The journalists at USA today have reached their verdict on the financial meltdown and predictably place most of the blame on the private sector while ignoring the chronology of events.
None of this would have happened had the government not abused its monopoly on force when it began intimidating and threatening lenders into throwing all prudent lending standards out the window. That was the first the domino to fall. Everything after that was an effect of government meddling.
Showing posts with label chris dodd. Show all posts
Showing posts with label chris dodd. Show all posts
Wednesday, December 17, 2008
Thursday, December 11, 2008
Quick Hits: December 11, 2008
** Confused by the massive bank bailout? Here's some answers from Hank Paulson to all the questions you were afraid to ask. Be more afraid of the answers.
** America's favorite domestic terrorist and reprobate William Ayers, is still trying to repair his image with incoherent rationales. Stop selling it Billy, cuz no one's buying.
** Bailout and buy from American car companies? There's no such thing anymore other than that they're headquartered in Detroit . What about all the foreign cars that are built here by Americans?
** Here's some cute video of peaceful and tolerant Muslim children being trained as suicide bombers.
** Obama is offering Israel a nuclear umbrella that will respond to any nuclear attack by Iran. Does this means that Obama has already thrown in the towel in preventing these psychos from getting nukes in the first place?I'm sure The Israelis will appreciate the support after they're dead.
** Chris Dodd wants new management at the car companies, saying: “If you are going to restructure a company you can’t be asking the people frankly, many who were involved in creating the problems we’re in, to be involved in restructuring.” Indeed. So why don't you resign, Dumbass! Or are you going destroy the auto industry just like you did with the mortgage, banking and real estate industries?
** The Pro-Palestian (The UN, US & European Left etc.) will tell you they're anti Zionist, not Jew Haters. What does that mean? Not much apparently.
** America's favorite domestic terrorist and reprobate William Ayers, is still trying to repair his image with incoherent rationales. Stop selling it Billy, cuz no one's buying.
** Bailout and buy from American car companies? There's no such thing anymore other than that they're headquartered in Detroit . What about all the foreign cars that are built here by Americans?
** Here's some cute video of peaceful and tolerant Muslim children being trained as suicide bombers.
** Obama is offering Israel a nuclear umbrella that will respond to any nuclear attack by Iran. Does this means that Obama has already thrown in the towel in preventing these psychos from getting nukes in the first place?I'm sure The Israelis will appreciate the support after they're dead.
** Chris Dodd wants new management at the car companies, saying: “If you are going to restructure a company you can’t be asking the people frankly, many who were involved in creating the problems we’re in, to be involved in restructuring.” Indeed. So why don't you resign, Dumbass! Or are you going destroy the auto industry just like you did with the mortgage, banking and real estate industries?
** The Pro-Palestian (The UN, US & European Left etc.) will tell you they're anti Zionist, not Jew Haters. What does that mean? Not much apparently.
Monday, December 8, 2008
Chris Dodd's Brass Balls
Dec. 7 (Bloomberg) -- Senate Banking Committee Chairman Chris Dodd said General Motors Corp. Chief Executive Richard Wagoner should be replaced as a condition for federal aid and Chrysler LLC may have to merge to survive. “You’ve got to consider new leadership,” Dodd said on CBS’s “Face the Nation.” Wagoner, he said, “has to move on.”
This from the guy who along with Barney Frank, oversaw and did nothing about the financial meltdown his party caused by forcing lenders to make loans to people who couldn't pay them back. Not to mention Dodd's own sweetheart loan from Countrywide that was an obvious payoff.
Dodd is not only still a Senator, he's still in charge of the same committee and is lecturing us on how the auto industry should be run. The only place he should be is federal prison.
Saturday, December 6, 2008
Power Mad Fools
First we had the Government induced Dodd/Frank Mortgage and Banking Meltdown. Now these same incompetent, corrupt boobs are heading up efforts to bring congress' scary business talents to bear on the Auto Industry. Investors Business Daily puts this insanity into perspective:
"...That leaves the latest bright idea from Congress: a broad, federally mandated restructuring of the Big Three in exchange for financial help. Congress would in essence become the Big Three's uber-manager, telling them how to become profitable again.
Excuse us, but are we supposed to believe that the same Congress responsible for next year's estimated $1 trillion deficit can profitably run a market-sensitive company like a car manufacturer?
Or that the same Congress that sat on its hands as the financial meltdown unfolded and helped create the mess will know how to financially restructure America's highly complex auto business?
Or that the people who just last year imposed $85 billion in new "efficiency" standards on a teetering industry will be savvy enough to run them anywhere but further into the ground?
Does Congress have the know-how to do this? We looked up the background of the majority Democrat members on the Senate Banking Committee who grilled Big Three CEOs last Thursday, and who will decide the outlines of any bailout plan. Out of 11 members, just one — Montana's Jon Tester, a farmer and former manager of a butcher shop — had any real business experience.
None of the rest, from committee chairman Chris Dodd on down, has any private-sector experience to speak of, apart from brief stints at law firms. Fact is, Congress isn't equipped to run anything... "
Excuse us, but are we supposed to believe that the same Congress responsible for next year's estimated $1 trillion deficit can profitably run a market-sensitive company like a car manufacturer?
Or that the same Congress that sat on its hands as the financial meltdown unfolded and helped create the mess will know how to financially restructure America's highly complex auto business?
Or that the people who just last year imposed $85 billion in new "efficiency" standards on a teetering industry will be savvy enough to run them anywhere but further into the ground?
Does Congress have the know-how to do this? We looked up the background of the majority Democrat members on the Senate Banking Committee who grilled Big Three CEOs last Thursday, and who will decide the outlines of any bailout plan. Out of 11 members, just one — Montana's Jon Tester, a farmer and former manager of a butcher shop — had any real business experience.
None of the rest, from committee chairman Chris Dodd on down, has any private-sector experience to speak of, apart from brief stints at law firms. Fact is, Congress isn't equipped to run anything... "
Friday, December 5, 2008
Dear Baltimore Sun: Politicians Aren't Business Experts
Why the hell are we allowing the incompetence of the Big Three to be "fixed" by people who are not only more incompetent, but completely unqualified? Oh, and they're doing it with our money. Insanity? You bet it is.
From BMI
Dear Editor:
You opine that Detroit automakers "need to explain in detail to Congress how they intend to eliminate thousands of uneconomical dealerships, swiftly bring their labor costs closer to what Toyota pays its workers in this country, and quickly produce more energy-efficient cars that Americans will want to buy" ("Selling American cars," Dec. 4).
No. These companies deserve investment funds only if they're able to make cars that will sell AND can demonstrate this ability to private investors. Congress is manned by people who specialize in winning popularity contests called "elections." These are not people expert in judging business models, or at pondering the pros and cons of different retail-distribution methods, or equipped to accurately discern the nuances of consumer demands for automobiles, or even – judging from their track record – aware of the most elementary principles of finance and economics.
If, say, you're looking for someone to manage your 401(k), would you entrust that job to Sen. Mikulski or Rep. Hoyer? Of course not, for that's not what they do. So why entrust them and other politicians with the job of investing on a vastly larger scale?
Sincerely,
Donald J. Boudreaux
Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.
From BMI
Dear Editor:
You opine that Detroit automakers "need to explain in detail to Congress how they intend to eliminate thousands of uneconomical dealerships, swiftly bring their labor costs closer to what Toyota pays its workers in this country, and quickly produce more energy-efficient cars that Americans will want to buy" ("Selling American cars," Dec. 4).
No. These companies deserve investment funds only if they're able to make cars that will sell AND can demonstrate this ability to private investors. Congress is manned by people who specialize in winning popularity contests called "elections." These are not people expert in judging business models, or at pondering the pros and cons of different retail-distribution methods, or equipped to accurately discern the nuances of consumer demands for automobiles, or even – judging from their track record – aware of the most elementary principles of finance and economics.
If, say, you're looking for someone to manage your 401(k), would you entrust that job to Sen. Mikulski or Rep. Hoyer? Of course not, for that's not what they do. So why entrust them and other politicians with the job of investing on a vastly larger scale?
Sincerely,
Donald J. Boudreaux
Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.
Gov't Run Auto Bailout Likely
WASHINGTON (AP) - The government would order a major restructuring of Detroit's struggling Big Three auto companies in exchange for a multibillion-dollar bailout under a plan circulating in Congress
Great. Political hacks will now do for the Auto Industry what they did to housing and mortgages. And the same corrupt perpetrators, Chris Dodd and Barney Frank, will be in charge again. These two should be in federal prison but Democrats think they're doing a fine job.
The bankruptcy courts are where every other failing company gets restructured, but Democrats can't resist the prospect of taking over a major industry with Soviet style central planning. Besides, the Democrats union buddies would see their fat, uncompetitive contracts disappear in a responsible bankruptcy plan, so taxpayers will now be on the hook for something private investors and lenders wont touch with a ten foot pole.
This will also be an opportunity for the Big Government socialists to micromanage industry and force the big three to produce enviro-friendly crap boxes that no one wants. It looks like the Eco-Marxist's Global Warming hoax may finally pay off. Remember the Yugo?
Tuesday, November 25, 2008
Dems Will Make It Worse
There are two types of economists. Those that don't know and those that don't know they don't know. Peter Schiff however, now looks like a genius after he correctly predicted with great certitude, the current economic mess we find ourselves in. What's more amazing is that he not only called what would happen but was dead on as to the why. As a side note, he must be having a lot of fun watching the other so-called experts rudely dismissing him while making now laughable predictions of their own.
Now Schiff is predicting further disaster as Obama promises to crank up the presses in a futile attempt to prop up an economy that needs to fall. (Video Below) Democrats are offering more government solutions from the same government that tripped everything up in the first place.
We will have more government spending on inefficient make work projects that take money from the private sector or borrow more on the country's already maxed out credit. Nancy Pelosi and Harry Reid will pass protectionist policies and block free trade deals that will result in retaliatory tariffs overseas. This will be on top of even more uncompetitive new regulations, labor laws and tax increases.
Buckle up and pucker your sphincters folks. It's going to be a wild ride.
Much thanks to Hot Air
Tuesday, October 7, 2008
Video Primer of CRA and the Financial Mess
I guess these guys have resolved the copyright issues. So, at the risk of being called a racist by Congressional reprobate Barney Frank, I'm re-posting a video that even he can understand.
Wednesday, October 1, 2008
Bankruptcy, Not Bailout
It's a given that when you have dug yourself into a hole, you should stop digging. The credit crisis was caused by government meddling in free markets for political purposes. The ensuing debacle now has that same government asking us to trust them to fix it.
Jeffrey A. Miron of Harvard University is calling for allowing the markets to work as they were meant to and getting rid of the perverse government inducements that created these disastrous distortions in the first place:
"This bailout was a terrible idea. Here's why.
The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.
Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared...
The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.
The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company."
Jeffrey A. Miron of Harvard University is calling for allowing the markets to work as they were meant to and getting rid of the perverse government inducements that created these disastrous distortions in the first place:
"This bailout was a terrible idea. Here's why.
The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.
Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared...
The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.
The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company."
Monday, September 29, 2008
Don't Blame Bush for This One
The White House has issued a timeline of its efforts to reign in Fannie Mae and Freddie Mac. They were blocked or ignored until it was too late by a Democrat Party (and some cowardly Republicans) more interested in class warfare and racial politics than doing their job:
2001
April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."
2002
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)
2003
January: Freddie Mac announces it has to restate financial results for the previous three years.
February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.
September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.
October: Fannie Mae discloses $1.2 billion accounting error.
November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)
2004
February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)
February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)
2005: April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)
2007
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.
August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)
September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.
September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.
December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)
2008
January: Bank of America announces it will buy Countrywide.
January: Citigroup announces mortgage portfolio lost $18.1 billion in value.
February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)
March: Bear Stearns announces it will sell itself to JPMorgan Chase.
March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)
April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)
May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.
** "Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)
** "[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)
** "Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)
June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)
July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.
2001
April: The Administration's FY02 budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity."
2002
May: The President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac. (OMB Prompt Letter to OFHEO, 5/29/02)
2003
January: Freddie Mac announces it has to restate financial results for the previous three years.
February: The Office of Federal Housing Enterprise Oversight (OFHEO) releases a report explaining that "although investors perceive an implicit Federal guarantee of [GSE] obligations," "the government has provided no explicit legal backing for them." As a consequence, unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market. ("Systemic Risk: Fannie Mae, Freddie Mac and the Role of OFHEO," OFHEO Report, 2/4/03)
September: Fannie Mae discloses SEC investigation and acknowledges OFHEO's review found earnings manipulations.
September: Treasury Secretary John Snow testifies before the House Financial Services Committee to recommend that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements.
October: Fannie Mae discloses $1.2 billion accounting error.
November: Council of the Economic Advisers (CEA) Chairman Greg Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE." (N. Gregory Mankiw, Remarks At The Conference Of State Bank Supervisors State Banking Summit And Leadership, 11/6/03)
2004
February: The President's FY05 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore…should be replaced with a new strengthened regulator." (2005 Budget Analytic Perspectives, pg. 83)
February: CEA Chairman Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator." (N. Gregory Mankiw, Op-Ed, "Keeping Fannie And Freddie's House In Order," Financial Times, 2/24/04)
June: Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System." (Samuel Bodman, House Financial Services Subcommittee on Oversight and Investigations Testimony, 6/16/04)
2005: April: Treasury Secretary John Snow repeats his call for GSE reform, saying "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America… Half-measures will only exacerbate the risks to our financial system." (Secretary John W. Snow, "Testimony Before The U.S. House Financial Services Committee," 4/13/05)
2007
July: Two Bear Stearns hedge funds invested in mortgage securities collapse.
August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, The White House, 8/9/07)
September: RealtyTrac announces foreclosure filings up 243,000 in August – up 115 percent from the year before.
September: Single-family existing home sales decreases 7.5 percent from the previous month – the lowest level in nine years. Median sale price of existing homes fell six percent from the year before.
December: President Bush again warns Congress of the need to pass legislation reforming GSEs, saying "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs – and ensures they focus on their important housing mission. The GSE reform bill passed by the House earlier this year is a good start. But the Senate has not acted. And the United States Senate needs to pass this legislation soon." (President George W. Bush, Discusses Housing, The White House, 12/6/07)
2008
January: Bank of America announces it will buy Countrywide.
January: Citigroup announces mortgage portfolio lost $18.1 billion in value.
February: Assistant Secretary David Nason reiterates the urgency of reforms, says "A new regulatory structure for the housing GSEs is essential if these entities are to continue to perform their public mission successfully." (David Nason, Testimony On Reforming GSE Regulation, Senate Committee On Banking, Housing And Urban Affairs, 2/7/08)
March: Bear Stearns announces it will sell itself to JPMorgan Chase.
March: President Bush calls on Congress to take action and "move forward with reforms on Fannie Mae and Freddie Mac. They need to continue to modernize the FHA, as well as allow State housing agencies to issue tax-free bonds to homeowners to refinance their mortgages." (President George W. Bush, Remarks To The Economic Club Of New York, New York, NY, 3/14/08)
April: President Bush urges Congress to pass the much needed legislation and "modernize Fannie Mae and Freddie Mac. [There are] constructive things Congress can do that will encourage the housing market to correct quickly by … helping people stay in their homes." (President George W. Bush, Meeting With Cabinet, the White House, 4/14/08)
May: President Bush issues several pleas to Congress to pass legislation reforming Fannie Mae and Freddie Mac before the situation deteriorates further.
** "Americans are concerned about making their mortgage payments and keeping their homes. Yet Congress has failed to pass legislation I have repeatedly requested to modernize the Federal Housing Administration that will help more families stay in their homes, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance sub-prime loans." (President George W. Bush, Radio Address, 5/3/08)
** "[T]he government ought to be helping creditworthy people stay in their homes. And one way we can do that – and Congress is making progress on this – is the reform of Fannie Mae and Freddie Mac. That reform will come with a strong, independent regulator." (President George W. Bush, Meeting With The Secretary Of The Treasury, the White House, 5/19/08)
** "Congress needs to pass legislation to modernize the Federal Housing Administration, reform Fannie Mae and Freddie Mac to ensure they focus on their housing mission, and allow State housing agencies to issue tax-free bonds to refinance subprime loans." (President George W. Bush, Radio Address, 5/31/08)
June: As foreclosure rates continued to rise in the first quarter, the President once again asks Congress to take the necessary measures to address this challenge, saying "we need to pass legislation to reform Fannie Mae and Freddie Mac." (President George W. Bush, Remarks At Swearing In Ceremony For Secretary Of Housing And Urban Development, Washington, D.C., 6/6/08)
July: Congress heeds the President's call for action and passes reform of Fannie Mae and Freddie Mac as it becomes clear that the institutions are failing.
Thursday, September 25, 2008
Democrat Fiddling While Money Burned
Fox News has put together a timeline that shows us who saw the financial meltdown and tried to do something about it. It also shows us who stood in the way.
If Barney Frank, Chris Dodd, Chuck Schumer et al had any shame, they would resign immediately. Instead they're asking us to trust them to fix a disaster they created and refused to recognize until it was too late.
At the very least they should get out of the way and just vote yes on whatever plan the responsible, competent adults decide is best to clean up their mess.
Wednesday, September 24, 2008
Give the Market Back its Freedom
Let's get this straight. The liquidity crisis is not a failure of capitalism or a result of deregulation. Rather, it is a classic case of Moral Hazard that benefited politicians and Wall Street pseudo-capitalists while using taxpayers as their co-signer. This is what happens when you have too much market distorting regulation that can be easily manipulated for personal and political gain.
Washington abused its power of force and law and the good credit of the American people to borrow money at below market rates in order to lend to unworthy borrowers and cronies in a massive socialist/fascist vote buying scheme. This was all done in the name of creating "affordable housing" regardless of the willingless or ability of borrower to afford it in the first place. It also attracted risky speculation that never would have happened had mortgages been priced to reflect market realities.
Democrats going all the way back to Jimmy Carter are to blame, although more than a few Republicans were right there with them. At the very least the entire GOP is guilty of either willful neglect, incompetence or both.
The all too predictable meltdown now has the perpetrators scrambling to cover their collective asses while adding insult to injury by sticking us with the bill. In other words, the same people who got us into this mess are now asking us to trust them to get us out of it with more of the same.
What to do now? Get the Government completely out of the mortgage business and let the real free market solve the problem. Newt Gingrich has a sound plan to get this started, which includes:
"First, suspend the mark-to-market rule which is insanely driving companies to unnecessary bankruptcy. If short selling can be suspended on 799 stocks (an arbitrary number and a warning of the rule by bureaucrats which is coming under the Paulson plan), the mark-to-market rule can be suspended for six months and then replaced with a more accurate three year rolling average mark-to-market.
Second, repeal Sarbanes-Oxley. It failed with Freddy Mac. It failed with Fannie Mae. It failed with Bear Stearns. It failed with Lehman Brothers. It failed with AIG. It is crippling our entrepreneurial economy. I spent three days this week in Silicon Valley. Everyone agreed Sarbanes-Oxley was crippling the economy. One firm told me they would bring more than 20 companies public in the next year if the law was repealed. Its Sarbanes-Oxley’s $3 million per start up annual accounting fee that is keeping these companies private.
Third, match our competitors in China and Singapore by going to a zero capital gains tax. Private capital will flood into Wall Street with zero capital gains and it will come at no cost to the taxpayer. Even if you believe in a static analytical model in which lower capital gains taxes mean lower revenues for the Treasury, a zero capital gains tax costs much less than the Paulson plan. And if you believe in a historic model (as I do), a zero capital gains tax would lead to a dramatic increase in federal revenue through a larger, more competitive and more prosperous economy.
Fourth, immediately pass an “all of the above” energy plan designed to bring home $500 billion of the $700 billion a year we are sending overseas. With that much energy income the American economy would boom and government revenues would grow."
I would add to that the following:
Fifth, break up Fannie Mae and Freddie Mac into too small to save pieces and sell them off to the private sector. Government has no business being in business as it will always put political considerations above sound business practices.
Sixth, investigate and prosecute Franklin Raines, Jim Johnson, Jamie Gorelick and anyone else who was involved in this fraud. Additionally, Barney Frank, Chris Dodd, Bill Clinton and any other officials behind this mess should be exposed for their corruption and removed from any position of authority going forward on this matter. If we were to use Enron as a benchmark for financial crime and punishment, then nothing is too good for these crooks.
The proponents of a bailout are saying a collapse of the financial system is inevitable if taxpayers don't step in with more money. They don't know that and it's probably not true. Instead, it's a fear of the unknown consequences that the free market will impose on these excesses. That will be painful, but far less so than more willful ignorance of the Law of Supply and Demand.
True capitalism can be strict and punishing, but it is always more fair and beneficial to everyone than the arrogant intrusiveness of the state.
At the end of the day, this is an object lesson as to why we should be as vigilant, if not more so about a separation of business and state as we are with religion and state. Not that we needed more examples of the 100% historical failure rate of Government meddling in the free, voluntary trade of individuals.
Links to more on this subject Here, Here , Here and Here.
Washington abused its power of force and law and the good credit of the American people to borrow money at below market rates in order to lend to unworthy borrowers and cronies in a massive socialist/fascist vote buying scheme. This was all done in the name of creating "affordable housing" regardless of the willingless or ability of borrower to afford it in the first place. It also attracted risky speculation that never would have happened had mortgages been priced to reflect market realities.
Democrats going all the way back to Jimmy Carter are to blame, although more than a few Republicans were right there with them. At the very least the entire GOP is guilty of either willful neglect, incompetence or both.
The all too predictable meltdown now has the perpetrators scrambling to cover their collective asses while adding insult to injury by sticking us with the bill. In other words, the same people who got us into this mess are now asking us to trust them to get us out of it with more of the same.
What to do now? Get the Government completely out of the mortgage business and let the real free market solve the problem. Newt Gingrich has a sound plan to get this started, which includes:
"First, suspend the mark-to-market rule which is insanely driving companies to unnecessary bankruptcy. If short selling can be suspended on 799 stocks (an arbitrary number and a warning of the rule by bureaucrats which is coming under the Paulson plan), the mark-to-market rule can be suspended for six months and then replaced with a more accurate three year rolling average mark-to-market.
Second, repeal Sarbanes-Oxley. It failed with Freddy Mac. It failed with Fannie Mae. It failed with Bear Stearns. It failed with Lehman Brothers. It failed with AIG. It is crippling our entrepreneurial economy. I spent three days this week in Silicon Valley. Everyone agreed Sarbanes-Oxley was crippling the economy. One firm told me they would bring more than 20 companies public in the next year if the law was repealed. Its Sarbanes-Oxley’s $3 million per start up annual accounting fee that is keeping these companies private.
Third, match our competitors in China and Singapore by going to a zero capital gains tax. Private capital will flood into Wall Street with zero capital gains and it will come at no cost to the taxpayer. Even if you believe in a static analytical model in which lower capital gains taxes mean lower revenues for the Treasury, a zero capital gains tax costs much less than the Paulson plan. And if you believe in a historic model (as I do), a zero capital gains tax would lead to a dramatic increase in federal revenue through a larger, more competitive and more prosperous economy.
Fourth, immediately pass an “all of the above” energy plan designed to bring home $500 billion of the $700 billion a year we are sending overseas. With that much energy income the American economy would boom and government revenues would grow."
I would add to that the following:
Fifth, break up Fannie Mae and Freddie Mac into too small to save pieces and sell them off to the private sector. Government has no business being in business as it will always put political considerations above sound business practices.
Sixth, investigate and prosecute Franklin Raines, Jim Johnson, Jamie Gorelick and anyone else who was involved in this fraud. Additionally, Barney Frank, Chris Dodd, Bill Clinton and any other officials behind this mess should be exposed for their corruption and removed from any position of authority going forward on this matter. If we were to use Enron as a benchmark for financial crime and punishment, then nothing is too good for these crooks.
The proponents of a bailout are saying a collapse of the financial system is inevitable if taxpayers don't step in with more money. They don't know that and it's probably not true. Instead, it's a fear of the unknown consequences that the free market will impose on these excesses. That will be painful, but far less so than more willful ignorance of the Law of Supply and Demand.
True capitalism can be strict and punishing, but it is always more fair and beneficial to everyone than the arrogant intrusiveness of the state.
At the end of the day, this is an object lesson as to why we should be as vigilant, if not more so about a separation of business and state as we are with religion and state. Not that we needed more examples of the 100% historical failure rate of Government meddling in the free, voluntary trade of individuals.
Links to more on this subject Here, Here , Here and Here.
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