What's a Little Mortgage Fraud Between Friends?

Episode Transcript

Speaker 1 (00:00):
I was on vacation a couple days last week, and
as a result, with that, plus the Labor Day, I've
been just itching to get to a microphone and just yap.
And one of those issues that I've been itching to
get to a microphone and yap about has been this
whole thing of President Trump removing one of the folks

(00:22):
who heads the Federal Reserve. So basically it's sort of
an unusual move. The Federal Reserve the centralized kind of bank,
sort of quasi independent agency of the federal government that
over sees the Federal Reserve, which we can talk about

(00:44):
that and how odd that is. The idea of a
government body that's quasi independent of the president kind of
doesn't make a whole ton of sense. Anyway. It's governed
by there's the chair of the Federal Reserve, Jerome Powell,
but there's actually he's actually the chair of a board
of governors. And President Trump removed a woman who was

(01:09):
on the Board of Governors, at which the president has
the authority to do so, from four cause. So he
removed Governor Lisa Cook from her position. I believe that
this was last Monday, so a week ago, eight days ago,

(01:32):
and it raises a couple of big issues. First, the
president does have statutory authority to remove someone from the
board of governors, quote for cause. What does four cause mean?
Will any of you who work in you know, HR
or oversee a business or something understands the difference, But
probably a lot of anyone who works, I guess understands

(01:54):
the difference between at will employment versus an employment arrangement
where you can only be fired for cause. For cause
is basically a higher burden of proof than at will.
If you're an at will employee, you can theoretically get
fired at any time for any reason. Now not any reason.

(02:21):
An that will employee gets fired out of racially motivated animus. Uh,
that's illegal to do. And I think most employers treat
their at will employees as if they are for cause
and will only fire someone if that person has developed

(02:42):
enough of a long track record of incompetence and poor
behavior that it's sort of an ironclad case. So or
you know, if it's genuine financial exigencies and you have
to let people go. So four cause is kind of

(03:04):
a higher bar. Someone asked to demonstrate something really bad
before you fire them. And President Trump fired this woman
on the grounds that it was discovered. Now, I don't
know if this was an investigation prompted because President Trump
didn't like this gal and didn't like her views on

(03:27):
the Federal Reserve. He fired her on the grounds that
she had engaged in false statements on her mortgage applications,
mortgage applications specifically for two homes. And everyone on the
left sort of reflexively erupts in anger and fury at

(03:50):
President Trump. How dare he He's attacking the independence of
the Federal Reserve, which, okay, whether the Federal Reserve should
be independent of the political branches of government is or
of the presidency specifically, I think is highly questionable. But anyway,
let's pass that over. And this is wrong. He's only

(04:14):
he's not legally allowed to do this. He can only
fire someone for a cause. She hasn't been accused of anything.
She hasn't been convicted of anything, Which is silly to
fire somebody for cause. You don't need an indictment, you
don't need a conviction of criminal conduct. You just need
evidence of bad behavior. And it led to this bizarre

(04:39):
round of hand ringing over something that I feel like
is so non sympathy producing to me that I feel
like I'm completely in President Trump's corner on this. All right,
it's the specific thing that this woman was alleged to
have done, making fall statements on mortgage applications, and that

(05:02):
sounds not that serious. But let's actually break it down, okay,
because apparently, and the justification is, well, what she did
is something that a lot of wealthy people have done.
You know a lot of people have probably done this,
and so for Trump to single her out is silly.
Let me describe what this is and you can tell

(05:25):
me if maybe this is something that we should just
universally prosecute more. All Right, you're a rich person. You're
buying not your first home, you're buying at least your
second home. So if you're someone who's buying a second home,
you've got a crapload of money. So right off the bat,
this is not a middle class phenomenon. This is a

(05:50):
wealthiest one percent kind of phenomenon. Here anyone who's affording
a second home nowadays. So what you do, and apparently
this is a thing that rich people have sort of
spread around to each other to sort of know about,
is so you have your mortgage for your first house,

(06:11):
and on the mortgage application, they ask you, is this
going to be your primary residence? If you say yes,
you get a more favorable interest rate for your loan. Why. Well,
because the bank rightly determines figures. Someone is more likely
to excuse me, someone is less likely to default on

(06:34):
a loan if it's the mortgage for their primary residence.
They want to live there, They're not going to default
on the mortgage for it. So they ask you, is
this your primary residence? When you say yes, you get

(06:55):
a slightly more favorable interest rate, maybe instead of I'm
just gonna pick numbers at random. Instead of four percent,
maybe it's three point seven percent. Okay. What these people do,
these ultra rich people, is with one bank they get
a mortgage for the one house. Then they go to
another bank to get a mortgage for their second home,

(07:17):
and the bank asks them do you intend for this
to be your primary residence? And you say yes to
that also to get the lower interest rate. So you're
lying one of these is not going to be your
primary residence. I mean either one or the other. So
you've lied on one or the other. And yeah, the

(07:42):
interest rate, it's a little small reduction in your interest rate.
But over the thirty year loan life, for the fifteen
year loan life, for a house that costs maybe four hundred,
five hundred thousand dollars, you're talking tens of thousands of
dollars that you're saving in mortgage payments. That's fraud, folks.

(08:07):
Fraud means lying for money. That's a great shorthand anything.
This is a one of the best things I learned
in my white collar crime course I took in law school.
When you hear the word fraud in a news story,
in a criminal some criminal context, fraud is a very

(08:30):
easy concept once you understand the definition that fraud is
lying for money. That's what fraud is. When you lie
for money, that's fraud. The bit Wise folks remember bit Wise,
the up and coming Fresno tech startup company. They were
lying to banks about the financial strength of their company

(08:54):
to get loans. Fraud lying for money or and they
were lying to prospective investors in order to get them
to invest. That's fraud. Okay, lying for money equals fraud.
So that's what this woman did, and they've got her
dead to rights. Seemingly, they've got two mortgage implications from

(09:18):
about two months apart both of them. She says that
she intends for these to be her primary homes. Yeah,
they got her dead to rights. Now, President Trump says, hey,
that's sufficient cause for us to fire you. And I

(09:40):
don't think that's crazy. I think to say, hey, you
want to be on the board of Governors of the
Federal Reserve. You're overseeing American banking and you've behaved in
this really dishonest way with your own finances. I mean,
we wouldn't want anyone on the board of governors of
the a Reserve who's committed a multio tens of thousands

(10:05):
of dollars of fraud scheme. And yeah, that's like a
felony amount. So President Trump is saying, hey, you shouldn't
be on. Now. Has President Trump done something like that
in the past, God knows, all right, if this was
something that was commonly done by rich people, I guess
it wouldn't shock me if President Trump has done that. Now,

(10:29):
President Trump has shifted where his primary residence was. He
used to be a New York resident, He's now a
Florida resident. But also, I mean, I don't know how
many mortgages Trump is taking out for his properties, maybe
way in the past, maybe did he. I don't know.
There's stories that Greg Abbott, the governor of Texas, had

(10:53):
engaged in this kind of behavior. And there is response
from folks on the left because the shoe is on
their foot very temporarily, is this is tyrannical to prosecute
this when you're not going to prosecute it for anyone else,
which is laughable. I mean, the whole previous four to

(11:16):
eight years, we were looking at President Trump, prosecuting him
for stuff no one had ever been prosecuted for before.
And I'll just say, if we're going to do the
who's being more logically consistent? Came if you listen to
this show consistently over the last four years five years,
for all of President Trump's legal cases, I think I've

(11:40):
been pretty fair. I've been calling balls and strikes. I
thought most of the charges against President Trump were silly.
I thought though that the mar A Lago keeping classified
documents at mar A Lago, I thought that was the
one thing President Trump did that probably was really bad,
was against the law. And I thought the whole idea that,

(12:04):
I mean, we have this constant thing that we seem
to do with the retention of classified documents, the unlawful
retention of classified documents, where we let powerful people get
away with it. Hillary Biden, various generals who have been

(12:24):
found with classified material at home. Who is that one
general who he was like a famous Iraq war general,
but then he had some mistress and he was showing
her all these classified materials. Anyway, a lot of those
people get a slap on the wrist and then nothing.
But lower level people, lower level CIA agents, military personnel,

(12:47):
government contractors, if they take classified material home with them,
they get the book thrown at them. They get like
ten years in One guy got like ten years in jail.
So I have disliked the unfair application of justice, and
I frequently stated over that time. I think you either

(13:08):
prosecute all of it as severely as you're doing for
these low level people, and you prosecute Hillary for it,
and you prosecute Trump for it, and you prosecute Biden
for it, and you prosecute everybody for it, or you
don't prosecute anybody for it to that level. You give
everyone slaps on the wrist, but pick one. This two
tiered system of justice, I just think is unfair, And

(13:29):
I think that's precisely what's happened with this mortgage fraud stuff,
which is a particularly aggravating as a millennial, Like there
are so many gen Z and millennials and younger basically

(13:50):
who feel like they will never be in a financial
position to purchase ah home, that feel like they're going
to be renting forever, that they can, feel like they
can never save up enough money because of the way
that housing prices have just exploded disproportionate to everything else

(14:11):
in the rest of the economy, exploded proportionate to real income.
People have done these studies and YouTube videos and stuff
about like, Okay, how many months worth of wages would
it take to make a twenty percent down payment on
an average home in this city that city, Philadelphia, this
city in nineteen ninety or nineteen eighty five versus today,

(14:36):
And it's it's not even close. And millennials and gen
Z are screwed with the idea of home ownership. Younger
millennials and gen Z are screwed. Some of these people
are never going to buy a home. And to see
entitled liberals defending this woman who's on because I guess
she's hesitant to cut interest rates, which President Trump wants

(14:58):
to do. So, therefore she's temporary, rarely like a hero
of the left. I guess to see them defending this
woman for tens of thousands of dollars worth of fraud
by lying on her mortgage application for not for her
first home, for her second home. Like, really, do liberals

(15:21):
want to be the party defending this? Yeah? This is
really the party of the working man. This is the
party of the little guy. This is the party of
the oppressed. Like it's so elitist. Well, of course people
do that for their Oh I do that for my
second home. My neighbor Bob does that for a second
Oh well, well of course you you well. I mean it

(15:42):
just knocks a couple of points off the interest right,
I mean, it only makes sense. You know. It's not
really prosecuted every unless you engage in some other kind
of financial fraud. It's fraud, you're lying. I remember when
I filled out the mortgage application for my house, and
they have that thing at the end of it where
it says I attest under penalty of you know, being

(16:04):
flogged and tarred and feathered and drawn, hung, drawn and quartered.
That the statements I have made, The representations I have
made are true to the best of my knowledge. Blah
blah blah blah blah. Like it has that thing at
the very end of it that you have to attest
that what you're saying is true to the best of
your knowledge. You got to sign your name to it.
These people are lying, They're lying on one of the

(16:26):
most significant maybe you know, one of the two most
significant financial transactions they're ever going to make for House
one in House two, they're lying on one of them.
So this idea that President Trump is the bad guy
here for saying get lost, No, you can't be on

(16:48):
the Federal Reserve Board of Now. I'm sure President Trump
didn't mind that it was someone who doesn't kind of
share his views on what interest rates should be at
the moment. But the fact is, look, I don't know
that she's got a leg to stand on here. If
you're lying about a huge financial transaction to advantage yourself

(17:13):
to the tune of tens of thousands of dollars, you
shouldn't have a big position of trust like this. I mean,
if I go to a bank and rob ten thousand dollars,
it's going to be a non stop manhunt by the
Fresno PD to chase me down and throw me in
the slammer with reason. I've committed a felony. But you know,

(17:38):
one lid a lie on your second home mortgage application
to save you tens of thousands of dollars, to defraud
a bank out of tens of thousands of dollars. Really,
that's what's happening here. Ah well, you know a lot
of folks do that, No, not definitionally, not a lot,
because it's only people who can foreign multiple homes. And

(18:04):
I thought it was the most elitist thing ever. I
really hope Democrats decide to make this one of their
ten pole things, the party of folks who lie on
their second mortgage applications. When we return, why can't President
Trump just sort of fire everybody on the Federal Reserve?
The inconsistent unitary executive theory. That's next on the John

(18:25):
Girardi Show, there's this whole sterman drum. President Trump fired
one of the governors on the board of the Federal Reserve,
This woman Lisa Cook, fired her four cause, which the
statute authorizing the Federal Reserve says. President Trump has statutory
authority to fire Governor's four cause she lied, is alleged

(18:49):
to have lied, but I mean, seems pretty straightforward. She
said two inconsistent things on two mortgage applications within like
two or three months of each other. Lied on a
mortgage application and to save her self tens of thousands
of dollars aka fraud. Lying for money equals fraud. So
President Trump fired her, and there's a bunch of anger

(19:10):
and righteous indignation on the left. How dare he does?
He questioning whether Trump has a statutory authority to do that?
And this raises for me kind of a constitutional question.
The Board of the Federal Reserve is an entity created
by Congress to govern American banking, set interest rates, etc.

(19:37):
Oversee money supply. It's created by Congress. I don't understand
why it isn't completely answerable to the president. Let me
just explain why. We have the legislative branch of our

(20:01):
government that rights our laws. We have the executive branch
that enforces our laws. And if something is part of
the executive branch, it's under the control and authority of
the president. Because Article two of the Constitution says that
the executive power shall be vested in the president. That's it.

(20:28):
So every executive officer under the president is using his
delegated authority more or less. If you look at every
federal government agency, all right, the FDA, the FDA is,
here's an employee at the FDA. He is under the
authority of ultimately doctor McCary, who's the head of the FDA,

(20:51):
who reports to the head of the Department of Health
and Human Services, Secretary Kennedy, who reports to President Trump.
President Trump is at the top of the ORG chart
for every single federal government agency because they're all executive
branch agencies. They're all entrusted to enforce laws that Congress wrote.

(21:18):
So the idea of an some kind of independent agency
doesn't make sense. If it's enforcing the law, then the
only person entitled to enforce the law is the president
and those whom he deems fit to wield that authority.

(21:44):
And yet there are a lot of conservatives libertarian leaning
people who think the whole idea of independent agencies is
bad and wrong, and they want President Trump to fire
people from so called independent agencies. A lot of these
things were sort of cooked up in over the course
of the twentieth century, where unitary executive theory was not
really very widely upheld, and the one exception seems to

(22:11):
be the Federal Reserve, and it seems to be purely
out of this weird sort of thought that, well, it's
good for our banking to be independent of politics. Well,
is it part of the executive branch or not? What
are we doing? Why should President Trump need cause to

(22:33):
fire someone from the Federal Reserve. If the Federal Reserve
is enforcing laws written by Congress governing the money supply,
setting interest rates, if Congress delegated it to do that,
then why doesn't President Trump completely control it? Now, maybe

(22:54):
you can make the argument. Some people have made the
argument that the Federal Reserve is unconstitution that there's no
power enumerated in the Constitution to have an entity like
the Federal Reserve. Okay, that's a different argument. That's an
argument for getting rid of the Federal Reserve altogether. If
the Federal Reserve exists, and if it is permitted to exist,

(23:15):
let's just assume that for the sake of argument. I
don't understand why President Trump or any president can't or
shouldn't completely control it from a constitutional law perspective. Now,
that'll be Maybe that's dangerous. Maybe it leads leaves American
banking and lending and printing of money subject to the

(23:36):
fluctuations of American politics. But the idea that it's this
thing that is just not accountable to American politics, I
think is highly questionable. Just my little thoughts. When we
return a story I've meant to talk about for weeks,

(23:57):
the stupidest of all stupid things to have happened at
President Unified School District competitive video games next on the
John Girardi Show. Presney Unified School District is a pretty
easy punching bag for local radio. It doesn't seem to

(24:18):
be very well run. It seems to be financially profligate.
It has terrible end results as far as its success
rates in actually teaching kids how to read and how
to do math. President Unified kids consistently score terribly in

(24:41):
state standardized reading and math scores. They're behind grade level.
It's something like seventy plus seventy percent or something of
kids are behind grade level in math and reading. It's
really really bad, and it's been this sort of tail

(25:02):
wagging the dog situation where so much of the I
think it's one of the test case examples of the
harmful effects of public sector unions. Public sector unions are
a bad idea. It has turned what should be a

(25:23):
public facing enterprise for educating children, educating the next generation
of our citizenry into basically a massive jobs program for
adults that the teacher workforce at Fresney Unified is wildly

(25:45):
overpaid relative to other adults in Fresno County with similar
levels of academic achievement, with people with similar academic credentials
degrees are paid much less than Fresnent Unified teachers aren't. Now,
the problem is, I think within any teachers union, is

(26:07):
that the new incoming teachers get paid like crap, and
the teachers who just hung around for a long time
get treated like royalty and they're making, you know, six
figures and they're doing fine. But on the average, teachers
are compensated way above comparably educated adults in Presne County.

(26:32):
All right, So Fresdent Unified has all these problems, and
maybe the thing I'm going to talk about is not
the greatest problem, but it's emblematic of a lot of things.

(26:53):
Attraction to fads making minor things not the major things
and inability to understand trends and where things are going.
And it has to do with the creation by Presdent
Unified of a E sports arena, getting rid of a

(27:21):
shop class to instead make an E sports arena. And
I gotta say, I'm kind of I'm a little disappointed
in local media to have just reported on this totally uncritically,
without any thought of like, wow, is this really a

(27:42):
good idea? Is this a good use of taxpayer money?
So here's a story, Like, you know, basically all the
TV news entities locally did little stories, little vignettes about it.
Here's from Case twenty four or CBS forty seven. After
years in the works and more than three point nine
million dollars from the passage of measure, m Fresno Unified's

(28:06):
E Sports league, known as Fuel is leveling up with
a place to finally call home. Oh it's amazing. It's
like when you step in here, it's like you're not
even at school anymore, said to Hippity tetpite t e
hip it. I guess that's to hippy eighth grader Emily Sandoval.

(28:29):
The five thousand square foot arena was once an old workshop,
an old wood shop for Ta Hippitye Middle School. So
let me just break down what happened here. We are
having this nationwide reckoning, This nationwide conversation is happening right now,

(28:51):
apparently totally unbeknownst to anyone at leadership at PRESNE unified
on the value of college education versus skilled labor and
the fact that we don't have I mean, you have
guys like Mike Row, the dirty jobs guy, going all
over the country talking about this, how we don't have

(29:12):
enough skilled labors, we don't have enough plumbers, electricians, welders,
skilled carpenters, et cetera. And how these are great jobs
that pay really well, there's real demand because there's not

(29:32):
enough supply. And yet the American high school, the American
public school high school system is has been oriented around
this very nineteen sixties, seventies, eighties, nineties model of universal college.
College was viewed as the gateway to success, the gateway

(29:57):
to the American dream. And that makes sense or someone
still living in nineteen ninety if I look at my family,
all right, My great grandfather came to America from Italy
on a boat as a fourteen year old boy. He
was a grosser and a shoemaker. His son went to college,

(30:21):
went to NYU, became a CPA and did really well.
His son, my dad, went to college and then went
to medical school and became a really successful orthopaedic surgeon.
And then his son went to college in law school.
And now yap's on the radio. Okay, But college, higher

(30:44):
education was the pathway to success for the Girardies. That's
a very common American story. And for someone seeing my
dad being success in the nineties, they would say, yes, college,
college is the gateway to success. We got to get

(31:06):
all these high school kids ready to go to college.
And thus this very egalitarian goal was set. Of the
standard we're shooting for with American public high schools is
everybody going to college. Now, that was always wildly unrealistic

(31:28):
because not everyone can graduate college. It's just not going
to happen. Not everyone is smart enough, not everyone is
dedicated enough, not everyone has the wherewithal to stick with it,
not everyone has the life situation where they can stay in.
College just doesn't work, and within the American economy it
might not be a great idea. So you had this

(31:51):
phenomenon of colleges wanting more and more people. There's more people,
more enrollment, more dollars, more reason for state funding for
your state colleges, and more reasons for donations from private
blah blah blah blah blah blah blah. And the federal
funny money was out there. Federal student loans were just

(32:11):
pouring in for colleges. So the universe was like, all right,
let's bring in more people, more people, keep increasing tuition,
keep increasing tuition. There's more and more and more loans.
Kids are willing to make go further and further into debt.
And what happened, well, the colleges kept lowering their standards

(32:34):
such that the value of a bachelor's degree today is
just much less than it was thirty years ago. Jobs
that needed a bachelor's degree thirty years ago today or
twenty years ago today need a master's degree. Jobs that
needed a high school diploma twenty thirty years ago today
probably need a bachelor's degree. My father in law is

(32:56):
an engineer for Cummins in Minneapolis. Cummins makes engines, all
kinds of stuff like that. He's made his career doing
all kinds of innovative things to help engines comply with
California emissions standards. He has a bunch of patents to
his name. My father in law is probably like the

(33:16):
last guy at Cummins who doesn't have a bachelor's degree.
He just learned engines and engineering skills. I think he
had an associate's degree, but he mostly learned. He learned
a lot about engines just from taking the family tractor
apart and putting it back together again. And that's just

(33:38):
not a thing. And I think he's kind of a
walking testament to Cummins would probably today not ever hire
a twenty two year old who didn't at least have
a college degree an engine in mechanical engineering. So it's
dumbed down in that way. We have this universal focus

(33:59):
on high on college and we're continuing to carry forward
this nineteen nineties attitude, and we've overcorrected. Now We've got
way too many kids going into way too much debt
for college degrees that are meaningless, that contribute nothing, and
that prepare them for nothing, especially with the explosion of

(34:21):
ridiculous quote studies degrees, African American studies, women studies, blah
blah blah blah blah blah blah, which prepare you for
literally no job, and really the focus of what the
university is supposed to be a place to make you
a well rounded, liberally educated individual, to educate you about

(34:41):
the true, beautiful and the good that has gone away.
College has just become a jobs program, which is kind
of what high school was supposed to be. And you've
seen the deterioration, the de emphasis on skilled trade labor.
You compare the American system with state Germany. The German

(35:04):
high school system has about a gazillion different tracks that
you can enter once you're in high school. Where you're
in high school and you can be on like an
elite university track, or you can be on an apprenticeship
track for this job or that job or that job,
and you have some ability to switch. But by the
time you're eighteen and you graduate, the average eighteen year

(35:25):
old in Germany is far more employable than any eighteen
year old in the United States. Why because they haven't
been generally educated for some general college experience to maybe
get a degree that might be completely useless. So we
have all this conversation in America about this trend, this phenomenon,

(35:49):
and President Unified does what not refurnish reburnish, renovate their
wood shop to train a new generation kids. Look, maybe
we need to rethink this. Not everyone's it's not everyone's
gonna go to college. Why don't we see if we
can get maybe there'll be you know, two hundred kids

(36:10):
that we can train every year to be expert contractors.
Who could you know, leave high school really well trained
in this and go get great jobs. Maybe if they're
thinking that college is not necessarily in their future, let's
get guys who are skilled, enthusiastic for this, get them educated. No,

(36:30):
we take their wood shop class and we turn it
into an e sports arena, competitive video games, competitive video
games in school. The quote from the story was a
middle school kid saying, you walk in and it's almost
like you're not at school anymore. Because you're not, you're

(36:50):
wasting time. And President Unified Blue almost four million of
your dollar, your measure m dollars on this project. So
great job, President Unified, Way to see where the trends
are going, Way to see what kids really need. You

(37:13):
blew four million dollars on video games and eliminated a
beautiful a shop class to do it. When we return
the roofeful return of Notre Dame football, Oh gosh, that
was rough. Next on The John Girardi Show, Well, we

(37:33):
had football return in a big way this past weekend, folks,
And I'm sad to say sorry to say Notre Dame
lost to Miami Spies Miami. With all my heart, I
did go to the President State game. That was fun.
The first half was not so fun. President State looks
pretty dang shaky that first half. I'm hoping they got

(37:56):
some of the kinks worked out and it'll be smoothly
ailing from here on out. But yeah, I don't know
a lot of stuff to work on for Fresno State
and Notre Dame. That'll do it. Johns already show see
next time on Power Talk