Tuesday, February 26, 2013

Bankruptcy and Changing Tastes in Impropriety

Here's news that near-bankrupt San Bernardino has hired as its city manager a man who has been through personal bankruptcy twice--the latest in February of 2011;.  By all accounts, the city pretty clearly needs somebody with insolvency experience, but let's waive the easy jokes about how it takes one to know one. Rather, take a closer look at the file.  I see by a press report that he disclosed ownership of a house which he valued at $147,500.  Like wow: I don't have any idea where exactly he lived, but even in the (then?) current real estate market, that sounds pretty modest.   But maybe not that modest: Zillow pegs the median price for a San Bernardino County home as of February 1, 2011 at $171,000, which would put him in the low side of the ball park.  The same index shows that the estimated value for the area peaked in early 2006 at about $383,000.  That's a drop of about 55 percent, which tells you why California's "Inland Empire" (heh!) is one of the basket cases in the late real estate meltdown (Wiki, citing a local news account, puts it fourth in the nation for foreclosures in 2010).

Against that $147,500, the paper reports that he had mortgage debt totaling $267,500.   So the home value is (as luck would have it) about 55 percent of the debt, fortuitously close to the percentage drop for the area as a whole.  He reportedly also scheduled bank and credit card debt of $137,252.  I really don't have a clue where that debt came from but I'm guessing a guy who was out of work, falling progressively further behind on his mortgage, and struggling through the week on his plastic So, just like an awful lot of his constituents: they'll have plenty to chat about down at the coffee shop, if San Bernardino has a coffee shop.

I do note a signs-of-the-times datum here, though.  That is: a spokesman for the city sounds just a teeny bit defensive about the whole business but basically ready to hang tough: we knew he did it, and we don't care.  Fine, and not really a surprise.  But my bedtime reading these past few  days has been David Cannadine's fascinating biography of Andrew Carnegie.  I just last night read some stuff about Carnegie's father, quoting a personal memoir the old  man prepared assessing his life in the fullness of age.  Papa presents himself as the very model of a flinty, hard-working Scotch-Irishman with a bit of business sense and a near-speechless horror at the idea of debt.  If the word "bankruptcy" appears in papa's memoir (I've only read the excerpts), I suspect it would set the page on fire.

And that was the way it was in the old days: bankruptcy as a matter of shame (the Scots, I am told, used to make them wear dunce caps).  These days, not so much.  Indeed, it looks like that in San Berdoo at least, bankruptcy is no bar to a position of public trust.  As I say,  I pass no judgment. But I'm diverted to speculate what might happen had somebody surfaced, say, a 10-year old citation for a domestic dispute--his (e.g.,) wife or girlfriend called the cops.  My guess is that he'd be out on  his ear.

Disclaimer: I express no view on whether he should be fired for bankruptcy, or a domestic dispute, or neither or both. And I certainly have no reason to suppose he was ever cited in a domestic dispute: hypothetical only. Just sayin'.

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