Archive for October 6th, 2008

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Lehman Congressional Hearing Today – What About Fannie & Freddie?

October 6, 2008

TBV Readers,

Remeber when Nancy Pelosi ordered a “wide Wall Street probe” a few weeks ago?http://www.politico.com/news/stories/0908/13514.html)

Well, Lehman was front and center today on Capitol Hill: http://ap.google.com/article/ALeqM5ioHc80xKMiATnqCpK0cDKJzk_nPQD93L05D04

So, why not have a hearing for Freddie Mac and Fannie Mae? If the Dems want to do their dog and pony show, maybe they should invite all the dogs that are responsible. Today, Rep. Shays called for hearings on Freddie and Fannie. Don’t hold your breath.

-AP

Shays Calls For Hearings On Fannie And Freddie
By Daniel W. Reilly

(The Politico) Republican Rep. Chris Shays called for hearings on the role of mortgage giants Fannie Mae and Freddie Mac in the financial crisis Monday, accusing the two mortgage companies of “wretched manipulation” of Congress.

“We are not confronting the 800 pound gorilla in room…the role of Fannie and Freddie in this debacle,” said Shays at a congressional hearing on the financial crisis.

Shays wondered why Democrats will target Wall Street firms during their planned set of hearings, but not Fannie and Freddie, who he said offered the type of subprime loans that helped trigger the crisis.

“Congress stood idly by as Fannie and Freddie played with trillions of dollars under a different set of rules,” Shays said.

House Oversight and Government Reform Committee Chairman Henry Waxman said his staff is already reviewing documents provided by Fannie and Freddie and may hold hearings on the topic in the future.

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Obama’s New Deal

October 6, 2008

If the Messiah wins, we will have a liberal house, a liberal senate and a liberal executive. Not a good sign for any economic conservative out there. James Pethokoukis dissects parts of a possible Obama economy.

1) Direct refinancing for homeowners.

2) Direct government involvement in the management of failing financial institutions that are recapitalized by government money, through something like the Reconstruction Finance Corporations of the Roosevelt era.

3) A transfer tax on stock and bond transactions, both to raise needed revenue and to damp down the kind of speculation that led to the meltdown.

4) Substantial public spending to pull the wider economy out of the hole. Most of that can be raised by surtaxes on the wealthy and by transaction taxes on speculation, but it will also require a temporary increase in public deficits.

5) Raise enough revenue to cover about $700 billion of financial recapitalization in year one, and in years two through eight use the proceeds for public works, infrastructure, good jobs, universal health coverage, expanded pre-kindergarten and child care.

How is he going to pay for all this new spending? He promised not to raise taxes on any couple making under 250,000 and any single person making under 200,000 and the Messiah would not lie about that right? At the Barackropolis, the Messiah said he would pay for any new spending “by closing corporate loopholes and tax havens.” Factcheck noted the fallacy in this. They estimate that his supposed tac cuts (economic redistribution) will cost government 130 billion in revenue, but closing tax loopholes (he doesn’t know what that means) would generate only 80 billion.

In order to pay for this massive increase in the size of government, there are two possible options.  One, Barack lied and middle class taxes go up also. Big Time. Alternatively, McCain’s assertion that an Obama presidency would be Jimmy Carter’s second term becomes a self-fulfilling prophecy.  We could see hikes in the payroll tax and 70 percent marginal tax rates for top income earners.  This could encourage flight from the U.S. to other areas such as Canada or Britain where tax rates would be lower. Higher taxes also empower creation of new tax shelters.

Also note that countries with higher marginal tax rates suffer ridiculously high levels of unemployment

Right now we are hovering around 6% unemployment. At the end of the Carter administration it was over 12%. Higher taxes will lead to lower hours for wage earners and early retirement for employers who don’t see a point in working 9 months out of the year to pay federal taxes. Let’s not forget, state and city taxes as well as sales, payroll, capgains, etc.

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Gloves. Off

October 6, 2008

McCain about to get awesome:

Our current economic crisis is a good case in point. What was his actual record in the years before the great economic crisis of our lifetimes?

This crisis started in our housing market in the form of subprime loans that were pushed on people who could not afford them. Bad mortgages were being backed by Fannie Mae and Freddie Mac, and it was only a matter of time before a contagion of unsustainable debt began to spread. This corruption was encouraged by Democrats in Congress, and abetted by Senator Obama.

Senator Obama has accused me of opposing regulation to avert this crisis. I guess he believes if a lie is big enough and repeated often enough it will be believed. But the truth is I was the one who called at the time for tighter restrictions on Fannie Mae and Freddie Mac that could have helped prevent this crisis from happening in the first place.

Senator Obama was silent on the regulation of Fannie Mae and Freddie Mac, and his Democratic allies in Congress opposed every effort to rein them in. As recently as September of last year he said that subprime loans had been, quote, “a good idea.” Well, Senator Obama, that “good idea” has now plunged this country into the worst financial crisis since the Great Depression.

To hear him talk now, you’d think he’d always opposed the dangerous practices at these institutions. But there is absolutely nothing in his record to suggest he did. He was surely familiar with the people who were creating this problem. The executives of Fannie Mae and Freddie Mac have advised him, and he has taken their money for his campaign. He has received more money from Fannie Mae and Freddie Mac than any other senator in history, with the exception of the chairman of the committee overseeing them.

Did he ever talk to the executives at Fannie and Freddie about these reckless loans? Did he ever discuss with them the stronger oversight I proposed? If Senator Obama is such a champion of financial regulation, why didn’t he support these regulations that could have prevented this crisis in the first place? He won’t tell you, but you deserve an answer.

We’ll know this worked if, by the time 8:00 rolls around, flapping heads are picking this apart for supposed innacuracies.  Stand up and kick some tail!

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Questioning the Relevance of Ayres?

October 6, 2008

Mark Levin summarizes it beautifully:

If John McCain had belonged to a church for 20 years and that church advocated white supremacy and the  pastor of the church spewed racist propaganda wrapped in Biblical verses — much of which was caught on video-tape — what would we say? If McCain’s good friends included people involved in blowing up abortion clinics instead of the Capitol Building, the Pentagon, and police stations, what would we say? If McCain was socially close to a professor with ties to neo-Nazi groups in Berlin, as opposed to a professor who had ties to the PLO, what would we say? If McCain spent his formative years schooled in fascism as opposed to Marxism, what would we say?

If McCain or Palin had one questionable dalliance that rose to any of the ones that Levin mentioned, he would have finished in Tancredo territory in the primaries.

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Obama Youth Regiment – The Left’s Idealogy in Middle Schools

October 6, 2008

Although prayer in schools and “under God” in the pledge are constantly under attack, something tells me that this type of indoctrination to the Great Leader and Messiah, The One, Obama, will not concern the good folks at the ACLU.

– AP

Enjoy the video, they must have been paying attention to Obama’s Singing Children from last week.

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Meet Obama Finance Chair Penny Pritzker

October 6, 2008

This weekend, Obama has begun an initiative to dig up the ghost of Charles Keating and the Keating Five and its ties to McCain. Obama even trotted out one of the Keating Five to introduce the Boss in a strange move. While John Glenn’s involvement is well known as was McCain’s, which he acknowledged, what is more troubling is the role of the Pritzker family in the Obama campaign as Obama tries to distance himself from the subprime mess.

Penny Pritker is Obama’s national finance chair. The Pritzker’s owner Superior Bank FSB and its 2001 failure resulted in a $460 million dollar payment to federal regulators as Erick Erickson notes. Superior was involved in subrime lending and failed because of subprime lending. When Superior failed, it had 2.3 billion dollars in assets built upon loans to people with poor credit histories.  Such bad practices led to the fall of Superior and the fall of so many other lending institutions today.

It is inherently dangerous for Obama to put someone with such a track record as head of his finance committee and may be foreshadowing about they type of people he would reward in his administration.

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Barney Frank’s Gay Partner / Fannie Mae Executive Involved in “New Product Initiatives” … read: “Affordable Housing/Subprime Lending Program Development”

October 6, 2008

Raines, Jim Johnson, and now Herb Moses, the Fannie Mae executive who had a relationship with Barney Frank while he was a voting member of the committee with oversight. A certain conflict of interest that is clearly receiving as much reporting as John Edwards playing Leisure Suit Larry with a commercial producer while his wife battles cancer. Good people. Of note is that Herb Moses was an executive at Fannie Mae working on new product initiatives during the time period when the Clinton administration made it much easier to push subprime loans through in order to have “affordable housing”.

-AP

By Bill Sammon
Foxnews

WASHINGTON — Unqualified home buyers were not the only ones who benefitted from Massachusetts Rep. Barney Frank’s efforts to deregulate Fannie Mae throughout the 1990s.

So did Frank’s partner, a Fannie Mae executive at the forefront of the agency’s push to relax lending restrictions.

Now that Fannie Mae is at the epicenter of a financial meltdown that threatens the U.S. economy, some are raising new questions about Frank’s relationship with Herb Moses, who was Fannie’s assistant director for product initiatives. Moses worked at the government-sponsored enterprise from 1991 to 1998, while Frank was on the House Banking Committee, which had jurisdiction over Fannie.

Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest. Critics, however, remain skeptical.

“It’s absolutely a conflict,” said Dan Gainor, vice president of the Business & Media Institute. “He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?

“If this had been his ex-wife and he was Republican, I would bet every penny I have – or at least what’s not in the stock market – that this would be considered germane,” added Gainor, a T. Boone Pickens Fellow. “But everybody wants to avoid it because he’s gay. It’s the quintessential double standard.”

A top GOP House aide agreed.

“C’mon, he writes housing and banking laws and his boyfriend is a top exec at a firm that stands to gain from those laws?” the aide told FOX News. “No media ever takes note? Imagine what would happen if Frank’s political affiliation was R instead of D? Imagine what the media would say if [GOP former] Chairman [Mike] Oxley’s wife or [GOP presidential nominee John] McCain’s wife was a top exec at Fannie for a decade while they wrote the nation’s housing and banking laws.”

Frank’s office did not immediately respond to requests for comment.

Frank met Moses in 1987, the same year he became the first openly gay member of Congress.

“I am the only member of the congressional gay spouse caucus,” Moses wrote in the Washington Post in 1991. “On Capitol Hill, Barney always introduces me as his lover.”

The two lived together in a Washington home until they broke up in 1998, a few months after Moses ended his seven-year tenure at Fannie Mae, where he was the assistant director of product initiatives. According to National Mortgage News, Moses “helped develop many of Fannie Mae’s affordable housing and home improvement lending programs.”

Critics say such programs led to the mortgage meltdown that prompted last month’s government takeover of Fannie Mae and its financial cousin, Freddie Mac. The giant firms are blamed for spreading bad mortgages throughout the private financial sector.

Although Frank now blames Republicans for the failure of Fannie and Freddie, he spent years blocking GOP lawmakers from imposing tougher regulations on the mortgage giants. In 1991, the year Moses was hired by Fannie, the Boston Globe reported that Frank pushed the agency to loosen regulations on mortgages for two- and three-family homes, even though they were defaulting at twice and five times the rate of single homes, respectively.

Three years later, President Clinton’s Department of Housing and Urban Development tried to impose a new regulation on Fannie, but was thwarted by Frank. Clinton now blames such Democrats for planting the seeds of today’s economic crisis.

“I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was president, to put some standards and tighten up a little on Fannie Mae and Freddie Mac,” Clinton said recently.