so they just took her instead! My aunt Zosia’s life story was a story of amazing courage and strength), My other aunt, Aunt Anna was testifying in a trial in Lvov in the case of murdered Armenian bishops when the border closed. She spent 10 years waiting to get back to Poland to her husband. She did come back bringing a great historical treasure with her, a carpet collection of her husband and husband’s father including pieces taken from the conquered Kara Mustafa’s Army during the 1683 Battle of Vienna, that she managed to secure through the war – but that is another great story I would like to share with you one day.

And here was my Mom, taking me and my sister in the opposite direction. But what was my Mom thinking about? She had a luggage of very recent history with her. Wasn’t she afraid? It was only a few years prior that she saved her father, a Home Army hero, from the hands of NKVD. He was sentenced to death (for being part of the pro-London Home Army, instead pro-Soviet People Army). Then suddenly his sentence was commuted to hard labor and after spending two years in copper mines of Legnica he was released. Many years later my grandpa and my grandma both received Virtuti Militari orders for their Home Army underground fight against Germans. The only thing my Mom told my sister and I about the miraculous release of our grandpa was that the NKVD officer that arrested him had a crush on her, but she never got into details (she took her secret with her now; she passed away of leukemia - some say a result of the radioactive cloud from Chernobyl that passed over my parents city on its way to Sweden where it was detected).

A few years after saving her father my Mom married a young (and handsome) Navy officer who was making a quick career in newly communist Poland. He was only 26 when he became the commander of Communist Poland Navy ship visiting London in 1955, for the first time since the end of the Second World War. He even met Queen Elizabeth and his young face showed on the cover pages of magazines in Poland. He was a Communist role model! In 1956 he was sent for three years to study in the Naval Academy in Leningrad. Three years away from his family (you have prison furloughs now, but there were no furloughs for the Naval Academy students then!). My father was gone for three years and for my Mom and us, the only way to see him was to travel to Soviet Union in 1957 and years after that, against the stream of people leaving Soviet Union as fast as they could once Khrushchev open the border.

Not only was my father a good Communist, he also was a good father and husband. Once my grandpa left prison he stayed in the little flat of my father. My father was the only person who could and would help someone who was on the wrong side of the political spectrum! My Mom was caught between two worlds of prewar prosperity and post war new power. So she was departing the old world of her parents and crossing the border of the enemy to reconnect her family at least for a few weeks per year!

But back to Stalin. He affected the lives of millions for many years and that includes many in my family. This is my story of Stalin and how his image evolved in my mind from seeing his body as a child to viewing the Katyn last night. Did you know that Russian denied this crime until 1990? I was growing up not knowing the truth. Finally, Gorbachev and then Yeltsin admitted the crime in 1990 and respectively 1992 50 years after it happened. Putin however reversed back to the old Soviet line that there is no proof that it happened! As recently as in June 2008 a court in Moscow rejected a request to hear a case on two issues: the declassification of documents about Katyn and the judicial rehabilitation of the victims! To read more on the Polish Russian relations regarding Katyn – a very sore point of their bilateral relations, click here. Stalin’s legacy is still alive! And while Stalin caries responsibility for killing approximately 25 million people, he is only the #2 killer in the 20^th century - behind his “student”, Mao-Zedong, blamed for death of 35 million people.

Note about my father. He is 80 years old. We were on different sides of the political spectrum in Poland for years. During the bloody workers uprising in Gdansk shipyard in December 1970 (9 years before The Solidarity Union was born in the Gdansk Shipyard, I was 18 at that time), we bitterly disagreed. Beaten and scared I owe him getting me out of the hands of police. But in 1979 when I decided to leave Poland, just 9 later, he told me “this is the best thing you can do”. By then he was totally disillusioned with the system and people who demonstrated that without any “checks and balances”, communism is just yet another totalitarian system. Communism in Poland in 1979, the year I left the country, while not as bloody as it was 25 years earlier, was still a system that didn’t tolerate different views or dissent. When I left, my father was expelled from the Communist party and forced to retire from the Navy. His guilt? He allowed his adult son to escape from the country! But history took yet a new turn. In 1989 Berlin Wall collapsed and the democracy returned to Poland first time since 1939. My father was welcomed back to the Naval Academy in Gdynia where he still teaches part time and continues publishing in the scientific magazines (click here to see his most recent publication). He is a respected role model for Navy officers again! And who were the people who welcomed him back? The same people, mostly his former students, who brought him down in the 80-ties got him back on the pedestal in the 90-ties. Just a paradox of countries going through political upheavals.

Directory of my real estate evolution related posts

I am passionate about CHANGE in general. A lot can be done to promote change in real estate. Hera are a few of my posts on the subject:

• Who Started the Real Estate Revolution? - emergence of Zillow and Trulia create new market dynamics prompting MLSs to action
  
• Can Zillow annihilate Realtors? is Zillow Realtors' ally or foe? It really doesn't matter. It has a lot to offer to clients and agents - so take advantage of it!
  
• GOOD and BAD about NAR: Can we fix NAR? - NAR is in danger of becoming irrelevant; its actions to protect a single commission based business model might lead to its undoing.
  
• Can We Fix NAR - Sequel part 2 - more comments and facts on the NAR and its future role
  
• Is your income below $12,000 per year? - comments on Mark Nadel's report Critical Assessment of the Residential Real Estate Rate Structure lead to a very interesting exchange of ideas and thoughts with Mark Nadel
• Is your income below $12,000? - Important update from Mark Nadel - more comments and updates
  
• Call for Supplanting NAR - comments on the post by Greg Swann's at Bloodhound Blog; the call for a new organization to guard the quality of agents can be compared to fixing a car with a broken engine by replacing the engine with another broken one.
• Comments on "Call for Supplanting NAR" from Mark Nadel - Mark Nadel, the author of "A Critical Assessment of the Traditional Residential Real Estate Broker Commission Rate Structure" authorized me to post his comments regarding the post of George Swann.
• NAR and Blogging - we don't need more rules! - As rumor is making its way around that NAR might step in and forbid agents to blog this post is explaining that compliance rules are already in place and that we don't need new ones.

Enjoy reading!

If you want to quickly visit a few places in CA....

....like this one:

.....then I have a few links for you:

Saturday afternoon in Half Moon Bay and Princeton

Beautiful Pacifica

Fascinating secrets of Easton Addition

South San Francisco (SSF) Contrasts

Directory of posts on Burlingame, CA by Cimpler Real Estate

Enjoy!

A few things about San Mateo, CA

There are many “nice” things about San Mateo, CA. It has a mild climate, a lot of beautiful homes (as the one below), interesting (but not necessarily exciting) history, etc. But is there anything special or unusual about San Mateo?

Here are 10 things I came with:

1. You Tube was a San Mateo startup (http://youtube.com/ ). They are in San Bruno, CA now. Here is their Last Day in San Mateo
2. Movie studio around 1923-5 - I read about in the Daily Journal, but cannot find the link!). San Mateo had a shot at becoming Hollywood, but I guess the weather in the South is better! Can you help to find the link???
3. Bay Meadows Race Track – it still exist, but it might be its last year. Seabiscuit ran here! (http://en.wikipedia.org/wiki/Bay_Meadows )
4. Lure Restaurant – if you look for a special (San Francisco like, expensive place with great food and décor, make sure you come here. It is in walking distance to San Mateo movie theaters (see #7) http://www.lurerestaurant.com
5. The San Mateo Performing Arts Center located on San Mateo High School, is one of the largest theatres on the peninsula outside of San Francisco (per Wikipedia)
6. Pier 1 Imports – was founded 1962, in San Mateo (per Wikipedia)
7. B Street cinema district - cinema brought the evening traffic to the City and local restaurants. A great place!
8. The local economy successfully withstood the dotcom industry crash – the credit goes to the San Mateo City Council! As a matter of fact, they continue doing a great job. Click Here to visit a very informative city website.
9. Coyote Point Museum (one of the best natural history museums and wildlife centers in California, according to Wikipedia entry )
10. Yul Kwon, winner of Survivor: Cook Islands.

To read the entire post, please go to:

Is there anything special about San Mateo, CA?

The reasons you might want to live in Millbrae, CA

Why would you want to live in Millbrae, CA? Really. It is sandwiched on the San Francisco Peninsula between Burlingame and Hillsborough with their great houses and restaurants to the South and San Francisco a few miles away to the North. But prices of homes are only slightly lower than in Burlingame. So what is the reason you would want to pay so much?

There is a very good reason to do so – Millbrae schools. There are four elementary schools (Meadows, Green Hills, Spring Valley, and Lomita Park) and one middle school (Taylor Middle School, named after the family that owned land along Taylor Blvd Mills High And then – there 's Mills High School - a real gem on the Peninsula.

It is the best public High School in San Mateo County. Two years ago it became the first High School in the history of San Mateo county to cross the threshold of excellence (Academic Performance Index -API - score of 800 points) scoring 832. It bettered this score last year by raising it to 840. Every year, large numbers of its students are accepted to the best colleges in the US including Berkeley, UCLA, Stanford, Harvard, Columbia, MIT, NYU and many other top universities in the country. And what about Cappuchino High School? Wikipedia notes: ”Although surrounded by land that is part of Millbrae, nearby Capuchino High School in fact belongs to San Bruno,” which leads many (like me) to assume Millbrae has two high schools. Click on Wikipedia to find more historical facts and interesting Millbrae trivia.

Recently Millbrae became the end stop of the BART train connecting it with many locations in San Francisco and East Bay. You can connect in Millbrae with Caltrain. The station building is impressive and became an instant landmark.

Another landmark – being completed “as we speak”. These are new Millbrae condos. where a popular bowling alley previously occupied previously. The project took many years to complete, but according to the 88 South Broadway contact, the sales office should open on April 28, 2007.

Hope you find it interesting. Follow on the above links to find out more information about Millbrae (its shops, Green Hills Country Club, hotels and others or email me. There is much more about Millbrae and its schools. Have you heard about Mills HS Robotics Team or its great Dragon Dance Team? Some of you could see the Mills Dragon Dance Team during this year Chinese New Year Celebration in Millbrae and then - two weeks later - in San Francisco. Another important piece of information - The Mills Robotics Team needs a new corporate sponsor. May be you can recommend one? Please don't hesitate to contact me!

Know other reasons for living in Millbrae? Share it with others by responding to this entry.

Are Sacramento County and Central Valley, CA a real estate disaster area?

How long will it take for Sacramento County and Central Valley markets to recover? After many years of a real estate Eldorado - the markets over there hit a slump. Many investors doubled their money in 2 years: a new 5 bedroom, 3 bathrooms homes increased in value from $300k-$400k in 2003 to $600k - $700k in 2005. But for investors, who have not sold a prolonged market slump is in store (according to some opinions it will take 2 to 3 years for prices to level off and 6 to 7 before they will start moving up again). A 3 year old house, which could sell for $650 k a year and half ago might sell for $550k - $575k today and only if it is in perfect condition as they have to compete against new homes still being built. 2 years from now its value might be below $500k.

I am a San Francisco (SF) Peninsula broker and I helped some of my SF Bay Area clients to buy and sell properties in Elk Grove (Sacramento County). However, some of them are facing a difficult decision.

What would you do if you were an investor in this situation? Should investors hold on to their properties and wait through the slump or sell a soon as possible? Selling is not easy too. If you drive by the area you will find 4 to 5 “For Sale” signs on a single block in newly built communities. Average time on the market there is 90-120 days. But waiting out might be difficult or impossible for many investors as prices of rentals have gone down. You will have a negative cash flow even if you have 30 - 40% of equity and are paying a minimum payment on the 1% Option ARM loan (many investors got 100% financing and after 2 years combined loans to a single Option ARM loan). Of course, one solution does not apply to everyone, but what would you do or what would you advice your customer who found himself/herself in this predicament?

Why is Burlingame, CA so desirable? More reasons and more facts.

In my recent blog entry "Why is Burlingame, CA so desirable?" I mentioned the death of Charles Frank Burlingame III, whose plane crashed to the Pentagon on 9/11. He was a descendant of Anson Burlingame, after whom Burlingame was named. On December 5, 2006, the Burlingame family suffered another loss. Wendy Burlingame, 32, a daughter of Charles Frank Burlingame, was found dead in a fire at the Galaxy Towers apartment complex in Guttenberg, N.J. The following article, published on December 6th by New York Post, reports the tragic event. According to the New York Post report "the quick-spreading, four-alarm fire - has been ruled suspicious, - but that no accelerant had been used." The suspicious character of Wendy Burlingame's death spurred speculations about the link to the so called "9/11 conspiracy theory".

I encourage those of you who read my first story about Burlingame to click on the following link to Wikipedia. You will find there a number of interesting facts on Burlingame's history. For example, did you know that the movie Dangerous Minds with Michelle Pfeifer was filmed on the Burlingame High School Campus in the spring 1994? Or that Charlie Howard, the owner of Seabiscut, owned a home in Burlingame? So click on the link above and endulge yourself in discovering Burlingame. And if you get interested to read more about Burlingame's history, please don't miss the article published by the Burlingame Historical Society. According to their entry "In 1893, 23 years after (Anson) Burlingame's death, a group of wealthy young men from San Francisco set about organizing a country club on the Peninsula. In casting about for a suitable designation they were inspired by the nice sounding name still found on county maps of the area. They decided to call it - The Burlingame Country Club. The village that was developing nearby, around the railroad station, was known as “Burlingame”, reflecting some of the prestige of the glamorous club, but it was not until 1908 that the town was incorporated. So was the name of the town selected because it was "nice sounding" (as it was in the case of the Club) or as a tribute to Anson Burlingame - our nation's famous diplomat and China's first ambassador to the United States?