Getting it and getting away with it 0

Investor’s Business Daily reports that Alan Greenspan “gets it” – which should not come as a surprise considering he was Chairman of the Federal Reserve for nearly 20 years – and recaps what happened that made America and the world poorer.

Testifying before the Financial Crisis Inquiry Commission, the former Fed chairman told some plain truths he didn’t dare utter when he headed the central bank. Most notably, Greenspan implied it was Congress’ meddling incompetence — not the Fed, or free markets, or greedy bankers — that created the financial meltdown. …

It wasn’t the Fed that caused the housing crash and financial meltdown. It was Congress and the White House.

The mess began in the 1970s when, during the Carter administration, left-wing activists attacked banks for supposed “redlining” practices that let them discriminate in making home loans.

In response, Congress passed the Community Reinvestment Act, which gave regulators the power to force banks to lend money to “low-income, minority, and distressed neighborhoods.”

To fund all this new lending, they used two little-known government-sponsored enterprises — Fannie Mae and Freddie Mac — and essentially rewrote credit standards for the banks, weakening them substantially. Banks made loans, then Fannie and Freddie bought them — using borrowed money to do it.

In this environment, credit ratings no longer mattered much. Neither did having a job or a steady income. What mattered was race.

The process got supercharged in 1992, when a Democrat-led Congress pushed Fannie and Freddie to buy even more mortgages from banks that had made loans to low-income and minority buyers. In 1996, President Clinton’s Department of Housing and Urban Development told Fannie and Freddie that 42% of their financing had to go to those with incomes below the median.

By 2000, HUD [Department of Housing and Urban Development] Secretary Andrew Cuomo proudly unveiled “new regulations” to “provide $2.4 trillion in mortgages for affordable housing for 28.1 million families.” Despite subsequent efforts at reform, Democrats in Congress — led by Sen. Chris Dodd and Rep. Barney Frank — rejected major changes to Fannie and Freddie.

We’re still paying for that today. Fannie and Freddie have gotten a blank check from the government for their losses, and still owe more than $5 trillion that they can’t pay off.

We’ve been critical of Greenspan in the past, but on this, he’s completely right. The biggest villain in the whole financial meltdown isn’t the “private sector,” as some in Congress — like Rep. Frank — have tried to claim. It’s Congress itself.

Shouldn’t those responsible, notably Chris Dodd and Barney Frank, be made to answer for the world-size wreck? What they’ve done to the economy makes Bernie Madoff’s crooked scheme look paltry.

If it’s not to find who is guilty, so that the culprits may be consigned to their just deserts, what is a Financial Crisis Inquiry Commission for?

Speaking of secession 18

The great divide between those who want socialism and those who want freedom is unbridgeable. The federal government is imposing socialism, the American people are determined to resist it. What remedies do the people have?

A year ago, Governor Rick Perry mentioned the possibility that Texas might secede from the union, but added that he “saw no reason why it should”.

Texas Gov. Rick Perry fired up an anti-tax “tea party” Wednesday with his stance against the federal government and for states’ rights as some in his U.S. flag-waving audience shouted, “Secede!”

An animated Perry told the crowd at Austin City Hall — one of three tea parties he was attending across the state — that officials in Washington have abandoned the country’s founding principles of limited government. He said the federal government is strangling Americans with taxation, spending and debt. …

Later, answering news reporters’ questions, Perry suggested Texans might at some point get so fed up they would want to secede from the union, though he said he sees no reason why Texas should do that.

“There’s a lot of different scenarios,” Perry said. “We’ve got a great union. There’s absolutely no reason to dissolve it. But if Washington continues to thumb their nose at the American people, you know, who knows what might come out of that. But Texas is a very unique place, and we’re a pretty independent lot to boot.”

Washington has continued to “thumb its nose” at the people. Now 13 [update, 18] states, including Texas, are suing the federal government over issues raised by the health care legislation it pushed through against the will of the majority of Americans. And there is talk of 37 states doing so.

Is secession again in the air?

The Tea Party movement is named to revive the memory of revolutionary secession.

Walter Williams, not for the first time, raises the topic of secession, considers the idea favorably, and comes close to advocating it – though he stops just short of doing so.

Ten years ago I asked the following question in a column titled “It’s Time To Part Company”:

“If one group of people prefers government control and management of people’s lives and another prefers liberty and a desire to be left alone, should they be required to fight, antagonize one another, risk bloodshed and loss of life in order to impose their preferences or should they be able to peaceably part company and go their separate ways?”

The problem that our nation faces is very much like a marriage where one partner has broken, and has no intention of keeping, the marital vows. Of course, the marriage can remain intact and one party tries to impose his will on the other and engage in the deviousness of one-upmanship. Rather than submission by one party or domestic violence, a more peaceable alternative is separation.

I believe we are nearing a point where there are enough irreconcilable differences between those Americans who want to control other Americans and those Americans who want to be left alone that separation is the only peaceable alternative. Just as in a marriage, where vows are broken, our human rights protections guaranteed by the U.S. Constitution have been grossly violated by a government instituted to protect them. 

The Democrat-controlled Washington is simply an escalation of a process that has been in full stride for at least two decades. There is no evidence that Americans who are responsible for and support constitutional abrogation have any intention of mending their ways.

You say, “Williams, what do you mean by constitutional abrogation?” Let’s look at just some of the magnitude of the violations.

Article I, Section 8 of our Constitution lists the activities for which Congress is authorized to tax and spend. Nowhere on that list is authority for Congress to tax and spend for: prescription drugs, Social Security, public education, farm subsidies, bank and business bailouts, food stamps and other activities that represent roughly two-thirds of the federal budget.

Neither is there authority for congressional mandates to the states and people about how they may use their land, the speed at which they can drive, whether a library has wheelchair ramps and the gallons of water used per toilet flush.

The list of congressional violations of both the letter and spirit of the Constitution is virtually without end. Our derelict Supreme Court has given Congress sanction to do anything upon which they can muster a majority vote.

James Madison, the acknowledged father of the Constitution, explained in Federalist Paper No. 45: “The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce. The powers reserved to the several States will extend to all the objects which in the ordinary course of affairs, concern the lives and liberties, and properties of the people, and the internal order, improvement and prosperity of the State.”

Americans who wish to live free have several options. We can submit to those who have constitutional contempt and want to run our lives. We can resist, fight and risk bloodshed and death in an attempt to force America’s tyrants to respect our liberties and human rights. We can seek a peaceful resolution of our irreconcilable differences by separating.

Some independence movements, such as our 1776 war with England and our 1861 War Between the States, have been violent, but they need not be. In 1905, Norway seceded from Sweden; Panama seceded from Columbia (1903), and West Virginia from Virginia (1863). Nonetheless, violent secession can lead to great friendships. England is probably our greatest ally.

The bottom-line question for all of us is: Should we part company or continue trying to forcibly impose our wills on one another? My preference is a restoration of the constitutional values of limited government that made us a great nation.

Fury on the hill 0

Obama’s puerile, sentimental, ignorant foreign policy weakens and potentially endangers America, but more immediate calamity threatens from his domestic policies.

At the Commentary-contentions website, Peter Wehner  writes:

In a front-page Washington Post story today — headlined “Angry Congress lashes out at Obama” — we read this:

Growing discontent over the economy and frustration with efforts to speed its recovery boiled over Thursday on Capitol Hill in a wave of criticism and outright anger directed at the Obama administration. Episodes in both houses of Congress exposed the raw nerves of lawmakers flooded with stories of unemployment and economic hardship back home.

What is happening is that the myriad troubling signs for Obama over the past several months — crumbling support for his health-care efforts, a huge loss of support among independents, a dispirited base, an energized opposition, growing approval of the GOP’s agenda — are now manifesting themselves in election results (see the Virginia and New Jersey governors’ races) and unhappiness among Democrats on Capitol Hill. …

Obama’s signature domestic initiative, health care, is deeply unpopular. Unemployment is above 10 percent and won’t be dropping significantly any time soon. The issues the country is focused on are ones that play to the advantage of the GOP. The nation is becoming more conservative in the Age of Obama. His party is increasingly nervous and restive as its members see what awaits them in 2010. … It wasn’t supposed to be this hard for liberalism’s “sort of God,” was it?

And this is only the beginning. As long as Obama is in power, things can only get worse.  If Wehner is right that Obama is making the nation more conservative in reaction, then the rescue posse might get here in the nick of time. But a terrible lot of – maybe irreparable – damage will have been done by then.

Once a prophet, now a numbskull 2

From Power Line:

We’ve noted many times that John McCain was one of the prescient legislators who saw the dangers posed by the runaway Freddy Mac and Fannie Mae and tried to do something about the problem. Until now, though, I’d never seen this letter of May 5, 2006, signed by McCain and 19 other Senators, that couldn’t have been clearer about the dangers posed by the Democrats’ reckless treatment of Fannie and Freddy, and the need to take action to protect the taxpayers and the economy. It’s hard to see how any warning could be more spot-on. Click to enlarge:

Among the more prescient observations:

We are concerned that if effective regulatory reform legislation for the housing-finance government-sponsored enterprises (GSEs) is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddy Mac pose to the housing market, the overall financial system, and the economy as a whole. …

Today, almost half of the home mortgages in the U.S. are guaranteed by these GSEs. They are mammoth financial institutions with almost $1.5 Trillion of debt outstanding between them. With the fiscal challenges facing us today (deficits, entitlements, pensions and flood insurance), Congress must ask itself who would pay this debt if Fannie or Freddy could not? …

It is vitally important that Congress take the necessary steps to ensure that these institutions benefit from strong and independent regulatory supervision, operate in a safe and sound manner, and are primarily focused on their statutory mission. More importantly, Congress must ensure that the American taxpayer is protected in the event either GSE should fail.

 Via Human Events. One thing I hadn’t realized is that McCain’s reform legislation was passed through the Senate Banking Committee, but was not able to gain majority support on the Senate floor. All twenty Senators who signed the letter calling attention to the urgency of reforming Fannie Mae and Freddy Mac were Republicans. After May 2006, the Democrats continued to use Fannie and Freddy as their private slush funds until the inevitable collapse, which McCain had warned against so eloquently, occurred.

For some inexplicable reason, John McCain seems unable to claim the credit he deserves for being one of the few politicians in Washington who saw the present crisis coming and tried to do something about it. He is even more unable to vigorously and unambiguously put the blame where it belongs: on the Democratic Party. Which is one of the principal reasons why, as everyone expects, he will lose in November. 

Posted under Commentary by Jillian Becker on Sunday, October 12, 2008

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Fannie and Freddie need criminal investigation 0

 From today’s Investor’s Business Daily:

Here’s how James B. Lockhart III, head of the Office of Federal Housing Enterprise Oversight, described the two companies back in 2006, before the meltdown occurred:

"The result of (Fannie’s and Freddie’s) rapid growth unconstrained by market forces and a weak regulator was years of mismanagement, flagrant earnings manipulation, and systems-and-controls problems. Managements of both companies were forced out, earnings were misstated by an estimated $16 billion, fines exceeding one-half billion dollars were imposed, and remedial costs will exceed $2 billion."

Yet Congress did nothing. Fannie and Freddie continued to enjoy a virtual monopoly of the housing finance market, holding nearly half the nation’s $12 trillion in mortgage assets in 2007.

And what happened to Fannie’s and Freddie’s top executives, almost all with deep ties to the Democratic Party? Did they get perp-walked to prison like WorldCom’s Bernie Ebbers, Tyco’s Dennis Koslowski, Adelphia’s John Rigas, ImClone’s Sam Waksal, or any of the others who did time for corporate misdeeds in the early 2000s?

No. Jim Johnson, former Walter Mondale aide, became head of Barack Obama’s vice presidential search committee. Franklin Raines, who headed Fannie from 1998 to 2004, the years of its worst excesses, pocketed nearly $100 million in pay and bonuses from Fannie. He, too, became an adviser to Obama.

Other Fannie-Freddie alumni did equally well. Rep. Rahm Emanuel has been front and center in crafting a new rescue bill. Ex-Clinton Justice official Jamie Gorelick careens from career catastrophe to catastrophe, and still gets top jobs. It pays to have ties.

Meanwhile, as previously documented, Rep. Barney Frank and Sen. Chris Dodd repeatedly thwarted reforms. Yet today they stand front-and-center as Democrats try to "fix" a problem they created.

As such, any investigation into Fannie and Freddie must include Congress, both current and past.

There’s lots of evidence that the two mortgage giants had become little more than taxpayer-guaranteed front companies for Democrats, who used them to reward supporters with cheap loans and to provide jobs for out-of-work politicians.

Posted under Commentary by Jillian Becker on Wednesday, October 1, 2008

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