Kill the bailout: The foreign bank angle
I’ll be on Neil Cavuto’s show at around 4:10-15pm-ish Eastern to talk about the foreign bank angle of the Mother of All Bailouts.
If you ain’t mad, you ain’t payin’ attention.
***
I hear that GOP Rep. Mike Pence, a fiscal conservative loner, will also be on the show. Tune in!
Posted in: Subprime crisis
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Yes, the EU uses the Euro though a few enlightened countries still maintain a separate national currency.
Really, the Euro is not new. It has been around since 1933. Back then the Euro was called the Reichmark. In 2043 they will change the name of the Euro again and it will be called the Dinar.
Yes, in German they would say “Wir behalten Besitz des Goldes der Juden.”
But, in Schweizerdeutsch it is slightly different and is pronounced “Wir haben sie wieder getäuscht!”
Armed resistance in a true civil war.
Some of the language in the bailout:
(b) Necessary Actions.–The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
So, Mr. Paulsen, a former CEO of one of the companies that created this mess (Goldman Sachs) now wants absolute power to clean up the mess at his own discretion?
I have a question for the Secretary of the Treasury: “Are you for real?”
This appears to be a violation of the Constitution on multiple levels and is (to mix metaphors) a clear cut case of the fox running the insane asylum.
Here’s another example of GW standing firm against the pork producing political hacks of congress.
On September 22nd, 2008 at 8:24 pm, psCargile said:
Exactly. The thing that’s been troubling to me is whether such a thing is possible in today’s world. I fear it just may not be logistically possible to fight back against this kind of tyranny. I think the kleptocrats in Washington know this, too, which means they are a tyranny without fear.
Fearless tyrannies only get more despotic with age.
I agree with part of that.
Not everyone is guilty. The banks and financial institutions were encouraged and in xome cases forced to offer loan programs that are now in a tailspin. If you did not offer these loans, you were accused of redlining and discriminatory practices. Bank regulators put an inordinate emphasis on an institutions’s “CRA Rating” (Community Reinvestment Act). That is a Congressionally mandated program compelling banks, in exchange for deposit insurance, to originate loans to low income areas in their banking communities.
None of these loans would have been made had financial institutions been required to keep the loans on their own books. Fannie and Freddie sent out the message not to worry, sell the loans to them and they would carry the risk. Wall Street saw an opportunity there, and followed Fannie and Freddie’s lead. Although Wall Street could not borrow from the Treasury like Fannie and Freddie, was not exempt from state and local taxes like Fannie and Freddie, and had to pay more to insure their packaged loans than Fannie and Freddie, and could not offer the bond yields like Fannie and Freddie without additional cost, they jumped in anyway.
Bank and mortgage regualtors did not rate financial institutions on loans they sold – only loans they held.
The SEC was asleep at the switch, and went so far as to warn banks and financial companies to AVOID putting extra money aside to cover any repayment risk – if historical trends did not support the reserve levels, they would be accused on sandbagging to manage their earnings in the future. The problem there was, there was NO historical trend for these crappy loans.
All the while, in the interest of fair lending to low income customers, lenders were essentially barred from charging the high interest rates that historically were applied to these loans to offset the risk. You pay more for an insurance policy if you are higher risk, but this practice was barred for mortgage loans.
Lower rates were not enough, so the other element of the risk equation – the down payment – was chipped away. Where historical trends dictated downpayments of 40% or more of the loan amount to offset the risk of loss in the event of a foreclosure, that was also viewed as a discriminatory practice. The low income borrowers or those with bad credit would never be able to save that much money. And besides, a higher down payment requirement would have hit minority borrowers the hardest, and that was a violation of Congress’ view of “Fair Lending”.
Led by Fannie and Freddie, those down payment requirements wwent from 40% to zero for some programs. 100% financing on a home. And that would never be a problem, since housing prices would always go up.
All it took was a slight breeze to start this house of cards tumbling down.
The real culprits here are Congress (doing great things with other people’s money) , Fannie and Freddie (executives reaping the rewards of payback in political patronage positions while engaged in serious accounting fraud), and the greed of Wall Street.
Hey, you know who else has written about some of these very things? Ayn Rand “Atlas Shrugged” Wanna know something else funny? Alan Greenspan was a disciple of her take on capitalism. I wonder whatever happened to him?
Was anyone able to find the video segment on Fox website. I found the vid with Pence and Cavuto but no Michelle. Did they edit her out?
What’s the point of getting mad? We’ve made it perfectly clear that we’re not going to stop them. We’re going to send some faxes, but at the end of the season we’re going to reward them with the #1 spot.
The lowest approval ratings in history, but we’re picking one of them to be President? Actually, most of us are picking one of them *not* to be President.
We don’t get mad any more. We just get offended.
People have talked for years about ‘voting the scum out.’ But in reality, everyone seems to like their own scum. So they keep reelecting them. Or they go by fear, the RINO is LOTE in their state and they’re afraid to rock the boat.
It’s broken. It won’t get fixed until civil war is forced upon us. Most people don’t want to be bothered. They’re too busy going to the mall or watching American Idol.
Well, I am done. I won’t be voting for either one of these people this year. I am done with the major parties. We were worried that Clinton, Gore, Kerry or Obama would give us socialism. It turns out Bush beat them to it.
Conservatives need a new home. The GOP is now simply the “other socialist party in America.”
WarEagle – I agree, but where to go? Seems whenever that topic comes up conservatives split in 10 directions.
The two party system is broken. Our country is broke
en.Now what?
Jim M.,
Redlining is when entire sections of town are barred by banks from eligibility for loan money even if some residents within that area have the resources to pay it back. Thus, if banks loaned funds to a few creditworthy borrowers who happen to live in an otherwise bad neighborhood, they could not be accused of redlining as long as they applied the same uniform standards to all areas.
As for so-called stated income loans, self-employed people tend to shave significant amounts of business income from their tax returns, or else the self-employment Social Security and Medicare taxes would kill them. So to accommodate them knowing that borrowers’ income was in fact higher than shown on their tax returns, the banks accepted the numbers put forth by the borrowers.
History shows what happens to democracies: first, there is freedom, then apathy, then dependence, then dictatorship. We are transitioning from apathy into dependence. I wonder how long it will be before there are serious calls for a new “Constitutional Convention”? There was a movement for one, back in the 70s, but it didn’t have much support. Times are different now. The Constitution now is ignored, so it shouldn’t be long. Many ignorant people will cheer their loss of freedoms. One thing for sure, all major corporations and Wall Street will be government-run to “protect us”.
That is the classic definition of redlining, but that definition expanded significantly in the push to generate higher risk loans. The application of “uniform standards” became obsolete, since the new lending programs all but eliminated any notion of traditional lending standards. And, if you were not “in the game” making those high risk loans, you were roundly criticized for your failure to reach out to low to moderate communities.
Senator Dodd holding hearings saying we have only one chance to get this right and shouldn’t rush into it…Hey Senator wanna check with the people to see how they feel about this mother of all bailouts and how they probably don’t want their hard earned $$$ going to bail out foreign banks…didn’t think so…
WarEagle, we have to take back the GOP, not abandon it, if for no other reason than they have gone to great lengths to keep other parties off the ballots and out of the media news. Look, have you seen even Michelle talk about any of the other Conservative candidates? Because I haven’t. The right wing talkers and writers have the power to effect change, but they don’t. Rush came the closest, but the rest of them are more focused on mocking the Democrats than actually fixing our own house.
Look – here’s a link to the Senate Banking Committee’s contact form. http://banking.senate.gov/public/index.cfm?FuseAction=Contact.Form
This is something that needs to be investigated. AIG is getting 85 Billion of taxpayers money, and the people RUNNING the company (Board of Directors)are in this alot DEEPER than anyone knows. Carla A. Hills, FORMER HUD Secretary runs AIG… She also is one of the HIGHERARCHY of the Council on Foreign Relations.
I am suggesting EVERYONE look at the Corporate Membership of the CFR and SEE who we are bailing out.The powers that be are NOT ELECTED.
By the way, take a look at who runs Fannie and Freddie, No conspiracy, cant be if its written in stone.
Michelle,
Why can’t the homeowners that have not defaulted on their loans form a class action suit against barney frank, chris dodd etc. is that possible.
paulson just said the american taxpayer is on the hook, then atp should receive stock in aig, lehman bros, and all banks that atp are bailing out.
On the push side of the equation, the practice of throwing money into the housing market by way of writing bad loans has got to be at least partly responsible for helping the real estate boom cycle that we witnessed just before the floor fell out a couple years ago. I look at ’starter home’ prices as a corollary to the minimum wage. While I don’t doubt the liberals would attempt to set home prices if they were afforded the opportunity, pushing the bottom end of the market place up with ‘cheap dollars’ just raised everything else above it. The people who find themselves in a position to sell their starter houses for a big profit given the increased demand for it by cheap money, (and a profit that isn’t going to be taxed if they then put it into a more expensive house), and find that the same cheap money puts them closer to that more expensive house – are going to trade up while the going is good.
Where are the conservative republicans? They have enough evidence now to skip the trial and arrange directly for Congressional HANGINGS with weasels Barney Frank and Christopher Dodd being first in line.
Liberals set the housing market on fire but WE are the ones getting burned by it AND the ones being forced to put it out!
Considering he was the one that left interest rates too low for too long, I’d guess he’s hiding away somewhere. Of course, he did come out long enough to bash McCain’s tax plan.