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Drywall Case

April 8th, 2009

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U.S. politicians are taking their complaints over China-made drywall to the top. Senator Bill Nelson wrote a letter to Obama, asking the President to “recall” the head of the Consumer Product Safety Commission. While politics play a role in preventing the current wave of quality failures from China, targeting the CPSC seems like misplaced motivation. The question is whether policies put in place decades early by leading politicians have benefitted Americans more than they have caused harm. It’s time to revisit decisions made by political and business leaders back in the 1990s.

I’m not a big fan of the phrase, “perfect storm,” but the drywall case is in fact the unfortunate convergence of some powerful macroeconomic factors. The housing boom of several years ago met the Chinese export juggernaut, and it has now collided with the credit crunch. Homeowners who bought properties with China-made drywall are completely stuck — and there are thousands of them.

From a recent article, one story caught my attention:

In the Banyan Isles subdivision in Parkland’s Heron Bay, Peter Chiarelli burst into tears after he showed Wexler, D-Boca Raton, the silver teapot set that has become irrevocably tarnished black.¬†He had bought this house to retire in, and another one for his son. Now the two luxury properties can’t be sold.

“Yesterday I was a millionaire, today I have nothing,” he said. “I can’t sell it, I can’t rent it. I’m stranded, there’s no way out.”

Real estate developers in this country will file bankruptcy as a result of the drywall scandal. Chinese operators will simply carry on with business as usual, having pocketed their profits already. That’s how it typically works anyway. Letter writing and finger pointing are fine, but lawmakers like Bill Nelson might also want to look into ways to make it easier for Americans to seek compensation from those who are actually responsible for creating quality failures.

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