I've Been Thinking

As I watch and read about Congress grilling the CEO's of the Big Three Automakers, some questions keep popping into my mind.

1) The CEO's rightfully took it on the chin for flying to Washington to beg for money in their private corporate jets. They have failing companies, and yet they still flew in those things, which cost $20,000 each for a round trip from Detroit to Washington. The leaders of Congress also have failed miserably in their jobs, and have approval ratings in the toilet. Why doesn't someone grill Nancy Pelosi about her taxpayer funded jumbo jet, which flies her non-stop to California and back every week at an estimated cost of over $5 million per year? Of OUR money? In THIS economy?

2) Barney Frank has also been front and center in the debate about how to spend bailout money. Why doesn't someone ask him about the part he played in the collapse of the economy with his demands to allow non-qualified buyers to buy houses?

3) Chris Dodd is asking for the ouster of failed GM CEO Richard Wagoner as part of the auto bailout deal. Why doesn't somone ask for his ouster for his part in the Fannie and Freddie debacle?

4) Sniveling Senate leader Harry Reid complains about the stinky tourists in Washington. Why doesn't someone ask him to go home where he will not have to put up with the unwashed masses he purports to stand up for?

The outright hypocrisy of our Congressional leaders boggles the mind. They don't even bother to hide it. Do they think that we are really that stupid? Apparently so.

It's Socialism, Stupid!

One of the biggest frauds perpetrated in the current Presidential campaign is the notion that the economy and the current financial crisis is a positive for Obama and the Democrats. Poll after poll shows that most people feel that Obama would handle the economy better, and that McCain would continue with failed Bush economic policies. While the current situation is complex in it's details, and there is plenty of blame to go around, the basic issue at hand is not the "deregulation" argument repeated ad nauseum by Obama. Without a government backed toxic product to sell, the market for toxic securities would never have existed, at least not to the level they now do. Sure, the geniuses on Wall Street could have concocted something to chop and dice into credit derivatives, but even they could not have found a market so VAST, and so TOXIC, with a defacto US government seal of approval behind it to lure millions of customers into a false sense of security. Without the social engineering experiment perpetrated by Acorn, (an organization with which Obama was involved and to which his campaign recently gave $832,000 for what may be a fraudulent get-out-the vote effort) and the Democrats, which demanded that banks provide mortgages to unqualified buyers, the current financial crisis would not have been born. By failing to regulate Fannie and Freddie, the Democrats made the situation even worse, because the market of toxic mortgages was allowed to erupt in size, with a US government stamp of approval. A complete fraud. A complete failure in social engineering, which is the Democrats' ideal in government policy. Why has McCain not pointed this out? Do we need a "Joe the Accountant" to ask Obama the question to get the message across to Americans?

Do we want more of these failed economic policies to drive us deeper and deeper into a hole? We will suffer the consequences, and that will be a cruel punishment. But if the cold eye of history, and our children and grandchildren look back and blame the crippling debt they inherit on us, it will be a travesty. What will we say to them?

Make no mistake, social engineering will explode, should Obama win the Presidency. Socialist policies do not work. How often do you hear about Denmark as a world leader in anything? But we ain't seen nothin' yet.

Where's the Outrage?

In yesterday's lead article, USA Today outed Congressional misbehavior and criminal negligence concerning the financial meltdown. So now we should all be aware that BOTH political parties, along with myriad other villains, are to blame. As ordinary citizens, the only group over whom we have any control is Congress. So my question is this:

Where is the outrage?

Why have the Democrats, who engineered and protected the great social experiment in home ownership for millions of unqualified buyers under the guise of Fannie and Freddie, been left unharmed, at the ready to gain additional seats in Congress, whilst Republicans bear the brunt of the blame? Do we want policies coddling those who default on mortgages (and you just wait and see- credit cards as well) to expand?? Has personal responsibility become a quaint, old fashioned notion?

Don't get me wrong. I still feel that members from both parties ought to be fired, and a new legion of uncontaminated Congressmen and women be offered a seat at the table. Should they too become corrupted by the influences in Washington, then good riddance to them next election. But to keep the current batch of foxes and weasels who raided the henhouse on watch demonstrates either complete ignorance of the issues at hand, or unbridled partisanship. In the current economic climate, when we need to be thinking as AMERICANS, both characteristics are deplorable.

Covering Their Fannies

While Senators Chuck Dodd (D-CT) and Barney Frank (D-MA) play the part of "avenging angels" as stated below in the UK-based Independent, and lay all blame for the financial crisis square on the Bush administration, many Americans are unaware that their fingerprints are all over the root cause of the mess.

Meanwhile, Charles Shumer (D-NY) and Jack Reed (D-RI) have made lots of noise recently decrying the executive severence pay for Mr. Raines and Mr. Mudd, CEO's of Fannie and Freddie. Guess who blocked reform of these very institutions back in 2005 as members of the Senate Banking Sub Committee in a party line vote? Senators Shumer and Reed. As a consequence, the reform bill never even made it to the full Senate for a vote.

From The Independent, Friday, October 3rd, http://www.independent.co.uk.opinion/, is this piece by Dominic Lawson outlining the real story behind Fannie and Freddie's implosion.

"Dominic Lawson: Democrat fingerprints are all over the financial crisis";
The least well off are going to face the most stringent terms for mortgages
Friday, 3 October 2008

Of all the characteristics of a successful politician, none is more essential than bare-faced cheek. Never has this been more evident than in the past fortnight, as senior Democrat members of the US legislature have sought to lay all the blame for the country's financial crisis on the executive arm of Government and Wall Street.
Neither of these two institutions is blameless – far from it. Yet when I see such senior Democrats as Barney Frank, Chairman of the House Financial Services Committee, and Christopher Dodd, Chairman of the Senate's Banking Committee, play the part of avenging angels – well, I can only stand in silent awe at the sheer tight-bottomed nerve of it. These are men with sphincters of steel.
What is the proximate cause of the collapse of confidence in the world's banks? Millions of improvident loans to American housebuyers. Which organisations were on their own responsible for guaranteeing half of this $12 trillion market? Freddie Mac and Fannie Mae, the so-called Government Sponsored Enterprises which last month were formally nationalised to prevent their immediate and catastrophic collapse. Now, who do you think were among the leading figures blocking all the earlier attempts by President Bush – and other Republicans – to bring these lending behemoths under greater regulatory control? Step forward, Barney Frank and Chris Dodd.
In September 2003 the Bush administration launched a measure to bring Fannie Mae and Freddie Mac under stricter regulatory control, after a report by outside investigators established that they were not adequately hedging against risks and that Fannie Mae in particular had scandalously mis-stated its accounts. In 2006, it was revealed that Fannie Mae had overstated its earnings – to which its senior executives' bonuses were linked – by a stunning $9.3billion. Between 1998 and 2003, Fannie Mae's executive chairman, Franklin Raines, picked up over $90m in bonuses and stock options.
Yet Barney Frank and his chums blocked all Bush's attempts to put a rein on Raines. During the House Financial Services Committee hearing following Bush's initiative, Frank declared: "The more people exaggerate a threat of safety and soundness [at Freddie Mac and Fannie Mae], the more people conjure up the possibility of serious financial losses to the Treasury which I do not see. I think we see entities that are fundamentally sound financially." His colleague on the committee, the California Democrat Maxine Walters, said: "There were nearly a dozen hearings where we were trying to fix something that wasn't broke. Mr Chairman, we do not have a crisis at Freddie Mac and particularly at Fannie Mae under the outstanding leadership of Mr Franklin Raines."
When Mr Raines himself was challenged by the Republican Christopher Shays, to the effect that his ratio of capital to assets (that is, mortgages) of 3 per cent was dangerously low, the Fannie Mae boss retorted that "our assets are so riskless, we could have a capital ratio of under 2 per cent".
Maxine Walters' complaint about previous attempts to bring the great state-sponsored housing finance bodies under stricter control was partly a reference to Bill Clinton's efforts. Last week the former President acknowledged that "responsibility" for the absence of proper regulation rested "with Democrats who were resisting any efforts of Republicans in Congress, and earlier when I was President and tried to impose tighter standards on Fannie Mae and Freddie Mac". Then, as now, members of his own party saw all such initiatives as unwonted attacks on the chances for low-earners, and particularly African-Americans, to own their own homes.
From its inception in 1938 Fannie Mae (and later Freddie Mac) was designed to make housing finance available to "ordinary Americans". This was a noble aim. In the 1970s another Democrat President, Jimmy Carter, introduced legislation which demanded that such bodies enhance their lending to minorities. Again, this was based on a noble idea: to stamp out racism in the mortgage market. Thus by 1998 you had the Federal Reserve Bank of Boston producing a document entitled "Closing the Gap: a Guide to Equal Opportunities Lending", which instructed banks that an applicant's "lack of credit history should not be seen as a negative factor" in obtaining a mortgage. As Stephen Malanga of the Manhatta *Institute notes: "Of course the new federal standards couldn't just apply to minorities. If they could pay back loans under these terms, then so could the majority of loan applicants. Quickly, these became the new standards in the industry. As the housing market boomed, banks embraced these new standards with a vengeance. Between 2004 and 2007, Fannie Mae and Freddie Mac became the biggest purchasers of subprime mortgages from all kinds of applicants, white and minority, and most of these loans were based on lending standards promoted by the Government."
One of the few journalists to see where this would lead was Jeff Jacoby, of the Boston Globe. Last week he reminded his readers what he had written in 1995: "Our banks are knowingly approving risky loans to get the feds and the activists off their backs... When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians and regulators plans to take the credit?". Jacoby adds now: "Barney Frank doesn't. But his fingerprints are all over this fiasco."
It's true that the improvident lending was not initiated by Fannie and Freddie: their role in this was to buy these loans and sell them on – but then the music stopped. Cynical students of the American political system will note that the biggest recipient of campaign contributions from the munificent duo of Fannie and Freddie over the past 20 years was one Christopher Dodd, Democrat Chairman of the Senate's Banking Committee.
Rather surprisingly, given that he has only been in the Senate for four of those years, the second biggest beneficiary was Barack Obama. In August the Washington Post reported that Obama's presidential campaign team had sought the advice of Franklin Raines "on mortgage and housing policy matters". Perhaps Mr Obama's team just wanted to know where all the bodies are buried – there are rather a lot of them.
The saddest outcome of all this within America – apart from the crippling cost to the nation's taxpayers – is that the very people the Democrats had intended to help will be the biggest victims: for many years to come banks will demand the most stringent terms for mortgages to the least well off.
In the meantime, let us praise Congressman Artur Davis of Alabama, who confessed this week: "Like a lot of my Democrat colleagues I was too slow to appreciate the recklessness of Fannie and Freddie when in retrospect I should have heeded the concerns raised. I wish my Democrat colleagues would admit that we were wrong." I fear Congressman Davis will not go far with this attitude – but at least he will be able to look at himself in the mirror.