Banks and other financial organizations have certainly been agile these last seven or eight years as they maximized the number of mortgages they sold. Now we're learning that agility also implies we better be able to cope with how fast things happen. As we the people all participated in the first great real estate boom of the 21st century, banks responded and gave us what we asked for (whether it made any sense or not).

Cause and effect follow each other quickly. It’s a lot harder to separate our words from our actions and the consequences that result from them. The real-time feedback loops that drive our economy are mirrors showing us who we really are even as we try to pretend to be somebody else. The real-time economy and the agility it demands is like the genie who quickly gives us what we ask for – so we better learn to be careful.

If banks make money from selling mortgages and if regulations are relaxed on who banks can sell to and what products they sell, then banks sell more mortgages and worry less about who buys them. We miss the point when we call banks’ behavior unethical; it was we the people and our elected government that relaxed the regulations on what the banks could do.

We gave them license to behave foolishly; and they did; and we benefited from their foolishness (for a while). Did we want everyone to get mortgages and “realize the dream of home ownership” so that there would be more and more buyers in the real estate market and thus keep driving up the prices we could charge each other for our properties? (I don’t remember if I was once in favor of something like that myself. If I was, I’m sure there were reasons why it seemed like a good idea at the time.)

The financial services sector spends more on IT than any other business sector so it’s not that they didn’t know what was happening; it’s just that there was no good reason until now to care about it. Business intelligence systems can tell you what’s going on, but how you react to that news depends on what your motivation is. And we all know motivation is largely determined by where the money is and the regulations about how to get it.

An agile enterprise is like a heat seeking missile; it locks onto the money and moves fast as it follows that money. A global economy composed of companies like this is much more volatile than the industrial economy of the last century. Regulations that define where the money is and what is legal and permissible to get it are the real time business rules that drive our economy.

We could have said we wanted the greatest possible home ownership and also said we don’t want banks lending our money in mortgages where people spend more than 30 percent of their annual income on mortgage payments. Banks would then have applied their agility to sell the maximum number of loans within those limits and that simple rule would have prevented most of the bad mortgages.

But it would also have restricted the number of real estate buyers and prevented the big run up in prices and lots of speculative opportunities and quick profits. Hmmm...what was it we were asking for then and what do we want now? Are we ready to put our money where our mouth is?

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