The Fed, Fannie and Fred

"[Tim Geithner, Ben Bernanke and Barney Frank] are calling to raise the debt ceiling. This will assist them with perpetuating the biggest legal government scam in history [financial institution bailouts of over $12 trillion]. Meanwhile, responsible middle class Americans are barely making it, as their investments are devalued and government expands, finding more ways to collect money from them to support its Ponzi scheme.

This is not capitalism gone amuck, as Barney Frank claims. The government bailing out private banks is not capitalism but quasi-socialism. There is a simple solution to fix this: the banks must be held accountable. There should be a way to sue the banks that originate the irresponsible investments and loans, even if they transfer their risky ventures to other banks. Nor should they be bailed out when they fail. For every bank that fails, another one that is more financially responsible is ready to step up and take its place. Fannie Mae and Freddie Mac are quasi-governmental lending agencies, so suing them would only hurt the taxpayers. They were responsible for the highest rates of foreclosures. They have grossly failed, and represent government at its worst, so the only solution is to eliminate them." Rachel Alexander

The Biggest Legalized Theft of Middle Class American Wealth - Page 1 - Rachel Alexander - Townhall Conservative

Appropriate, non-fatal punishment

Would you deem this cruel and unusual? John Edwards, Bernie Madoff, Charlie Rangel and Barney Frank should be locked up together in a small, maximum security cell and be forced to listen 24/7 to each other's lies. If they fall asleep, Nancy Pelosi has to waterboard them, but then deny she knew what she was doing. Works for me.

Sean Bielat running against Barney Frank

Barney Frank is a danger to the whole country, so I'd support Sean Bielat if I could, and I can. Lots of little people who are tired of tyrant Barney can send money to support his campaign. Frank can spout off on everything, so I have no idea why he's afraid of a former Marine.



You can donate on-line, but there are 3 mailing addresses, too.
Sean Bielat for Congress
Brookline Post Office Box
PO Box 1143
Brookline, MA 02446

If everyone sent even $5 to the Republicans running against the entrenched Congress people who have taken our country to this terrible state, we could give them a much better chance. Then, if they don't remember why they are there or why they got support from people out of their district, boot 'em out next time.

Also, remember to vote. It's almost November!

Lie of the Day by guess who?

There are some great ones on the list. . . just a sampling.

Lie: Part of the reason oil companies are drilling a mile beneath the surface of the ocean [is] because we're running out of places to drill on land and in shallow water.
--President Obama promotes his cap and trade plan in his speech from the Oval Office.

Lie: We're not satisfied with everything we've done [in Congress]. The way to cure that is to give us more authority and more ability.
--Barney Frank tells young Democrats that giving Congress more power is the cure.


Lie: [W]e have rescued this economy.
--President Obama, saying the stimulus worked so well that we need to pass another

Lie: [Iraq] could be one of the great achievements of this administration.
--Vice President Joe Biden forgetting to blame Bush for success in Iraq

Lie: There has never been a more open process for any legislation.
--House Speaker Nancy Pelosi, on Congress' work on the health care bill

Laura Ingraham: Lie of the Day Archives

The story of the housing meltdown from an economist

Nobody caught on--not Greenspan, Bush, or Frank. And Barney Frank is still pushing more home ownership--without standards. But Bush will continue to be blamed because it happened on his watch. Video interview June 29, 2009



Sowell asserts in his book, "The Housing Boom and Bust," that politicians in Washington were trying to solve a problem that didn't exist.

"The problem that didn't exist was a national problem of unaffordable housing," Sowell explained. [And he's quite correct--housing was quite affordable in central Ohio.]

"The housing in particular areas, particularly coastal California and some other areas around the country, were just astronomically high. It was not uncommon for people to have to pay half of their family income just to put a roof over their head. So that was a very serious problem where it existed.

"But it existed in various coastal communities primarily and a couple of other places. Unfortunately, the elites whose strongholds are on the East and West Coasts don't seem to understand that there's a whole country in between, and in most of that country housing was quite affordable by all historical standards.

"So they set out to solve the problem by setting up a federal program to bring down the mortgage requirements, the 20 percent down payment and that sort of thing, and by forcing Fannie Mae and Freddie Mac to buy up those mortgages from the people who no longer had to meet the same requirements.

"The banks had no choice but to go along because the regulators controlled their fate. So the banks would simply sign up people, sell the mortgages to Fannie Mae and Freddie Mac. It now became Fannie Mae and Freddie Mac's problem. And that meant it became the taxpayers' problem." [quotes from Newsmax interview]

The Barney Dodge

The man knows no shame. He hid behind a Medal of Honor recipient, (published a whiney letter in the WSJ 9-23) in order not to appear at the defunding vote for ACORN. Oh Barney, you're the only thing transparent in this current administration!

The Gangster Government

We're used to cronyism in government and the workplace. But this is much worse. Now we've got 20 czars who report only to Obama running the government instead of elected officials. Czar is the Russian word for Caesar, and the former General Motors, The Government Motors, is now Gangster Motors. Folks, Obama is a marxist; until recently I thought he was too smart to go the Russian route, but this all looks awfully familiar if you've ever studied the Soviet Union.



HT Murray.

Who is more dangerous to society, Michael Vick or Barack Obama?

This morning I heard a news story on the radio that Michael Vick's bankruptcy "plan" was turned down by the court. Too bad someone doesn't apply the same standards to our President who has unleashed the pit bull of socialism on our people! Our little cock fighter pranced around the ring and sang "peck me" like a Dixie Chick. We're sending tea bags, but I don't think that is going to scare him when he's seen the crowds in Europe chanting and clapping. Even the phony Soros backed demonstrations made him happy. Or Barney Frank, how about a plan for him? He has actually physically threatened Americans. Michael Vick didn't threaten children. Congressman Frank prancing in front of TV cameras was actually going after citizens' children when he demanded names in Congressional hearings on job contracts he approved for the bailout.

I was flitting around the house doing laundry and ironing about 5:30 a.m. (I'm an early riser, obviously.) I decided to turn on the radio in the laundry room, and the reception isn't terrific, so I settled on NPR. Proximity to the WOSU tower seems to allow that when nothing else is up. After five minutes of a guy with a British accent preach about how we needed to teach banks "morality" and reporting with lots of saliva (is it their bad teeth?) the fabulous relationship between Obama and Brown, which just a few weeks ago was in the toilet, I switched to the early a.m. show on the paranormal--it made more sense than that guy. But after 5 minutes of a guy remembering an apparition in blue that came into his bedroom when he was 5 and it looked exactly like his mother who was quite ill and putting up with a gambling husband who was being hunted by the mafia, it really was a draw.

The Obamacons

No, Barack Obama is not to blame for the years and years of marxists and socialists with which we have peopled our Congress [beginning in the 1920s], but he has given them permission to act like fools. First, he appointed a tax cheat as Secretary of Treasury, Timothy Geithner, who skipped ethics class and church, to lead us out of a mess created by years and years of government tampering with the economy to the tune of trillions and trillions in bad paper. Second, by having zip-nada-zilch business experience and being the titlular head of ACORN, President Obama helped create the mob mentality in Congress and in front of the AIG execs' homes, the very people the Obamacons hired to get us out of the mess. Creating and inciting mobs to violence (someone had to pay for the bus, the meals, the driver, the "community organizer" to gather them up from street corners and bars) is resorting to the old USSR and Chi-Com tactics of decades past. Worked then, why not today?

In today's WSJ, Hernando de Soto says something very important about contracts--something so key to this trumped up AIG bonus frenzy, he probably didn't even realize it, since I don't think he's that sympathetic to capitalists, and writes about the disparity between the poor and wealthy.

"Ever since humans started trading, lending and investing beyond the confines of the family and the tribe, we have depended on legally authenticated written statements to get the facts about things of value. Over the past 200 years, that legal authority has matured into a global consensus on the procedures, standards and principles required to document facts in a way that everyone can easily understand and trust.

The result is a formidable property system with rules and recording mechanisms that fix on paper the facts that allow us to hold, transfer, transform and use everything we own, from stocks to screenplays." WSJ article

What he left out is that Congress has violated this long tradition of honoring a contract. Everyone (at least on their staff) from Obama on down through the newest elected Representative, like Mary Jo Kilroy from Ohio, knew that the people getting the "bonus" (i.e. a salary due at the end of a service) were not the people who ran AIG into the ground. They were the people hired to fix the mess. Now, given how they were treated, how mobs were hired and their families threatened by the likes of Barney Frankenstein in trumped up phony televised hearings, would you want to sign on for government service to help your country?

If the contracts with AIG are worthless, so are your mortgage, your college transcript, your bank CD certificate, your credit card interest agreement, your auto lease, your pension plan payout and the menu at your favorite restaurant.

Protest in Fairfield, Conn.

"The identities of most current and former AIG employees remain private, for now, but for those executives whose names are known, life now includes security guards at their homes, reporters in their driveways, and vehicles invading their neighborhoods. Nobody was hurt and the protest went off without incident, but the event should serve as a dire warning for anyone even thinking about participating in Treasury Secretary Timothy Geithner’s new Public-Private Investment Program. Morning Bell, March 23, 2009"

Thanks, Barney Frank. One more notch in your belt. You just didn't get it when accused of "McCarthyism." It's the techniques--smear, innuendo, fear, blame by association, and you have them all. But you're the one, with your Congressional colleagues who signed the AIG bonsus contracts.

Through its power to subpoena witness and hold people in contempt of Congress, HUAC [formed in 1938] often pressured witnesses to surrender names and other information that could lead to the apprehension of Communists and Communist sympathizers. Committee members often branded witnesses as "red" if they refused to comply or hesitated in answering committee questions. In perhaps its most famous investigation, HUAC-member Richard Nixon, after weeks of dramatic hearings, was, at the final hour, able to reveal that Alger Hiss, a former State Department official, had lied to them about having "ever been a Communist." More importantly, however, the questioning style and examination techniques employed by HUAC served as the model upon which Senator Joseph McCarthy would conduct his investigative hearings in the early 1950s. Following Senator McCarthy's censure, however, and his subsequent departure from the Senate, the American public grew increasingly wary of the "redbaiting" techniques employed by HUAC and others. The work of the committee continued to decline in importance throughout the late 1950s and early 1960s until the committee itself was renamed the House Internal Security Committee in 1969, prefiguring its eventual abolition in 1975. GWU site

Buyer's Remorse

Sorry, Mr. President and Mr. Frank. You agreed to this deal. You just had to bail out AIG, and you did so knowing about those contracts. Are you going to set aside the union contracts? Of course not. Now, are you going to just say other contracts aren't binding or just those who create money for the economy? This outrage about the bonuses for AIG is outrageous. We own it; we bought it as is, and we knew all about it--assuming the "we" are the political whiz kids we elected. You guys are the proverbial bulls in the china shop and don't want to pay for the damage you've done.

Is it time to kill off Fannie and Fred?

Here’s a list, in reverse order, of WSJ articles on the poorly run Fannie Mae--back to February 2002, early in the Bush administration, the earliest one in Feb. 2002 comparing the risk to Enron. Was anyone listening?

"As for interest-rate risk, Fan and Fred hedge with a giant and complex program using all manner of derivatives. At the end of 2000, their combined derivative position was valued at $780 billion. Even scarier, these hedges are only as good as the counterparties' ability to pay up. But Fan and Fred don't disclose the identity of their parties, so investors have no idea how much risk comes from possible counterparty failure. (By the way, last year Fan's derivative strategy went, um, somewhat amiss and she had to write down shareholder equity by $7.4 billion.)

Fan and Fred also pool mortgages and then sell those securities -- that is, they retain the credit risk since they guarantee the soundness of the mortgages and buyers assume the interest-rate risk. But Fan and Fred have recently been buying back their own securities; each now holds 30% of all mortgage-backed securities outstanding. Simply put, they are re-assuming interest-rate risk. Not necessarily a terminal practice when interest rates are stable, but dangerous if rates turn volatile."

We know Fan and Fred and their federal co-conspirators in Congress (called committee "oversite", or fox guarding the hen house) are in part to blame for the current meltdown and housing crisis. The like to blame a corporate "greed", but it's bad loans chasing even worse risks. Then there is today’s alarming editorial in WSJ that points out that in addition to our $6.6 trillion debt held by the public (up from $5.3 trillion a year ago), you and I are guaranteeing $5.3 trillion in Fannie and Fred liabilities!

So I ask you, what if there had never been a Fannie Mae or Freddie Mac?

“In 1938, the Federal government established Fannie Mae to expand the flow of mortgage money by creating a secondary market. Fannie Mae was authorized to buy Federal Housing Administration-insured mortgages, thereby replenishing the supply of money to lend to future homeowners.

Freddie Mac is a stockholder-owned corporation chartered by Congress in 1970 to keep money flowing to mortgage lenders to ensure that there was funding available for future homeowners. Freddie Mac purchases single-family and multifamily residential mortgages. They help homeowners and renter get lower housing costs and better access to home financing.” from Singing Blog

So Fannie is a holdover from the Depression era and Fred from the 70s. Maybe they should have been killed off when WWII and not FDR's socialist programs restored the economy? In theory, the interest rate is supposed to be 1/4 percent lower, but considering how mortgage loans have fluctuated from 4.5% (about 5 years ago) to 10.5% (about 22 years ago) during my own mortgage commitment years (we've owned 5 homes since 1961), how really has that 1/4 percent made a difference to home owners, who seem to find the means no matter what the rate, other than to encourage bad behavior and poor credit? Plus, it's one more playground of regulation for the likes of the Barney Franks of Congress. In truth, I can't blame all this on the old Barn--he hasn't been in charge long enough to have created all the mess, but I'd like to see every chair of that committee still alive and not in a nursing home testify before the American people about why we the people need Fannie and Fred and to hear a few mea culpas.

More of what got us to our financial meltdown in housing

Have you noticed that the GSEs Fannie and Freddie are front and center of the stimulus?

"Before Wall Street screamed bloody murder at the opening of 2008, President Bush was resisting pressure to lift the financial limit on the mortgages Fannie Mae and Freddie Mac purchase and securitize. The Office of Federal Housing Enterprise Oversight (OFHEO), the GSEs’ wimpy watchdog, also objected to lifting the limit and continues to do so post stimulus agreement. The present GSE limit is $417,000. The stimulus would snap the cap to $625,500, and to $729,750 in extra pricey housing markets. Allowing Fannie and Freddie to purchase and securitize jumbo mortgages, the oversize loans MBS investors now shun as too risky. Link

How we got here--a quick review



HT Taxmanblog

Barney the dog has left DC

We'll enjoy the memories of his antics. Barney the Frank is still there, marauding through the halls of Congress, looking for plunder, still misleading us into more debt. Barney Frank, the Representative from Massachusetts has done more damage to this nation than the senior senator from that state could ever have imagined.

Rep. Barney Frank asserted Thursday that the Obama administration can be more trusted than the Bush administration to ensure that banks do not misuse money they get from a $700 billion bailout fund. Chicago Tribune

Yes, good ol' Barn. He's the one who told us there was no problem with Fannie and Fred; he's the one with Chris Dodd whose oversite responsibilities got us here along with all the other Democrats and "can't we all get along" Republicans. He's the one who should be brought before Congress to do the mea culpa they are forcing on CEOs.

As my artist friend Charlie wrote, Barney is attempting to "wash his hands and those of the Democrat party of any blame for the mess, and lay total responsibility on the Bush administration and Republicans in General. The truth is that Frank and the liberal left generated the whole problem by coercing financial institutions to make loans to people who couldn't afford them and using their political clout in Fannie Mae and Freddie Mac to cover up the problem. (The loans were nicknamed "NINJA" loans....No Income, No Job or Assets)." Yes, I've written about that many times at this blog, and my man Bush certainly can take part of the blame. Four years ago he was praising the number of new home owners among minorities, pandering to the liberals in his own party and moderate Democrats. Owning a home isn't a "civil right," and there was a very good reason for 20% down and fixed mortgages. Once the government began demanding that banks become social workers and nannies, the scene was set for our current playbook.

If government would stay out of this, we could come out of this recession as we've come out of the last 5 or 6, without a massive Depression, but we're on our way! Wheeee! But now we have a $13 a week payback "to make work pay" for all those who believed in Hope and Change.

How are these pirates different

than our Congress which has been holding the US taxpayer hostage through their own failures to control their out of control GSEs and profligate spending? Muslim pirates have held 26 vessels and 537 crew members hostage for $18.30 million. Pikers! They need a green card to the beltway to learn from the experts like Barney, Nancy, Chris and Hank. Oh--I feel a poem coming on.



Barney, Nancy, Chris and Hank
threw us hostages in the tank
with bank terrorists taught by Acorn
just like bomber Bernadine Dohrn,
using minorities and the poor
with us as deals on the floor
of the House finance committee,
Oh Lordy, what a pity.

Setting the Record Straight on GSE's role in the economy

Since we're in for another round of FDR type "fixer-uppers" to weigh down the economy, the response to who's at fault is up at the White House Web page. Even if you're an avid Bush basher, you really ought to take a look, because your 401-k or 403-b has been just as damaged as mine, but for some reason, you just might think that by raising taxes, you'll get some back. Don't think it works that way--at least it didn't in the 1930s.

The chronology starts in April 2001 with the FY 2002 budget, "the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity." (2002 Budget Analytic Perspectives, pg. 142)" Democrats forget Bush inherited a recession and was probably trying to figure out how to fix it. Having poor people borrow both the mortgage and the down payment from the government was not a healthy way to go. Foreclosures were already showing that.

Read all the way through to August 2007 (chronology ends in September 2008), the last time I think this steam roller could have been halted and around the time I started blogging about it: "August: President Bush emphatically calls on Congress to pass a reform package for Fannie Mae and Freddie Mac, saying "first things first when it comes to those two institutions. Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options." (President George W. Bush, Press Conference, the White House, 8/9/07)" I even wrote a poem about it in September 2007--not only were Barney and Chris not listening to the President, they weren't listening to Norma! Once the Democrats controlled Congress, there was no turning this thing around. Now they get the whole sticky wad.

Obama's team was much faster at taking advantage of this problem (by lying) than was the disorganized, flabby McCain team, so most of you bought into the, "it's the President/Republicans fault" meme and that action was needed immediately. I've spent more time deciding what to have for Thanksgiving Dinner than these Porkers did figuring this one out. We'll stay in this mess until someone smart about not raising taxes figures it out. I'm already retired, so please hurry up!

More wrong headlines

Greenspan admits errors
Now maybe the Democrats can take the stand and admit their errors? Don't hold your breath. The most breathtaking statement in this article by Kara Scannel in WSJ (Kara, don't you realize your job too is going down the tubes?)

"Greenspan dodged and weaved."

The finest weavers in the country first tied us in knots and now sit unraveling our economy in Congress. Barney Frank. Chris Dodd. Barack Obama. John Kerry. Ted Kennedy. The fraternity of fixers.

Forecasting, Kara, is not the problem. There clearly was time 18 months ago to stop this blood bath. Many Republicans tried to save the sinking ship, including John McCain and George Bush, and they were blocked by accusations of racism and defeating the dreams of the poor. And you guys who write that puerile, journalism school 101 nonsense as the "news" for WSJ, NYT, WaPo and USAToday just went along, and along and along. You never dug deep, never ask questions, but if the truth did peep through, you buried it somewhere beyond paragraph 15.

For edification, Kara, please read, "Would the last honest reporter please turn out the lights"

If the builders knew why didn't Barry and Barney?

"Approximately $216 billion in subprime and Alt-A mortgages will reset for the first time this year, which could ultimately push 3 percent of all outstanding mortgage debt into default. As a result, a large number of households will return to the renter pool throughout 2008. To compensate, builders are expected to expand existing apartment inventory by 1.1 percent, or more than 100,000 new market-rate units." Buildings, Annual Industry Forecast, 2008

How Democrats brought down the economy through ignorance, sloth and bribes

When Republicans tried to rein in the GSEs (Fannie Mae and Freddie Mac) our Democrat economic brain trust said: Maxine Waters, "Wasn't broke." Gregory Meeks, "I'm pissed off [that you're investigating this]." Barney Frank, "I don't see anything that's an issue." Lacy Clay, "Political lynching."



And now they want us to elect another Democrat to fix it. I've always thought of Obama as a marxist, Hillary as a socialist and McCain as a Democrat, so maybe they've got this one right. Vote McCain-Palin. It couldn't get worse than what these financial wizes whized. And if I may continue in that vein about Democrats, "they haven't got a pot to pee in" when it comes to the poverty of their ideas.

Gramm-Leach-Bliley

"Democrats largely supported it at the time, and one of their own, Bill Clinton, signed it. Now they frame it as a Republican bill that helped send the nation on the path to perdition."

Even Bill Clinton has been interviewed recently as saying it was a good idea, and of course, he could have vetoed it. So why do we let the Democrats get away with saying it is the Republicans and deregulation's fault? Here's what happened.

Modernized the rules, says IBD.

The mistakes had nothing to do with the 1999 law.

Pumping up home ownership was good for business and good for the politicians--all of them.

A new multitrillion-dollar market emerged

And what happened from there to cause the collapse needs to be investigated.

Well, maybe, but we sure shouldn't put Barney Frank in charge, he definitely needs to go; and congress definitely shouldn't be patting themselves on the back!