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Sorry, Mr. Bernanke; your loan is denied.

bernanke sad“My loan is WHAT?” The voice on the other end of the line was shrill—very different from the measured tones most of us had heard from the Chairman of the Federal Reserve, the central bank of the United States of America. I had taken a loan application from former Chairman Ben Shalom Bernanke. He had sent me his bank statements, tax returns for 2012 and 2013, copies of driver’s licenses for him and Anna, his wife. He wanted to refinance his three-bedroom home on Capitol Hill. He had applied for a new loan of $625,000.

“I’m sorry, Ben,” I said. I felt like a big shot, calling a guy who had been one of the most powerful men on the planet by his first name. “You were a W-2 employee at the Federal Reserve for eleven years, but you went self employed in February, when you handed the keys to Janet Yellen.”

“Do you have any idea how much they pay me to give a speech?” he said. “I get a quarter of a million bucks just to stand up and run my mouth for half an hour! I’ve done six so far this year, and my agent has me booked through all of next year. I’m doing much better than the $200k I made at the Fed! So what’s the problem?” I could hear his exasperation.

“Here’s the problem,” I said. “You’ve only recently become self employed, and you’ve moved from being an economist and banker to being a professional speaker and consultant. As far as the lender is concerned, you’re now in a different line of work. It doesn’t matter how much you’re making; as far as they’re concerned, your income from speaking, plus the million-dollar book advance you got, not to be income that is likely to continue. I’m sorry, but that’s going to be the same with any lender.” I heard a loud sigh from his end, then a muttered imprecation.

“So there’s no way to do this?”

“Well, we could do an ‘asset depletion’ loan. I’m sure you have plenty of liquid assets. The only problem is that it’s a lot more expensive than a standard Fannie Mae-Freddie Mac loan. Or you could wait until next year, send me your 2014 tax return and go on that.”

“I’ll pass on that,” he said. “I think I know how I can make this work for me anyway.” I expressed my disappointment at not being able to help him and we said our cordial good-byes.

The next day, I saw headlines all over the media:

FORMER FED CHIEF DENIED MORTGAGE. BLAMES OVER-REGULATION.

I got an email invitation from him the same day. Did I want to attend his next speech? His topic, which was getting a lot of attention, was this:

“How excessive regulation is keeping qualified borrowers out of the market”

After the press coverage he had gotten after having his mortgage application denied, he was speaking to sellout crowds.

That Ben: lands on his feet every time.

Note: To anyone who hasn’t figured it out already, this is a fictitious encounter. Although I would be more than happy to assist the former Chair of the Federal Reserve, Dr. Bernanke is not, in fact, my real client. It is common knowledge, however, that he was unable to get a mortgage for the exact reasons I covered in my story above. I hope he has had an opportunity to read my story and gets a kick out of it. JMP
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