Ten years ago was the unofficial start of the financial crisis of 2008, marked by the government’s intervention to rescue a foundering investment bank from its imminent collapse. For the next twelve months, the powerful institutions at the helm of our economy – the Treasury Department, the Federal Reserve, and the banks of Wall Street – navigated the most volatile economic stretch that any of us have seen in our lifetimes. Often at odds with each other about how to act amid wave after wave of foreclosures, bankruptcies, and the collapse of credit markets and stock prices worldwide, none of the big decision-makers could state with much confidence whether our economic system would make it through the storm intact.
Many, many great books have been written about the causes, events, and aftermath of the financial crisis. Frontline’s ongoing series is another great resource. Others have sought out more personal stories about the crisis and how we’ve changed since then, explored why no top bankers went to jail despite the widespread fraud on Wall Street that contributed to the collapse, and asked whether the next crisis is now imminent. These writers and producers all do a much better job that I could of reassembling the many shards and fragments left in the wake of the carnage. But it seems like a good time to reflect on how the financial crisis shaped my own life, and how tuning in to the outside world in that moment changed my priorities and my career.
My first experience with what would become the financial crisis came within weeks of graduating from college in spring of 2007. Needing to save some money before leaving for a singing gig in Germany in the fall, I took a temp job in a call center that occupied one dreary wing of an otherwise-empty shopping mall in southern Minnesota. My job was to answer the phone for a helpline set up after a class action lawsuit against a major mortgage lender. The suit alleged the type of behavior that’s now familiar to anyone who has read about the excesses of the mortgage industry in the mid-2000’s: luring customers in with low teaser rates, not telling them that their payments were likely to shoot up in a few months, and lending to anyone who could sign the application regardless of whether they could pay it back. When the teaser rates expired, the inevitable wave of forelosures that followed wiped out thousands of now-former homeowners.
The class action suit ended in a settlement. Each member of the class got a postcard in the mail instructing them to call a helpline. When I answered the phone I read from a printed script in a three-ring binder on my desk, reciting that the lender did not admit to any wrongdoing as part of the settlement. Moving along, I would look up the borrower in the computer system and inform them of their share of the damages awarded. This was all the restitution they would get from a company that had promised them the American dream and delivered a nightmare of families disrupted, credit ruined, and shelter – literally the roof over their heads – repossessed. For most of the people I talked to, their claim amounted to about $600.
I answered 200 calls per day for several weeks before they started to taper off. My bosses expected me to stick to the script and speed through the queue, but the reality was different. These were people who had lost their homes, and it was impossible to treat them with the robotic indifference company policy demanded. Some claimants called multiple times, either convinced we had their numbers wrong or just needing more opportunities to vent. One time I got into trouble with my bosses after spending nearly an hour on the phone with a man who, despite knowing that I could do nothing to change his situation, just wanted to tell me all about his grandkids.
The financial world was still a mystery to me, a 22-year-old with a music degree. I was more likely back then to blame people for their own situations because they had bought into lifestyles beyond their means, but the trauma I heard in their voices was still real and it was impossible not to feel sympathy. I still felt that my calling was as an opera singer, but now there was also a powerful desire to help people keep out of the mess those callers found themselves in.
After returning from Germany I kept singing domestically while working a day job at a nonprofit in Minneapolis. That was my situation as the crisis simmered up and finally boiled over in the fall of 2008. I’ve shared a little bit of what happened in my own financial life then, but the crisis and ensuing recession had a bigger impact on me than just my bank account. It came in the form of a newfound curiosity about the distant but powerful forces of money, markets, and the economy that touch all of us whether we want them to or not.
My worldview at the time was very narrow. I had grown up and gone to college in the same small town, and Wall Street seemed like something that would never matter to me. I had never heard of Bear Stearns before reading the headlines about its collapse. Ditto Lehman Brothers. They were in the center of the financial universe, but that universe was totally cut off from the everyday lives of normal Americans. Now that faraway financial system was collapsing, and the shockwaves it sent out struck people I knew from up and down the economic spectrum. The feeling came back that I should be helping people safeguard themselves from this type of calamity, and an idea began to take shape of how I could do it.
The first step was taking control of my own financial life. Freelance singing and stringing together temp jobs wasn’t going to make anybody rich, but I learned the basics of tracking expenses, setting a budget, doing my own taxes, different types of retirement accounts – the kinds of things that everybody should learn in high school.
Then I went farther, learning about the psychological effects money has on people and how they interact with it. I read Kahneman and Taleb and Mlodinow. I examined my own history with money and vowed to learn from it to help others. My opinions about the homeowners who had fueled the housing bubble by taking out bad mortgages started to evolve. They may have signed the loan documents, but the sales tactics of predatory mortgage lenders blinded their ability to see things rationally. It’s easy to look on from the outside and criticize someone for acting irrationally, but the promise of a better life has a more powerful psychological hold on us than anybody would like to admit.
It wasn’t just the mistakes and biases and greed in the financial world that fascinated me but also the world of good that an honest and competent steward of money can do. Eventually I found out about good organizations like NAPFA and XY Planning Network who try to bring about change in the industry by advocating for financial advisors who put their clients’ interests first. They signaled to me that I could join the system while working to avoid the excesses that had led to the near-collapse of its near-collapse a decade ago. Rather than use the psychological effects of money and wealth to sell products and earn commissions, the good advisors help clients see their situations clearly and make better decisions than they would otherwise.
When I read or talk to someone about 2008 these days, I can vividly remember the darkness of those days and feel sympathy for the people who lost homes and jobs and retirement savings. But I also think of the crisis as the catalyst for a long series of events that would lead me down the path to become a financial planner and eventually found my own company to help people get their own financial lives organized and build a secure financial future. My story is just that of one person, but if enough others felt the same calling as I did, I’d like to think that together we can prevent the effects of the next crisis from being as harmful as the last one.
Ben Henry-Moreland 