The economic crisis is big news. It affects nearly everyone. Either you are directly affected or you know someone that is. The speculation regarding how we got here, when it will end and how best to end the current crisis are all over the board. An interesting example of the rise of the crisis lies right here in Des Moines.
Des Moines and the Midwest are often insulated from the dramatic economic swings taking place on the coasts. Simply put, as a whole we are more conservative. But a few relatively large scale economic stories highlight past problems in the real estate and investment industry. Probably the biggest for Des Moines is the story of Ed Boesen.
Like many others in Des Moines, I knew Ed, worked with Ed and sincerely liked Ed. His energy was boundless and creativity mind boggling at times. His charisma literally lit up a room. Using money from a family flower business, he began to grow a real estate and business empire. Many speculate Ed's intentions were not genuine. Nobody can prove a thing and I'm giving him the benefit of the doubt - things simply started to get out of control.
He began borrowing to pay debt - large debt - to the tune of over $50 million. Lenders bypassed typical lending due diligence and would apparently lend him money on charisma and reputation alone. One lender approved a loan for over $5 million in part by relying upon a security interest in a non-existent $7 million plus investment account . The lender verified the existence of the account by relying upon an AOL e-mail which included the name of the brokerage in the address - yes, really. That was the type of due diligence required of a man with this type of reputation before the economic collapse. I imagine he never dreamed he couldn't turn it around and pay everyone back. But the bottom fell out. His world crashing, he very sadly decided to end his own life. Only then did the debacle become public and what a story it was. There are far too many links to list here, but simply Google his name and Iowa or Des Moines and you will find vast sources of information and speculation.
The point of mentioning this story here is that it highlights the problems in the industry and helps explain the knee-jerk reaction of restricted lending. Like a spurned lover seeking the arms of a polar opposite for comfort, lenders and governmental oversight workers alike have tightened lending policies to the point of lunacy. We need to find the middle ground. There are still excellent and charismatic entrepreneurs willing to risk their own assets to move forward. Why can't we all open our eyes, make necessary and reasonable adjustments to the system and move on? I don't think we'll know for some time. For a little insight though, pay attention to what is going on in Des Moines.
