Ancient Lesson

After a stressful morning of meetings, calls, and correspondence, it was time to take a breather. I hopped on to the 1 California at the foot of Sacramento and rode it up to Stockton.

At the Bank of America branch the teller—he looked barely out of high school—addressed me in Cantonese but switched immediately to English when I said, Good afternoon, I’d like to pay my mortgage. He looked at the modest balance on the statement. “Would you like a home equity loan?” No, thank you. “But we’re running a promotion. There are no fees or closing costs.” No, thank you. “It won’t cost you anything.” No. But I admired his persistence. He’ll be the manager some day.

The main reason I continue to carry the first is that the rate is a low 5.25%. The return on my investments exceeds the cost of the mortgage--although with the recent market action a lot less comfortably--and it’s nice to have some extra liquidity. Any new home equity line is unlikely to be drawn upon because the rate floats at a wide spread over an index; B of A is currently offering new loans at an expensive 7.49%.

Lost in the fairness furor over bailing out subprime borrowers and lenders is any discussion about the risk-averse saps like me who elected to pay (a lot) more by locking in their costs. My 5.25% fixed rate looks low today, but lenders then were offering under 4%, albeit with refinancing risk. Some of the people who are now feeling pain have been paying many thousands less than I have over the past decade. By bailing them out, we’re going to make sure that those who won when rates went down won’t lose now that they have gone up. If you dwell on the unfairness long enough, it’s easy to give in to your anger, Luke.

Speaking of Luke, one of the earliest lessons they teach us in Sunday school is the parable of the prodigal son. The younger son demands his inheritance, blows it on wine and women, and returns, humbled, starving and pleading for a job, to his father. The father, rather than remonstrating him, is overjoyed and throws a feast. (There’s not a perfect parallel to the present day subprime mess, since as far as this observer can tell, there’s little repentance on the part of those who misbehaved; they’re going to do it again.)

But the parable is also about the elder son, who is angry that he has been obedient his entire life without such recognition.

Look, these many years I have served you, and I never disobeyed your command, yet you never gave me a young goat, that I might celebrate with my friends. But when this son of yours came, who has devoured your property with prostitutes, you killed the fattened calf for him!

And he said to him, ‘Son, you are always with me, and all that is mine is yours. It was fitting to celebrate and be glad, for this your brother was dead, and is alive; he was lost, and is found.’

I can identify with all of them--the wastrel son who regrets his spender bender, the father who forgives his children anything, and the older son who resents that his brother was rewarded, not punished. By far the hardest path is trod by the obedient son; when he can truly accept his father's decision without rancor, he will have achieved a state of grace. © 2007 Stephen Yuen

At the Transamerica Redwood Park city dwellers are closer to the Divine.