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Barney goes braless . . . on an apparently cold day in the House
I would probably give in to the urge to claw out my eyeballs were it not for the fact that the above picture is already indelibly printed in my brain.
Showing posts with label Barney Frank. Show all posts
Showing posts with label Barney Frank. Show all posts
Tuesday, December 20, 2011
Thursday, December 1, 2011
An Epitaph For The Banking Queen
To paraphrase Charles Krauthammer from his appearance on Fox News the other night, the best thing Barney Frank ever did for America, he did a few days ago when he announced his retirement from Congress. Indeed, Barney Frank, during his 30 years in office, was perhaps the single most destructive force our country has seen in the past century.
Like all liberals, Frank always claimed the moral high ground for his actions. He justified his most destructive policies on the supposed need to counter racism in the financial industry and to offer help to the lower and lower middle class through the creation "affordable housing." In his wake, he has left America's economy - and indeed, most of the world's economy - a wreck and our nation in decline.
Frank used the canard of racism in the financial industry to eviscerate the credit standards of America's financial industry. He then used Fannie and Freddie to to create "affordable housing" by government fiat. He set the stage for the spread of sub prime mortgage backed securities throughout the financial industries of the world. True, countless others bear a portion of the responsibility for these problems. And indeed, a strong case can be made that Chris Dodd and Bill Clinton share almost as much of the blame as Frank. That said, my research into our economic decline (see link above), from the creation of the CRA under Jimmy Carter to the present day, has led me to the firm conclusion that Barney Frank is the "but for" cause of our current financial distress..
Barney Frank was also detestable for another personality quirk - his utter intellectual dishonesty. Barney Frank never engaged in an honest disagreement. His sole style of argument was to demonize his opponents. Contest his stand on Fannie Mae and it wasn't because you were legitimately concerned with the long term impact, it was because, according to Frank, you hated minorities and did not want to see Americans have "affordable housing." He was, to quote Bruce, the purveyor of the Gay Patriot blog:
"And as his final act, Frank and his near equally guilty partner in our federally directed national suicide, fellow Democrat Chris Dodd, authored the Dodd Frank Act, ostensibly written to cure the problems that led to our financial crisis. Talk about your howling cognitive dissonance - it is a law that ensconces the very social engineering and other problems that gifted us this near Depression and that now promise to keep screwing America for decades to come.
. . . a mean-spirited, petty man, wrong about so much, unwilling to admit his mistakes, childish in victory . . . That he will no longer be the most prominent gay politician is a good thing for gay America, a very good thing indeed.
"
Barney Frank is, was and has been a national disaster on a scale so grand that I really can't think of any other legislator in our nation's history who could plausibly be claimed his equal. I do not know why he is leaving, but I do know this - today has brought a giant step forward for our nation.
Monday, February 28, 2011
Teddy -
If asked to describe Teddy Kennedy, my response would be an out of control, intellectually dishonest leftie, womanizer, and boozer with no sense of personal responsibility. But it turns out, my description would not do the man justice. This from Powerline, summarizing FBI files on the "liberal lion" recently released pursuant to a FOIA request:
The most entertaining documents relate to a trip Kennedy took to Latin America in 1961. He visited a number of countries, accompanied by his "political counselor." In each country, Kennedy met with prominent Communists or other left-wing leaders. The U.S. Ambassador to Mexico was outraged that Kennedy wanted to bring such people to the embassy--this was the heart of the Cold War, after all--and he refused, telling Kennedy to arrange his own interviews somewhere else. A State Department official in Peru described Teddy as "pompous and a spoiled brat."
In Colombia, the first person Kennedy wanted to meet with was Lauchlin Currie, a Russian spy who served as a key aide to Franklin Roosevelt, then moved to Colombia and renounced his American citizenship.
By the time he got to Chile, Kennedy apparently was tired of political work, so he "made arrangements to 'rent' a brothel for an entire night" in Santiago.
Politically, between repeatedly reelecting Teddy and Barney Frank, both of whom have been utterly toxic to our politics and so destructive to our economy, I can't help but wonder if the rest of us ought to be asking Massachusetts to secede for the good of the nation.
Sunday, July 11, 2010
The Liberals Final Goal - The Dismantling Of America's Military
Thus Belial with words clothed in reason's garb
Counselled ignoble ease and peaceful sloth, not peace.- Milton, Paradise Lost
FDR understood the need for a strong military - as did JFK and LBJ. But not today's modern left. They live in a world of suicidal fantasy, where the only threat to world peace is the U.S. and its military.
Between 1950 and 1994, spending on our military never fell below 4% of GDP and at times was a high as 14%. Eyeballing the numbers, it would appear that average spending on the military as a percentage of GDP for the period 1950 to 1994 easily exceeded 6%. That ended with Clinton who dropped military spending to a post WWII low of 3% of GDP. It rose under Bush to as we prosecuted two wars in Iraq and Afghanistan, but still stayed below 5%.
Enter that master of our national disaster, Barney Frank. Having already played a central role in destroying our economy through social engineering in our financial sector, he now portends to gut our military capacity in order to pay for Obama's profligate spending and to leave a vast pile of money for Democratic entitlements and union pay-offs.
Our budding Sun Tzu, Frank, has overseen the preparation of a 56 page report, Debt, Deficits, & Defense: A Way Forward. In it, he asserts that we have no enemies that can do us any harm. Indeed, for but one example, he describes Iran as a small, local threat offset by its own enemies in the region. Thus, Frank says, there is no need for a robust military. Frank recommends that we adopt what he names a "Strategy of Restraint." Actually, that name is disingenuous because, despite Franks use of the word "strategy," what he proposes is not a military strategy, but rather a political policy to unilaterally disarm to the point that our ability to project force would be extremely, if not fatally, compromised.
Frank would have America withdraw the vast majority of what would be left of our military to within our boarders, apparently leaving token forces in NATO and withdrawing from the vast majority of our commitments elsewhere. Frank would further forswear all foreign wars unless we are first attacked within our borders by an expeditionary force. The amount of military force Frank would leave us with might - just maybe - allow us to defend our borders.
Here are Frank's specific proposals, with his projected savings in red:
Strategic Capabilities
1. Reduce the US nuclear arsenal; adopt dyad; cancel Trident II - $113.5 billion
• 1000 deployed warheads
• 7 Ohio-class SSBNs
• 160 Minuteman missiles
2. Limit modernization of nuclear weapons infrastructure and research - $26 billion
3. Selectively curtail missile defense & space spending - $55 billion
Conventional Forces
4. Reduce troops in Europe and Asia, cut end strength by 50,000 - $80 billion
5. Roll back Army & USMC growth as wars in Iraq and Afghanistan end - $147 billion
6. Reduce US Navy fleet to 230 ships - $126.6 billion
7. Retire two Navy aircraft carriers and naval air wings $50 billion
8. Retire two Air Force fighter wings, reduce F-35 buy $40.3 billion
Procurement and R&D
9. Cancel USAF F-35, buy replacement $47.9 billion
10. Cancel USN & USMC F-35, buy replacement $9.85 billion
11. Cancel MV-22 Osprey, field alternatives $10 b. – $12 billion
12. Delay KC-X Tanker, interim upgrade of some KC-135s $9.9 billion
13. Cancel Expeditionary Fighting Vehicle, field alternatives $8 b. – $9 billion
14. Reduce spending on research & development $50 billion
Personnel Costs
15. Military compensation reform $55 billion
16. Reform DoD’s health care system $60 billion
17. Reduce military recruiting expenditures as wars recede $5 billion
Maintenance and Supply Systems
18. Improve the efficiency of military depots, commissaries, and exchanges $13 billion
Command, Support, and Infrastructure
19. Require commensurate savings in command, support, and infrastructure $100 billion
What Frank proposes is a recipe for disaster. History teaches a brutal lesson - that peace is achieved only through superior military power. Europe has enjoyed only two extended periods of peace over the past two millennia. They were the Pax Romana and, most recently, the Pax Americana. The flip side of that coin is that weakness has always been an invitation to attack.
Frank states that we should maintain a small military core that we can then expand as the need arises. But the days when there was safely time to "ramp-up" military capability to meet a threat ended about World War I - and at least by World War II. Indeed, we were fortunate in WWII in having several years to prepare before we entered the war. But forgetting the lesson of preparedness, we were almost destroyed in Korea within a few weeks because we were there with forces unprepared for war and with second rate weaponry.
When we fought the Iraqi military in conventional war, we destroyed them in short order, less than 30 days of fighting combined, due to our vastly superior training and weaponry. Take away that training, take away that superior weaponry, and what you are left with is two roughly equal forces fighting it out. That is what Iran and Iraq did between 1980 and 1988. They fought to a stalemate for eight years and sustained a combined total of nearly 2.5 million casualties. That is what happens when equals fight. In contrast, in both of our wars with Iraq and inclusive of the post-war occupation, we suffered a sum total of less than 5,000 soldiers killed. It is the difference between minimal costs in blood and gold and disastrous costs.
Further, to maintain military superiority means that advanced weapons systems must be developed and fielded. That takes years, not months. If Frank thinks that Russia and China are not deeply engaged in trying to develop and field equipment superior to our own, he is supremely misguided. Fighting an enemy with a technological advantage is a sure ticket to defeat. Ask the Poles or the French from WWII.
Frank points to the relative expenditure between the U.S., China, Russia, and Iran as proof that we have no enemies capable of threatening U.S. military superiority. That is incredibly disingenuous. As to Russia and China, pay and benefits for the soldiers is not even a pittance of what we pay for our all volunteer military. As to budget devoted to equipment and R&D, just from the things I have read over the past several years, both China and Russia have been fielding very sophisticated military equipment. The Air Defense system Russia is preparing to send to Iran is sufficiently good as to worry both Israel and the U.S. China has begun to field a blue water navy - with much of their technology stolen from us.
In sum, what Barney Frank proposes is an end to the U.S. as a superpower and an end to the U.S. as a guarantor of peace in regions strategic to the United States and our allies. It is a disaster waiting to happen. Where we to adopt Frank's recommendations, it would take to the U.S. back to pre-WWII days to an isolationist America. And that worked out well, didn't it. We only lost a little over 400,000 men in WWII.
Where we to adopt Frank's recommendations, I could envision the fall of Taiwan and Israel within two decades, as well as the rapid expansion of China, Russia, Iran and whatever the successor to al Qaeda maybe. I could further envision problems in South America. How will our world - and our economy - be in two decades after Frank and Obama are done with our military? I would have to say that we would be in deep trouble indeed.
Thursday, April 22, 2010
And This Will Fix Our Financial Problem?
As I look at the financial "reforms" proposed by Obama, it appears that there is precious little in the way of reform that is actually meant to address the issues raised by our financial crisis. My first question in that regard is how can Obama reform the financial system if we have not identified the problems at issue. Obama has established a commission to determine the causes of our financial break down. He wants reforms passed this summer, but the commission won't be reporting until the winter. So how the hell can he push through financial reforms months before that commission has completed its work and issued its report? Obama's push for financial reform before the commission issues its report makes a mockery of both.
Beyond that question, all of my issues with Obama's proposed financial reform are substantive. One, we know that much of the problem with the subprime mortgages came about because sub-prime loans were being bundled and given AAA ratings. This should be a central focus of financial reform, yet how that happened has been perhaps the most studiously ignored issue of the entire sub-prime mess. Indeed, the degree to which it has been ignored is making my spidey senses go tingling off the charts. On its face it appears that there has been massive fraud - and fraud that deeply implicates Fannie Mae. Moreover, having heard Barney Frank within the past year pressure Fannie Mae to upgrade the rating for certain loans, I really wonder whether this issue might not implicate some of our elected representatives also.
Two, it appears that our financial crisis came about one step removed from the sub-prime crisis. Besides apparent fraud in the bundling of tranches, you had derivatives designed to spread the risk - normally a good thing - but you also had recently enacted mark to market accounting rules that required institutions to show the value of their mortgaged backed securities as zero when the market for mortgages froze. Of course the value of the securities was not zero, but this rule caused untold chaos for those firms holding many securities - and it was what nearly froze the international credit market. Yet I see nothing being done to address those rare situations when mark to market becomes punitive and fails to give an accurate measure of the value of the securities being held.
Three, I supported the bailout of our financial institutions last year in light of the unique circumstances and the threat to credit - a meltdown that might have caused a true depression. That said, under anything short of such a unique set of circumstances, we should be not bailing out any financial institution. For capitalism to work, corporations need to be allowed to fail - whether they be AIG or GM. Yet Obama's proposed regulations give the government unlimited power to take over and bail out financial institutions and even establishes a slush fun to support such acts.
Four, Fannie and Freddie need to be completely privatized and put out of the reach of Congressional control. No one can argue that it was the demonic intersection of Fannie and Democrats that lay at the heart of our current fiscal woes. Yet they have now been, for all practical purposes, completely nationalized by the Obama administration.
Five, it was social engineering of credit qualifications that led directly to our current fiscal woes. Any financial reform should make color blind lending standards mandatory. Yet Obama proposes to put racially charged lending standards back into the front and center of our financial industry. That is anything but reform.
Six, someone needs to explain how heavily taxing banks and their profits will do anything to protect the banks customers, improve efficiency, or do anything other than further feed the trough at which at which our voracious socialist governments feed. Yet that is what is being proposed by the IMF:
Tough proposals to cut the world's biggest banks down to size by taxing their profits and pay were outlined by the International Monetary Fund tonight in an attempt to spare taxpayers another massive public bailout of the financial sector.
In measures more stringent than Wall Street and the City had expected, the fund called for the introduction of a twin-track approach to the three-year banking crisis that would both force firms to pay for any future support packages and raise new taxes on their profits and remuneration. . . .
Those are the issues I see. Michael Barone, writing at The Examiner amplifies several of them:
. . . The Dodd bill, however, has it trumped. Its provisions promise to give us one episode of Gangster Government after another.
At the top of the list is the $50 billion fund that the Federal Deposit Insurance Corp. could use to pay off creditors of firms identified as systematically risky, i.e., "too big to fail."
"The Dodd bill," Democratic Rep. Brad Sherman writes, "has unlimited executive bailout authority. That's something Wall Street desperately wants but doesn't dare ask for."
Politically connected creditors would have every reason to assume they'd get favorable treatment. The Dodd bill specifically authorizes the FDIC to treat "creditors similarly situated" differently.
Second, as former Bush administration economist Larry Lindsey points out, the Dodd bill gives the Treasury and the FDIC authority to grant an unlimited number of loan guarantees to "too big to fail" firms. Chief executive officers might want to have receipts for their contributions to Sen. Charles Schumer and the Obama campaign in hand when they apply.
Lindsey ticks off other special favors. "Labor gets 'proxy access' to bring its agenda items before shareholders as well as annual 'say on pay' for executives. Consumer activists get a brand-new agency funded directly out of the seniorage the Fed earns. No oversight by the Federal Reserve Board or by Congress on how the money is spent."
Then there are carve-out provisions provided for particular interests. "Obtaining a carve-out isn't rocket science," one Republican K Street lobbyist told the Huffington Post. "Just give Chairman Dodd and Chuck Schumer a s--tload of money."
The Obama Democrats portray the Dodd bill as a brave attempt to clamp tougher regulation on Wall Street. They know that polls show that voters strongly reject just about all their programs to expand the size and scope of government, with the conspicuous exception of financial regulation.
Republicans have been accurately attacking the Dodd bill for authorizing bailouts of big Wall Street firms and giving them unfair advantages over small competitors. They might want to add that it authorizes Gangster Government -- the channeling of vast sums from the politically unprotected to the politically connected.
That can boomerang even against the latter. Goldman Sachs employees gave nearly $1 million to the Obama campaign and $4.5 million to Democrats in 2008. That didn't prevent the Goldman from being shoved under the SEC bus. Gangster Government may look good to those currently in favor, but, as some of Al Capone's confederates found out, that status is not permanent, and there is always more room under the bus.
Ultimately, I see no reason to think that the financial reforms proposed by Obama will do a single thing to improve our economy. What a surprise, eh?
Tuesday, February 16, 2010
A Partisan Democrat's Solution To End Partisanship
He is Washington's Most Toxic Asset. He, along with Chris Dodd and Bill Clinton, were the architects of our current economic meltdown. He is the Banking Queen - Democrat Rep. Barney Frank, as thoroughly partisan as anyone to ever have sat in Congress. In response to soon to be former Sen. Evan Bayh's chastisement of Congress for rank partisanship, Frank agreed and proposed his own solution to that problem:
. . . Frank says his fellow Democrat could do more to change that by staying in Congress and helping change the filibuster rule than by stepping out of public service.
Hah. His answer to the partisan crisis is to make the minority party irrelevant, thus allowing the majority Democrats to ignore Congressional Republicans. It would end partisan rancor by dispensing with any need for bipartisanship. When in God's name will Mass. voters turn this walking disaster out of office?
Sunday, January 24, 2010
Democrats & War On The The Economy, Act II
President Barack Obama's newest Wall Street crackdown was met with hesitation from Treasury Secretary Timothy Geithner, who voiced concern that politics could sacrifice good economic policy, according to financial industry sources. Mr. White's problem is that he does not understand that, for Obama, all problems, from national security to economic, are political - and in his world, it it is the ideology of the far left that are driving Obama's politics. Capitalism is evil. It must be controlled by government and there is nothing wrong with using it as a whipping boy to gather votes. The real problems that led to our fiscal meltdown in fact have to be ignored because they implicate nearly every Democrat in Congress today, including our resident Acorn enabler, Obama himself. Warren Buffett opposes President Barack Obama’s proposed levy on financial institutions because firms including Goldman Sachs Group Inc. and Wells Fargo & Co. already repaid bailout funds. Let's be clear, when you tax a corporation, it always, always, gets passed through to the clientele. It will not create one new job to lessen the record unemployment in America. It will merely make our banks a little less competitive so Obama can pose as a populist champion. A top House Democrat on Friday said his committee was preparing to recommend "abolishing" mortgage-finance giants Fannie Mae and Freddie Mac and rebuilding the U.S. housing-finance system from scratch. What could possibly go wrong.
Among the many fictions Obama sold us was that Democrats were not repsponsible for our economic meldown (Fannie, Freddie, moral hazard, race based lending standards - nothing to see there) - but rather that our finacial sector was. Obama tried to use the financial crisis to push his priorities of health care and cap and trade while tossing the infamous Stimulus into the economy in the hopes that a bill - only 2.6% of which was aimed at small business - would somehow stop the unemployment hemmoraging.
Now here we sit, well into a recession that is second only to the Great Depression in the depth of its effects and length. So what does Obama plan for an Act II that will put our economy on better footing? How about new bank regulations to limit their size and trading abilities as well as taxing our most productive banks in what amounts to a public scourging. Perhaps even more horrifying is the plan for Washington's most toxic asset, one of the primary architects of our finanical disaster, Barney Frank, to do away with Fannie Mae and Freddie Mac and replace them with a new agency created by him. What could possibly go wrong.
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Obama has floated a plan to encumber banks with a host of new regulations to limit the size of banks and the type of transactions in which they can engage. This is nothing more than an Axlerod inspired attempt to fan the flames of class anger to raise poll numbers. It does nothing to solve the problems that got it us into this financial catastrophe and it will likely put a stake in our global financial competitiveness, but it does play to the socialist meme of capitalism as the root of all evil. Thus it works for Obama, but Treasury Sec., Tim Geitner is finding it a bit difficult to get behind:
Geithner is concerned that the proposed limits on big banks' trading and size could impact U.S. firms' global competitiveness, the sources said, speaking anonymously because Geithner has not spoken publicly about his reservations.
He also has concerns that the limits do not necessarily get at the root of the problems and excesses that fueled the recent financial meltdown, the sources said.
A White House official said both Geithner and Lawrence Summers, the director of Obama's National Economic Council, worked closely with Paul Volcker, who heads a White House economic recovery board, in developing the proposals.
"The plan was submitted to the president with a unanimous recommendation from the economic team," the official said.
Obama's proposals would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.
Obama called for a new cap on the size of banks in relation to the overall financial sector that would take into account not only bank deposits, which are already capped, but also liabilities and other non-deposit funding sources.. . .
They come as the administration has sharpened its rhetoric against Wall Street where the announcement was met with disdain. Bank shares slid and the dollar fell against other currencies. . . .
Lawrence White, a professor at New York University's Stern School of Business and a former regulator, said Obama's proposals were "a solution to the wrong problem."
"They have this rhetoric that it was proprietary trading that was the problem," White said. "That's wrong."
In the same vein is Obama's new punitive bank tax, designed to garner votes by punishing select banks. Warren Buffet, an Obama supporter during the campaign, finds himself not exactly impressed by this latest attack:
“I don’t see any reason why they should be paying a special tax,” said Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., in an interview on Bloomberg Television today. Supporters of the plan to tax the banks “are trying to punish people,” he said. “I don’t see the rationale for it.”
Obama announced a plan last week to impose a fee on as many as 50 financial companies to recover losses from the federal government’s Troubled Asset Relief Program. The levy would apply to firms with more than $50 billion in assets, including Wells Fargo and Goldman Sachs, two companies that Berkshire has investments in. It would exclude Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders taken over by the U.S.
“Look at the damage Fannie and Freddie caused, and they were run by the Congress,” said Buffett. “Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.”
Wells Fargo, Goldman Sachs and other beneficiaries of the bailout such as Bank of America Corp. and JPMorgan Chase & Co. repaid the money they got from the government. Fannie Mae and Freddie Mac owe about $110 billion, according to Bloomberg data.
“Most of the banks didn’t need to be saved,” Buffett said. “Including Wells Fargo.” . . .
The president’s proposed tax would be imposed on firms including bank holding companies and some insurers. The administration estimates the tax will raise $90 billion over 10 years and $117 billion over 12 years.
“My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people,” Obama said Jan. 14 when he announced the Financial Crisis Responsibility Fee. “We want our money back, and we’re going to get it.”
And last but not least in doubling down on failure is perhaps the scariest finanical news yet to come out of Washington in decades. It is a plan for Barney Frank, one of three central architects of our financial meltdown, to write the next chapter of America's march to the finanical precipice. This from the WSJ:
"The remedy here is...as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," said Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee.
. . . Fannie and Freddie own or guarantee around half of the nation's $11 trillion in home mortgages. . . .
Thursday, January 14, 2010
Continuing the Downward Economic Spiral
From the first few Drudgelines today:
New jobless claims rise 'more than expected'...
Retail sales drop in December; Sales for all of '09 plunge by record amount...
Record year for foreclosures...
NOW HE WANTS TO TAX BANKS?
Dollar 'Crisis' Looms if USA Doesn't Curb Debt...
We have real unemployment at 17.3% - at least - and that number is, according to AP today, on an upward trend. On top of that, "[r]etail sales unexpectedly fell in December, leaving 2009 with the biggest yearly drop on record." For the year, retail sales were off 6.2% from 2008, a year when retail sales dropped 0.5%. 2009 is by leaps and bounds the worst year of decline on record for retail sales. Also, foreclosures were up 21% in 2009 and are expected to go higher in 2010.
Obama has proposed a new tax on some of our nations largest "financial companies" to make up for the costs of TARP. Designed to raise $117 billion, the tax would hit certain financial companies with over $50 billion in assets. It would exempt government controlled companies such as GMAC. This will of course drive up the costs of banking for all of us, but it does enjoy the support of Barney Frank - a man with a proven track record of some economic consequence to our nation. This comes on top of the recent decision of our government to de facto fully nationalize Fannie Mae and Freddie Mac, making the taxpayer liable for all the losses they incur.
Now another organization, this time a think tank - The Committee On The Fiscal Future Of The United States - is sounding the alarm that the "U.S. soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs . . ." Tell us something we don't know. Our debt stands at over 50% of GDP and is continuing to rise. Social Security is still a time bomb, and Obama is attempting to deal with Medicare by making the situation far worse.
There is some really good news for the economy however. We were told just the other day that the Obama administration, as if by magic, created or saved, 2 million jobs with the pork laden stimulus. And yes, that would be the same stimulus wherein Dems allocated all of 2.6% of $789 billion to funding small business programs and tax breaks.
Time to quote Ed Morrissey at Hot Air:
We’re not in a recovery, especially not in employment. Production may have incrementally improved in 2009Q3, but hardly enough to stimulate job creation. Rep. John Carter uses similar data at Big Government to make the same point. The economic policies of the Obama administration have lengthened the recession and delayed what would be the normal recovery process, mainly by signaling to investors and businesses that costs will go up in taxes and energy prices, as well as burdensome mandates on health insurance. As a result, people are not investing their money into job-creating risk but are sheltering their cash instead.
The US needs a change in direction, and fast. Another Porkulus will give the illusion of action while deepening our debt and creating more need for higher taxes in the future. We have to make investment attractive, and the only way to do that is to cut taxes, pare back government programs, close the deficit through belt-tightening, and get Congress out of the private sector.
Update: Hot Air also has some excellent graphs showing how deep this recession is compared to all other post-WWII recessions. This is by far the deepest and the longest, with no end in sight.
Saturday, December 26, 2009
BOHICA - Obama's Fannie/Freddie Dead Drop
Those who cannot learn from history are doomed to repeat it.
- - Edmund Burke
The Obama administration, on Christmas Eve, dropped an utterly insane bombshell. Team Obama has used the slowest news weekend of the year to announce that they are uncapping federal guarantees for Fannie Mae and Freddie Mac loans - writing these institutions a blank check with our tax dollars. This from the WSJ:
The Obama administration's decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.
The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.
Unlimited access to bailout funds through 2012 was "necessary for preserving the continued strength and stability of the mortgage market," the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.
"The timing of this executive order giving Fannie and Freddie a blank check is no coincidence," said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed "to prevent the general public from taking note."
Treasury officials couldn't be reached for comment Friday.
So far, Treasury has provided $60 billion of capital to Fannie and $51 billion to Freddie. Mahesh Swaminathan, a senior mortgage analyst at Credit Suisse in New York, said he didn't believe Fannie and Freddie would need more than $200 billion apiece from the Treasury. . . .
Why uncap federal (our tax dollar) guarantees for Freddie and Fannie, particularly when they have the vast majority of funds remaining available to them. At Politico, one analyst speculates that "It's possible we may see some horrendous numbers for the fourth quarter and, thus 2009, and Treasury wants to calm the markets." The other possiblity is more insidious. Hot Air reasons:
It looks as though Obama wants to use Fannie and Freddie as proxies for more social engineering and wants to prepare for them to take more losses as a result. That would be the only reason to completely uncap the commitment to cover its losses. After all, the bailout was supposed to help put the two GSAs back into the black, and at the rate they have used that bailout (assuming no improvement), we wouldn’t have to worry about exceeding caps until 2012. I’d bet that the Obama administration retools its foreclosure prevention programs to have Fannie and Freddie buy up the paper and forgive parts of the principal on the loans, and have taxpayers eat the losses on a massive basis.
Perhaps the biggest travesty of putting Democrats in charge of both houses of Congress is that there has been no investigation into the causes of our economic meltdown. That meltdown, which began with the sub-prime crisis, was proximately caused by massive market distortion resulting from Democrat's social engineering. Bill Clinton, Chris Dodd and Barney Frank were the engines of that social engineering, and the tools they used were Community Reinvestment Act (CRA) regulations to force the lowering of lending standards and the use of Fannie Mae and Freddie Mac to underwrite these risky loans.
The CRA regulations allowed groups like ACORN to sue banks who did not make a proportionate amount of loans to African Americans. It mattered not that the banks could show, in virtually all cases, that loans denied to people of whatever race were denied on legitimate, non-discriminatory grounds. It didn't matter that ACORN could not show that a minority was treated to different standards than a white. All that mattered were the statistics. As an aside, this precise theory has been held, standing alone, as unconstitutional in terms of hiring and fining.
With no official investigation into this disaster, Obama has been free to not merely continue with the poison at its heart, but to further it. A few months ago, proposed financial regulations that would not merely keep the CRA in force, but would double down, expanding its enfocement. And now if Obama is planning to again use Fannie and Freddie as tools of this disaterous piece of social engineering, it will condemn us to repeat history. BOHICA - bend over, here it comes again.
Thursday, July 9, 2009
Republicans Highlight The Fannie & Freddie Failures But Need More
The housing bubble that burst in 2007 and led to a financial crisis can be traced back to federal government intervention in the U.S. housing market intended to help provide homeownership opportunities for more Americans. This intervention began with two government-backed corporations, Fannie Mae and Freddie Mac, which privatized their profits but socialized their risks, creating powerful incentives for them to act recklessly and exposing taxpayers to tremendous losses. Government intervention also created “affordable” but dangerous lending policies which encouraged lower down payments, looser underwriting standards and higher leverage. Finally, government intervention created a nexus of vested interests – politicians, lenders and lobbyists – who profited from the “affordable” housing market and acted to kill reforms. In the short run, this government intervention was successful in its stated goal – raising the national homeownership rate. However, the ultimate effect was to create a mortgage tsunami that wrought devastation on the American people and economy. While government intervention was not the sole cause of the financial crisis, its role was significant and has received too little attention. All of that is good for as far as it goes, but this report simply is far too narrow. Republicans still are not putting the "subprime meltdown" in the context of the larger economic meltdown that we are facing. They are still ceding to the Democrats by their silence the larger narrative of Democrats that our economic crisis is ultimately a failure of capitalist markets and caused by deregulation.
The Republican members of the House Oversight Committee have issued a 29 page report dealing with the subprime meltdown. You can find it here. While it does tell the tale, it goes nowhere near far enough in many respects. It does not do enough to highlight the foreseeability of this mortgage meltdown, nor does it do enough to highlight the culpability of Democrats in the House and Senate, Barney Frank in particular. (For more on those topics, see my post, Hurricane Subprime) Most importantly, the House report does not put the mortgage meltdown in the larger context of economic meltdown we are facing today.
As the report sums up:
None of that is true. At the heart of the subprime meltdown was social engineering through government regulation. Without the subprime meltdown, we simply do not suffer our current economic crisis. That was the big domino that has knocked down all the other dominos. The failure of bond rating companies to accurately assess the risk of mortgage backed securities was a related major culprit. Mark to market accounting rules then made this whole matter exponentially worse, creating a market value of zero for a significant portion of mortgage backed securities. I could go on, but I am so tired of screaming about this while our Republicans in Congress - those who should be doing the screaming - sit on their thumbs.
Unfortunately, Obama is using the left's narrative for a massive expansion of government control of our economy. He is even pushing a vast expansion of the CRA and racially charged lending requirements. It is insanity. It is like prescribing a diet of butter and lard for a heart attack victim. But it will happen if this is the best the Republicans can do as a counternarrative. And if so, we are in deep trouble.
Thursday, July 2, 2009
Barney Frank Vies For Washinton's Most Toxic Asset
When President Obama announced on June 9 that some financial institutions would be allowed to repay Troubled Asset Relief Program dollars, he said the massively expensive TARP bailout had made money for the federal government. "It is worth noting that in the first round of repayments from these [TARP recipients], the government has actually turned a profit," the president said. Indeed, TARP supporters have long held out the hope that the program might be profitable. Read the entire article. I mean, its not like we need to be concerned about the size of our budget, right? Barney Frank is a clear and present danger to this country.
Few people have played such a disastrous role in our nation as Barney Frank. He has been a key architect of the mortgage mess that is at the heart of our economic meltdown. Since the mortgage market crashed, that hasn't slowed this utterly shameless and dangerous man. He has strong-armed the bond rating companies not to downgrade municipal bonds and floated a plan to have the federal government insure all state and local bond issues. A few days ago, he asked Fannie Mae to start accepting loans on condos that they currently deny as too risky. His latest is now to take repayment of TARP funds - money that is by law supposed to go into the general funds and be used to pay down our crippling debt - and use it to fund one of his latest brilliant plans. This from Byron York:
But now Rep. Barney Frank, the chairman of the House Financial Services Committee, has come up with a proposal to spend any TARP profits before they can be returned to the taxpayers. Last Friday, Frank introduced the "TARP for Main Street Act of 2009," a bill that would take profits from the program and immediately redirect them toward housing proposals favored by Frank and some fellow Democrats.
. . . Last month, the General Accountability Office (GAO) reported that, through June 12, 2009, the government had received $6.2 billion in dividend payments. The original TARP legislation required that money made from the program "shall be paid into the general fund of the Treasury for reduction of the public debt."
Frank, however, wants to spend the money before it can be used to pay down anything. First, the "TARP for Main Street" proposal would take $1 billion "from dividends paid by financial institutions that have received financial assistance provided under…the Emergency Economic Stabilization Act" and apply it to a trust fund that Frank has long wanted to create for low-income rental housing. (The measure, unfunded, was part of last year's bailout of Fannie Mae and Freddie Mac.) Next, Frank would take $1.5 billion from TARP dividends for a so-called "neighborhood stabilization" fund. Republican critics have charged that both measures might allow federal dollars to be distributed to activist groups like the Association of Community Organizers for Reform Now, or ACORN.
The "TARP for Main Street" bill would also spend $2 billion, apparently from remaining TARP funds, to subsidize people who are delinquent on their mortgages, and another $2 billion to "stabilize multifamily properties that are in default or foreclosure." . . .
Tuesday, June 30, 2009
Masters Of Disaster Set To Strike Again - Will The Ricci Decision Stop Them
Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to "roll the dice" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity -- with your money. He and New York Representative Anthony Weiner have sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers. Read the whole article. Frank is, I've long maintained, a clear and present danger to the United States. ACORN, which played a starring role in creating the subprime mortgage crisis, plans to add insult to injury by harassing lenders across the nation with protests tomorrow in an effort to coerce them into supporting President Obama's Making Home Affordable foreclosure-avoidance program. But the worst of the worst is Obama and his plan to put the disasterous Community Reinvestment Act on steroids as part of his 89 page proposal for massive government intervention in our economy, “A New Foundation: Rebuilding Financial Supervision and Regulation.” The CRA uses an analysis precisely like that in a "disparate impact" claim under Title VII to determine whether financial institutions are making enough loans to minorities. As it stands now, banks cannot defend against a finding of insufficient loans to minorities under the CRA by pointing to their individual portfoloio to show that they have not engaged in discrimination, but rather have applied loan standards evenly and without reference to color. The government applies the CRA to require a racially balanced result.
(Picture from Protein Wisdom)
Many of the same people who brought us the current economic collapse - the left generally, with Barney Frank, ACORN and Obama in particular - are at it again. Rather than fixing the problems they created over two decades, each are doubling down. Obama is planning to vastly exand the Community Reivestment Act. Barney Frank is pushing a new version of subprime lending on Fannie Mae. ACORN is out thugging the major mortgage brokers. But a speed bump may now be in their path. The Supreme Court decision in Ricci yesterday might actually be the tool that defangs the racially charged Community Reinvestment Act and curbs some its abuses by the Masters of Disaster.
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We are in the worst recession since the Great Depression because of a catastrophic failure of the mortgage loan market. At the very heart of that failure is the racially charged Community Reinvestment Act. (For an in-depth discussion of the CRA and its impact on our economy, please see Hurricane Subprime, 1977-2000.) Without that, we have no economic collapse.
The CRA was used by the likes of ACORN and Obama to force reduced lending standards. Barney Frank and Chris Dodd pushed Fannie and Freddie to provide a vastly expanded market for these sub-prime and reduced standard loans. There were other significant contributing factors.
There were the bond rating services that inexplicably and wholly misrated mortgage backed securities. There is mark to market accounting rules that require corporation to show mortgages that cannot be sold in the current collapsed market as having no value, irrespective of the fact that they do have value. And we had the derivative market that failed catastrophically when the entire mortgage market failed. All these played ancillary roles in the meltdown that has had a severe domino effect throughout our economy.
But all of that has gone down the memory hole with the left in complete charge of the government. No hearings have been held on the causes of this economic nightmare. If you listen to Barney Frank, he has always been the paragon of fiscal responsiblity. If you listen to Obama, the CRA played no role in the meltdown, it was all the fault of evil capitalist pigs on Wall St. Indeed, instead of fixing any of the above problems, Obama, Frank, and ACORN are busy doubling down.
As to Barney Frank, this from the WSJ documents his latest insanity:
You read that right. After two years of telling us how lax lending standards drove up the market and led to loans that should never have been made, Mr. Frank wants Fannie and Freddie to take more risk in condo developments with high percentages of unsold units, high delinquency rates or high concentrations of ownership within the development. . . .
Fannie and Freddie have always been political creatures under the best circumstances. But we don't remember anyone electing Mr. Frank underwriter-in-chief of the United States.
ACORN, for its part, is out doing what it does best - strong-arming financial institutions. This from the American Spectator:
Austin King, director of ACORN Financial Justice, sent out a press release today advising of the demonstrations that are planned as part of its "Homewrecker 4" campaign. The four financial companies targeted are Goldman Sachs, HomEq Servicing, American Home Mortgage, and OneWest. . . .
ACORN plans to hit Dallas, Pittsburgh, Philadelphia, St. Louis, New York City, Wilmington (Del.), Columbus (Ohio), Houston, Little Rock, Boston, Los Angeles, Miami, San Francisco, and Seattle.
But let's not forget that ACORN helped to cause the mortgage bubble by strongarming banks into making loans they shouldn't have. And cheering them on was ACORN's lawyer, Barack Obama, who contributed to the increasingly hostile environment for banks when he represented plaintiffs in the 1995 class action lawsuit Buycks-Roberson v. Citibank. The suit demanded that Citibank grant mortgages to an equal percentage of minority and non-minority mortgage applicants. The bank settled the case three years later and reportedly agreed to beef up its lending to unqualified applicants. . . .
You will recall that yesterday, the Supreme Court decided in Ricci that application of legitimate, race neutral criteria was what Title VII required and that it would be an unlawful act of racism for an institution to throw out the results of a test because it did not provide a racially balanced result. Though decided in the context of Title VII, Ricci provides a general principle of law that should be applicable to the misuse of the CRA by our government to engage in outcome oriented, social engineering. One can only hope that some attorney, somewhere, is polishing the Ricci decision and preparing to use it as the centerpiece against the CRA. That would go a long way to defanging Obama, Frank, and ACORN.
Friday, April 24, 2009
Authors Of Fiscal Meltdown
Our economic meltdown all stems out of the subprime crisis. There were three authors of that meltdown: Bill Clinton, Barney Frank and Chris Dodd. Clinton turned the Community Reinvestment Act into a tool of social engineering. Clinton, along with Frank and Dodd, unleashed Fannie and Freddie to create a huge market for subprime loans and then spread the poison of mortgage backed securities throughout the world economy, and gave groups such as ACORN the keys to the courthouse in an effort to strong-arm banks into making subprime loans. They pushed these programs and protected them at all turns.
Compliments of Hot Air today, here is Barney Frank in action in 2005, claiming that talk of a "housing bubble" was pure fantasy and that he intended to push us further into home ownership morass.
I include below the fold some of the numerous other posts I have done documenting Frank as being at the center of the crisis. One of the great misfortunes of the left taking the reins of power was that this is now the one true area where "we are looking" only "forward and not back." Not only does that mean that those responsible for this fiscal crisis go unpunished, more importantly, it means that the underlying problems have yet to be addressed and groups such as ACORN are funded to the tune of billions of dollars of taxpayer money in order to pursue the same goals. It is obscene. And equally as obscene is Barney Frank today engaging in a full scale rewrite of history:
Previous Posts
Barney Frank In Bed With Fannie Mae
Chris Dodd, Barney Frank & The Subprime Crisis
Barney Frank's Fingerprints
Resolution of the Initial Problems Caused By The Subprime Crisis
A Spotlight On The Left's Subprime Crisis
Sunday, October 5, 2008
Why Isin't McCain Saying This?
Clearly there are many on the right willing to point out McCain's history as regards the subprime crisis - and the left's responsibility for it.
So why won't McCain?
Friday, October 3, 2008
Finally - Republican Ad Goes On The Offensive Over The Subprime Mess
Democrats own the subprime crisis. Their talking point is simple - the economic problems we face are due to the "Bush economy." If that complete rewrite of history sticks, then Republicans lose the election. Neither McCain in his first debate nor Palin last night did anything to rebut the rewrite. Finally, the ad below from the NRCC starts to get out the message.
Prior posts on subprime crisis (newest to oldest):
28. WSJ & Bill Clinton On Deregulation, Glass-Steagall & The Subrpime Crisis – The WSJ, with some help from Bill Clinton, debunks the canard that deregulation, as opposed to the massive push into subprime lending, was the cause of the subrpime crisis.
27. Barney Frank In Bed With Fannie Mae – Barney Frank was pushing us into subprime loans for "affordable housing" and protecting Fannie Mae from tightened regulation even as he was involved in a long relationship with Fannie exec Herb Moses.
26. McCain, Subprime Crisis, SEC & Suspension Of Mark To Market – McCain had been calling for suspension of mark to market accounting rules for months because it would greatly exacerbate a fiscal crisis. He was right. The SEC has now partially suspended the rule.
25. Obama, ACORN & The Subprime Crisis – Video of Stanley Kurtz discussing how Obama, through ACORN, was involved as a community organizer and then a lawyer in pushing Chicago banks into the subprime market.
24. Pelosi’s Cover-Up – Speaker Nancy Pelosi has announced she will not allow hearings into the origins of the subprime crisis.
23. Chris Dodd, Barney Frank & The Subprime Crisis – video from Fox News discussing the responsibility of Sen. Chris Dodd and Rep. Barney Frank for the subprime crisis.
22. Wall St., Credit Default Swaps, Glass Steagall, The Subprime Crisis . . . & Black Tuesday – A former Wall St. trader weighs in on the subprime crisis from a Wall St. perspective.
21. The History of the Left’s Subprime Crisis – Roger Kimball at PJM traces the history of the subprime crisis.
20. The Subprime Crisis, ACORN & Obama, The Community Organizer - Obama's time as a community organizer was very much involved with ACORN's efforts to force subprime lending upon the financial institutions in Chicago.
19. The Treasury Dept. - Anerica's Newest Subprime Lender - The legislation to solve the subprime crisis is only aimed at part in shoring up financial markets. A large part of the bill requires that the Treasury Dept. act as the subprime lender of last resort.
18. Resolution of the Initial Subprime Crisis - Time For Investigation - A first look at the draft legislation and an outline of what else needs to happen to resolve this crisis.
17. Thomas Sowell On The Subprime Crisis & Proposed Bailout - Economist Thomas Sowell weighs in on the need for the proposed bailout to stabilize the market and the politics at the root of this fiscal crisis.
16. Subprime Crisis: Spin versus C-Span - a video of 2004 hearings in which the House Democrats heaped scorn on the idea that Fannie Mae and Freddie Mac were a disaster waiting to happen and fighting tooth and nail to preven any further regulation of Fannie and Freddie.
15. The Subprime Crisis, Dems, Obama & McCain - a great video giving the history of the subprime crisis.
14. Krauthammer On The Subprime Crisis: Time For A Return To Public Executions - America is livid over this fiscal crisis and wants a pound of flesh to satiate its cravings before beginning the job of putting our financial house back in order. Krauthammer things we should give it to them and suggests a return to the auto de fe, this time as a reality show.
13. Dodd, ACORN, and the Penultimate Screwing of the Taxpayers - The left, the people responsible for the subprime crisis, proposed a deal that would have used the return on rehabilitated investments not for the benefit of taxpayers but to fund progressive advocacy organizations that are fundamentally corrupt.
12. WaMu Swallowed Up In The Left's Subprime Swamp - Washington Mutual goes under because of toxic mortgage debt.
11. A Spotlight On The Left's Subprime Crisis - A video summary of the origins of the subprime crisis with lots of footage of Rep. Barney Frank and others protecting Fannie Mae from regulation by the Bush Administration and McCain.
10. McCain The Chessmaster Part II - McCain was responding to a 3 a.m. phone call in returning to Washington. He is given political cover and support by Bill Clinton.
9. The President Addresses The Nation - Bush explains the stakes involved for America with the subprime crisis.
8. Finally – Oversight - The FBI has finally announced criminal investigations at Fannie and Freddie.
7. A Doddering Fool & Charlatan - Chris Dodd is up to his ears in the subprime crisis. With our economy teetering on an actual depression due to the Fannie/Freddie/subprime loan crisis, it was not merely surreal to watch Senator Chris Dodd chair an emergency hearing of the Senate Banking Committee to evaluate the Treasury's proposed rescue plan, it was obscene.
6. Fannie & Freddie, McCain & Obama, Subprime & Wall St.The WSJ discusses both how the subprime loan market came about and how Democrats, including Obama, were both the cause of the problem and the roadblock to a solution that would have averted this catastrophe. Dafydd at Big Lizard's explains how Mortgage Backed Securities worked on Wall Street.
5. The Left’s Subprime Meltdown - A post by the Anchoress discusses this subprime crisis as a creation of the left and a system that was protected to the end by the left. She adds additional sites, quotes and links to explain the mosaic.
4. The Origins – And Foreseeability – Of the Subprime Crisis - A 1999 article in the NYT describes the Clinton Administration forcing subprime loans onto America and also forecasts that this will create a house of cards that will fall apart in a down market.
3. Obama & The "Family" Of Fannie Mae - Documenting Obama’s relationship to Fannie Mae.
2. Dodging a Depression - The NYT and WSJ document just how serious is the subprime crisis. Quite literally it brought us to the point of a complete and catastrophic stoppage of our financial systems. This was not a stock market crash, it was a lending and credit crash. The WSJ describes the events of the week leading up to the crisis point.
1. McCain, The Fannie and Freddie Crisis, and Obamafuscation - Obama and the entire Democratic Party are trying to blame Republicans for the subprime crisis. But this crisis was created by Bill Clinton and protected against Republican efforts to reign it in over a decade – until it failed, nearly pulling out entire economic system into a depression.
Wednesday, October 1, 2008
Barney Frank In Bed With Fannie Mae
Prominent Democrats ran Fannie Mae, the same government-sponsored enterprise (GSE) that donated campaign cash to top Democrats. And one of Fannie Mae’s main defenders in the House – Rep. Barney Frank, D-Mass., a recipient of more than $40,000 in campaign donations from Fannie since 1989 – was once romantically involved with a Fannie Mae executive. Read the entire article. One wonders if Barney Frank's relationship with a Fannie Mae executive was not a huge conflict of interest? Irregardless, Frank's now claiming that the subprime crisis is wholly the responsiblity of Republicans or that the problem is deregulation is insipid. Barney Frank would have us believe he bears no responsibility for his own lifetime of actions aimed at lowering lending standards, driving us into the subprime swamp, and doing all he could to - succesfully - keep us there. Further, he would have America ignore the fact that all of the policies leading to the subprime crisis were put in place by Democrats.
Barney Frank, one of the prime architects of our nation's fiscal destruction, spent the last two decades in bed with Fannie Mae, both figuratively and, it would seem, literally.
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This from an exceptional article by Jeff Poor at the Business & Media Institute, documenting some of Barney Frank's efforts to drive our nation into the subprime swamp while maintaining an intimate relationship with a Fannie Mae executive:
The media coverage of Frank’s coziness with Fannie Mae and his pro-Fannie Mae stances has been lacking.
. . . The July 3, 1998, Reliable Source column in The Washington Post reported Frank, who is openly gay, had a relationship with Herb Moses, an executive for the now-government controlled Fannie Mae. The column revealed the two had split up at the time but also said Frank was referring to Moses as his “spouse.” Another Washington Post report said Frank called Moses his “lover” and that the two were “still friends” after the breakup.
Frank was and remains a stalwart defender of Fannie Mae, which is now under FBI investigation along with its sister organization Freddie Mac, American International Group Inc. (NYSE:AIG) and Lehman Brothers (NYSE:LEH) – all recently participants in government bailouts. But Frank has derailed efforts to regulate the institution, as well as denying it posed any financial risk. Frank’s office has been unresponsive to efforts by the Business & Media Institute to comment on these potential conflicts of interest.
While the relationship reportedly ended 10 years ago, Frank was serving on the House Banking Committee the entire 10 years they were together. The committee is the primary House body which along with the Office of Federal Housing Enterprise Oversight (OFHEO) has jurisdiction over the government-sponsored enterprises.
He has served on the committee since becoming a congressman in 1981 and became the ranking Democrat on the committee in 2003. He became chairman of the committee, now called the House Financial Services Committee, in 2007.
Moses was the assistant director for product initiatives at Fannie Mae and had been at the forefront of relaxing lending restrictions at the company for rural customers, according to the Feb. 23, 1998, issue of National Mortgage News (NMN).
“Herb Moses, who helped develop many of Fannie Mae’s affordable housing and home improvement lending programs, has left the mortgage industry,” Darryl Hicks wrote for NMN. “Mr. Moses - whose last day was Feb. 13 - spent the past seven years at Fannie Mae, most recently as director of housing initiatives. Over the course of time, he played an instrumental role in developing the company’s Title One and 203(k) home improvement lending programs.”
Hicks explained in his story how Moses orchestrated a collaborative effort between Fannie Mae and the Department of Agriculture.
“The Dartmouth grad also played a crucial role in brokering a relationship between Fannie Mae and the Department of Agriculture,” Hicks wrote. “This led to the creation of Fannie Mae’s rural housing program where the secondary marketing agency agreed to purchase small farm loans insured through the department.”
While Moses served at Fannie Mae and was Frank’s partner, Frank was actively working to support GSEs, according to several news outlets.
In 1991, Frank and former Rep. Joe Kennedy, D-Mass., lobbied for Fannie to soften rules on multi-family home mortgages although those dwellings showed a default rate twice that of single-family homes, according to the Nov. 22, 1991, Boston Globe.
. . . Moses left Fannie in 1998 to start his own pottery business. National Mortgage News called Moses a “mortgage guru” and said he developed “many of Fannie Mae's affordable housing and home improvement lending programs. Moses ended his relationship with Frank just months after he left Fannie.
Even after the relationship ended, however, Frank was a staunch defender of Fannie Mae even as other experts suggested there were serious problems building in Fannie Mae and Freddie Mac.
According to an article by Kathleen Day in the Oct. 8, 2003, Washington Post, Frank opposed giving the Bush administration the right to approve or disapprove business activities that “could pose risk to the taxpayers.” He told the Post he worried the Treasury Department “would sacrifice activities that are good for consumers in the name of lowering the companies’ market risks.”
Just a month before, Frank had aggressively thwarted reform efforts by the Bush administration. He told The New York Times on Sept. 11, 2003, Fannie Mae and Freddie Mac’s problems were “exaggerated,” a gross miscalculation some five years later with costs estimated to be in the hundreds of billions.
“These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis,” Frank said to the Times. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
. . . In a July 23 op-ed, Wall Street Journal Editorial Page Editor Paul Gigot put the blame for the GSEs’ collapse firmly on the members of the liberal establishment who took money from Freddie and Fannie. “Fan and Fred also couldn't prosper for as long as they have without the support of the political left... This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. [Paul] Krugman and the Washington Post's Steven Pearlstein in the press.”
. . . [O]n Sept. 17, 2008, former Bush administration Deputy Chief of Staff Karl Rove elaborated on the Bush administration’s efforts to curb abuses at the two GSEs in 2003. He told Fox News’ “Hannity & Colmes” that Frank was among the most aggressive opponents of White House attempts to reform Fannie Mae and Freddie Mac.
“All of this bad stuff on Wall Street happened because people got greedy and the greed started at Fannie Mae and Freddie Mac,” Rove said. “And I know this because five years ago, the administration was alerted by the regulator, James Lockhart, that there was insufficient authority and that these institutions – particularly Fannie – were out of control.”
Rove said the Bush administration’s efforts to reform Fannie and Freddie were opposed by congressional Democrats – specifically Frank and Senate Banking Committee Chairman Christopher Dodd, D-Conn.
“And I got to tell you, for five years, I was part of an effort at the White House to fight this and our biggest opponents on the Hill who blocked this every step of the way were people like Chris Dodd and Barney Frank. And Fannie and Freddie are the $200 billion contagion at the center of this.”
Frank has been quick to blame deregulation for some of the problems in the financial environment, as he did on Bloomberg television’s Sept. 19 “Political Capital with Al Hunt.” However, as earmark crusader Rep. Jeff Flake, R-Ariz. pointed out – it’s not deregulation, but it was the structure of Fannie Mae and Freddie Mac that had been guarded by Frank and other members of Congress.
“Some people point at deregulation,” Flake said to the Business & Media Institute on Sept. 23. “It’s not deregulation at all. We have for far too long shielded Fannie and Freddie for example, with the implicit and now explicit guarantee. I just found it humorous.”
Flake specifically named Frank as one of the members behind letting allegations of transgressions at the two GSEs for slipping by without oversight from Congress.
“Just a few minutes ago, a reporter was asking me about this and saying, ‘Barney Frank is saying that’s just – because there were allegations,’ correct ones – ‘that Fannie and Freddie have been the playground for politicians for years and now the other side is saying Fannie and Freddie were just a small part of this and this goes far beyond.’ It does, but these same people a couple of weeks ago said, ‘You got to bail out Fannie and Freddie because they touch everything out there. They touch nearly every mortgage out there.’ And because of that explicit guarantee – that we would come and bail them out, nobody has been subject to market discipline.”
. . . The red flags were raised long before the government bailed out the two GSEs in August 2008. The first egregious scandal involving Fannie Mae occurred in 2004. A 2004 Wall Street Journal editorial was first to point out claims in an OFHEO report that showed accounting malpractices by the GSE.
“For years, mortgage giant Fannie Mae has produced smoothly growing earnings. And for years, observers have wondered how Fannie could manage its inherently risky portfolio without a whiff of volatility, the Oct. 4, 2004, editorial, “Fannie Mae Enron?” said. “Now, thanks to Fannie’s regulator, we know the answer. The company was cooking the books. Big time.”
(H/T Dr. Sanity)
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