Rant #17 - Back Off, Socialist Punks! Congress Tries to go Blackjack with the Same Failed Hand...

This week, Lehman Brothers went bankrupt, Washington Mutual inched closer to the cliff and AIG received an $85 billion bailout that gives the Federal Reserve an 80% stake in AIG’s equity funds. The credit crisis has reached a new level as relatively few bad mortgages are affecting normal, predictable, theoretically “safe” investments like money markets, bonds and pension funds.

In a previous article, I decried the Federal takeover of Fannie and Freddie, and I still stand by this on principle. But the problem goes much deeper than this. The problems have been mounting for many years and have been affected by many variables, but the largest factors that figure into today’s economic quagmire consist of a single bill, a single political Party and a single Senator that was shot down by his colleagues. While no single factor is solely to blame for these problems we’re suffering with today, there are significant benchmarks and individuals that factor into this:

In 1977, the Community Reinvestment Act was passed by a Democrat-controlled Congress and President Carter as a way to make low to middle income borrowers (LMI) qualify for the types of home financing good borrowers have access to. After years of criticism by both sides of the aisle for being too vague and not accomplishing what it was supposed to do, President Clinton finally led a charge to pass a “modernization” amendment to the Act that called on the Treasury to report within two years how to fix the loopholes and “insufficiencies” in the system, and make it easier for LMI borrowers to get home loans.

Finally, in 2001 Congress passed revisions to the actual act that allowed Fannie Mae and Freddie Mac and other banks (including much smaller banks, for the first time) to qualify for government support for these types of loans, by virtue of being able to dump these types of mortgages on obligated bankers at Fannie and Freddie. Meanwhile, through the 90's the seeds of corruption under the guise of good intentions were laid by a man named Franklin Raines. The result was the beginning of a housing boom, as tens of thousands of new homeowners poured into the homeownership market. The natural economic cycle combined with this regulatory change to fuel growth that was exacerbated by the Federal Reserve lowering the discount rate to 1% by 2005-2006. Meanwhile, Fannie and Freddie became the largest lobbyists in D.C., pushing for promotion of programs that helped to fuel their growth and their earnings. The CEO’s of these mortgage behemoths were being compensated based upon earnings, which led to falsely reported earnings for many years in a row. Risky loans abounded and banks were flush in hundreds of millions of cash (with no call for “windfall profits taxes”, by the way…), and only a select few saw the rising tide coming.

One of those people were Senator John McCain, of Arizona. In 2005, seeing the negative effects of these two loosely regulated banks and showing a distaste for the blatant lobbying habits of these same two, McCain sought to introduce a bill that would establish a separate, independent committee to oversee the two banks and recommend impartial changes, and strip governance of them from the Department of Housing and Urban Development, and give it to this newly formed committee. The law passed the Republican-controlled House but faltered in the Senate, which was unable to pass it due to the inability of Republicans to overcome blockage by Senate Democrats. The bill died.

Sounding today like a prophet, McCain said the following in introducing the bill to the Senate Committee that oversees finance:

“Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets.

The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac. The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems.

This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market.

OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay. I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation.

If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”

Today, Congress failed to pass a bailout plan for financial markets, and the U.S. stock market responded with an 800 point drop followed by several other international markets doing the same as they opened later in the day.

We now face a serious crisis in credit and liquidity and Congress insists that the only solution is more oversight and government control of hundreds of thousands of bad mortgages.

Barack Obama is refusing to take a hard line on this proposal so he can claim plausible deniability later, but he comes from the same cloth of governing philosophy that believes Government can best serve the needs of the people in such affairs. As everything shakes out and new revelations come to light on how this mess began and strengthened, we are seeing that not only is Obama comfortable with the idea of a virtual government "takeover", but is surrounded by the very people who brought about this crisis to begin with. Barack Obama received over $126,000 in contributions and financial support from 2004-2008, second only in total receipts to Senator Christopher Dodd, who collected only a few thousand more dollars, but spread over 19 years. This means that Barack Obama received the support of Fannie and Freddie lobbyists and their appendages at a rate 4 times that of any other Senator. This is terrifying to realize that Fannie and Freddie (who have now been revealed to have literally broken the law and falsified documents and forged signatures to drive up earnings and bonuses for Execs) saw something in Senator Obama that would lead them to support him far and above any other legislator in the House OR the Senate.

The corrupt executive at Fannie Mae who began this culture of deception is now considered part of the inner circle of Barack Obama's economic advisory panel, as Barack seeks his advice in housing and finance.

Unless you want the government to be landlord to your neighbors and becoming the single largest investor in the world, using your money, then I suggest you apply all necessary and accessible pressure on your Congressmen to continue standing on the principle of truly free markets and taxpayer protection. It was Congress meddling in the natural affairs and time-tested mechanisms of the financial investment market that set the motion for this collapse, the last thing we need is another intervention by the very entity that screwed this up to begin with.

The problem today is a financial system crippled by the mistakes learned by private institutions 80 years ago. The reason we suffer today is because once again, socialists tried to hijack a free system for their own cause, whether legitimate or not. Let's not make the same mistake again by letting the fools get another crack at it.

BlogBlurb - Who I Am: My Definition of a Conservative Minarchist

A friend recently challenged me to identify my political philosophy as succinctly as I could by answering some basic questions.

What is your political philosophy?

How do you think government should be run, and why?

Do you identify with a particular brand of politics (i.e., Conservative, Liberal, Libertarian, etc.)?

Why?

What's the issue that inspires you to hold your viewpoint and associate with that brand?

This is my political philosophy:

I have to identify myself as an idealist in principle, but pragmatic in philosophy. I am Conservative. But I jokingly refer to myself as a Conservative Minarchist, that is, minimalist in government control in almost anything other than infrastructure, policing of reasonable morality, and military protection.

The pragmatist in me recognizes the needs of a society with radical differences between Hartford, Connecticut and Mobile, Alabama. But in this respect, I still believe local needs should remain local, and the Constitution affords the powers and rights not given to the Federal Government to the individual States and to the people. If Massachusetts wishes to serve the poor through it’s varied tax base, New York shouldn’t have to pay for it. I believe government has a responsibility to equip and encourage, but not to facilitate or provide.

Through history I see countless examples of good intentions that end up replacing the original problem with a new one, or several. Welfare, unemployment and federal project grants are just a few of the examples I’ve seen gone awry.

The problem I have observed is that government programs inherently survive beyond their usefulness and perpetuate their intended audience rather than resolving the initial injustice once and for all.

Which serves another final point on my philosophy… government is to see to the defense of those suffering injustice. But natural, human tragedy is not the same as injustice. And in this regard, I believe private charity should always come before the compelled compassion of “government assistance”. Private enterprise, social services and charity have always been more successful than government attempts at the same.

So, in conclusion, I firmly, though sadly believe the society we have today is the result of a Church that has failed it’s other oft’ overlooked commission to both the world and to it’s own:

“Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress and to keep oneself from being polluted by the world.”

- James 1:27

So, Church... What are we going to do about it? Your country and her people desperately need an answer. I believe faith in action within a local community and prudence in governing across a nation work together in perfect harmony and would revolutionize American culture. It would shrink the demand on government services, allow personal freedoms to flourish, and revive American churches for generations. True religion, or the lack of it, determines the rose and fall of nations. America was a unique experiment, and we are sadly losing it. This is why I've been shaped into the kind of voter, and layman I have. My goal is to change the church and community I serve and the government that serves me.

This is the life of a Conservative Minarchist.

Blogblurb - Your Call: So, is this "bias", or just typical "hard news"?

Tell me, if you were going to report on the convention of a major national political party and it's supporters came out raving and happy, and the ratings were through the roof, how would you report on the event? I would expect myself to interview attendees, highlight the positive momentum and give the public a picture of the energy the convention held for everyone there.

...Even if it were the Democrat National Convention.

But, MSNBC, in despair after falling in dead-last in the ratings game for BOTH conventions (FoxNews came in dead-first in the coverage of BOTH, by the way), and after demoting it's two lead anchors for the evening political news instead had this lead page in its programming department:

Though it is purely beside my point, it is notable that the same page shows a headlining video of Michelle Obama, with the title "Michelle Obama dances on 'Ellen'". But my observation centers on the "coverage" of the Republican National Convention. Or, that is, the "aftermath" of said Convention.

Now, it must be noted that these videos fall under "Countdown" which is hardly claiming these days to be "fair and balanced", as Keith Olbermann and Rachel Maddow take their hour to pour the vitriol that leftist desire so much. Those disenchanted by the relative "balance" of CNN find their home on "Countdown" with Keith "Olderman" and Rachel "Mad-woman" as he they've taken on John Ashcroft, Don Rumsfeld, George Bush and Karl Rove on a daily basis for years.

However, "editors" exist in this business for a reason, and they used to have the job of maintaining at least an APPEARANCE of balance and objectivity.

While on this page Michelle Obama is having an Arsenio Hall moment, the Republican Convention "coverage" was titled "The RNC Aftermath" and featured video clips with titles such as:

"Maddow - Let's call lies lies"
"McCain speech skips vets"

"Filling in the blanks on Palin"

I was astonished that Keith Older-man was placed as the ANCHOR for the RNC this last week... imagine if Sean Hannity or Rush Limbaugh were the Anchor for DNC coverage the week before. The Dems and Obama campaign would have been all over it, crying foul... especially since it appears America prefers FoxNews over any other cable network (they hit ratings near 10 million viewers last week, while their nearest competitor came in with about half that audience). Fox understands it's viewers appreciate their attempt to be "fair"... which in this world of media-immaturity means a "moderate" report would seem "right wing".

It's pathetic. And a lousy excuse for a network.

Unfortunately, Chris Matthews had to take the fall along with Keith. Sorry, Chris.

Misgiving #9 - U.S. Government Seizes Control of Nation's Two Largest Banks, FNMA and FHMLC

This morning the United States Treasury Department announced the Federal takeover of mortgage giants Fannie Mae and Freddie Mac. Department Secretary Henry Paulson made the declaration in the midst of significant uncertaintly on Wall Street regarding the solvency of the two banks to survive losses in excess of $3 billion resulting from defaulting loans.

Henry Allison and David Moffett were the CEO's of Fannie Mae and Freddie Mac, respectively. The Chief Executive Officers of both companies have been ousted and all portfolio loans under both agencies will be managed by the Federal Housing Finance Agency. Freddie Mac and Fannie Mae together control or insure over half of the nation's $12 trillion mortgage market.

With combined revenues of $84 billion and assets, they have lost more than $10 billion and sent major concerns through not only the secondary mortgage market, but now the public securities market as well.

Many Democrats adamantly support the Bush Administration's move, but the political fallout has yet to be seen as the government initiates one of the most significant takeovers in decades. As Government Sponsored Entities, the two corporations are private but loosely regulated by the Department of Housing and Urban Development and the Office of Federal Housing Enterprise Oversight. However, this move will amount to a Federal buyout of investors and potentially billions in taxpayer dollars being needed to shore up the corporations in light of defaulting mortgages.

Fannie Mae was created in 1938 by the Roosevelt administration to help assure liquidity in the private and government-backed mortgage market for the sake of private banking institutions. It became a private corporation in 1968, and became a guarantor of private and commercial loans only, with government loans falling under the control of another new Federal agency, the Government National Mortgage Association. (Ginnie Mae)

When Fannie Mae was made private in 1968, the Congress realized that there needed to be a balance of corporate competition, and in 1970 they chartered the creation of the Federal Home Loan Mortgage Corporation (Freddie Mac for short), providing the services of bundling mortgages into securities to be sold as a package on the investment market.

It was the development in the 70's of the speculating market in mortgage securities that led to Fannie Mae and Freddie Mac finding themselves at the helm of nearly the entire U.S. mortgage market, yet under the whim of the stock market and it's idiosyncrasies.

The most recent credit crisis was initiated by many factors, but most significant of which was the insertion of loans issued under bad credit (sub prime, high-interest government loans and other riskier loans) into the same consolidated mortgage investment instruments as those with low-risk loans, then giving them the same investment rating as the higher value securities. Fannie Mae, Freddie Mac as well as other large commercial banks bought and sold these instruments on the secondary mortgage market throughout the housing boom of the last decade without concern to the bad loans sitting within the securities they had built their equity upon. When the cards began to fall in 2004, some thought nothing of the ripples made by a temporary disruption in one or two banks that had failed to balance their sheets or invest wisely. However, when larger mortgage companies began revealing mounting foreclosures and losses, Wall Street began to take notice.

The housing market had exploded with a vengeance for over 5 years, and as home prices began to stabilize the sub prime and adjustable-rate mortgages that had become so prevalent began to weigh on the banks that had bought securities with these loans consolidated into them. As homeowners found themselves unable to refinance out of these loans because of a flat real estate market, foreclosures began to rise with an equal vengeance, causing a flat market to begin to pull backward. With foreclosures doubling and housing values (the last source of stability in a failed loan package) falling like a rock, many banks began to fail, or merge with other banks to cover their losses. Traditional banks and investment houses who had gambled on the rising real estate market suffered mightily in the mounting crisis, and the downturn claimed the lives of banks such as Countrywide, Merrill Lynch and event the stalwart Bear Stearns.

Understandably, the Federal Government feels an impulse to aid failing homeowners and inject some confidence into the market, but after hundreds of billions of dollars have been borrowed to shore up the industry the Treasury Department now sees it as necessary to take over the two largest corporations in the mortgage world, shielding investors from the consequences of a capitalist system that routinely corrects itself as necessary when the excesses of failed judgment come back to haunt those who looked idly by, including the Federal Reserve.

The Government does bear responsibility for some of this mess, but I believe the best course would have been better oversight (NOT meaning "regulation"), and the best course now is to allow the market to correct itself, which it is already doing. Banks fail when investors make mistakes in judgment, but the system fails when the government steps in to stop the necessary bleeding that allows the whole of the market to prosper over time. The stock of these two companies has fallen nearly 90% from their one-year highs, as of July of this year. However, as in every free market recovery, this only presents a lesson in discretion to those that lose, and an opportunity for reward for those who buy these devalued shares now.

Democrat Party nominee Barack Obama spoke at a campaign stop in Indiana and addressed his concerns about the takeover plan, but refused to pass judgment until he sees the Bush Administration's plan. Meanwhile, Republican candidates John McCain and Sarah Palin were campaigning in Colorado Springs, CO and gave their take on the financial crisis and pending takeover. McCain said this is another clear example of the nation's economic woes, and lemented that "Today, we're looking at another federal bailout of our home loan agencies".

Vice Presidential candidate Sarah Palin responded by saying, “They’ve gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”

I am adamantly opposed to this "bailout" of Fannie Mae and Freddie Mac, and support the full disclosure of the manner in which these entities run their books. In addition, I believe future oversight can be accomplished by tightly regulating the manner in which mortgage securities are bundled together and graded, but much else would be a violation of our free market principles and would reward only those investors who made foolish decisions to begin with and deserve to suffer the consequences of their failure in prudence.

Misgiving #8 - Slime 101 / How to Smear a Politician

The media has not even attempted to hide their blatant disregard for common sense and general goodwill in their biased attacks on Sarah Palin since her selection was announced last Thursday as John McCain's Vice Presidential nominee. Armed with only a few days of investigative journalism, many news outlets have hit the stands and their internet pages with charges usually reserved for the National Inquirer for washed up celebrities that no one cares about.

A few examples:

The London Daily Telegraph: "How Good a 'Mom' Could Sarah Palin Be?"

The New York Times: "Vice in Go-Go Boots"

And the best of all...

US Weekly: "Babies, Lies and Scandal"

This story was found on FoxNews.com and written by Jana Winter:

On its most recent cover, due out on newsstands Friday, the magazine shows a picture of Palin with the headline, “Babies, Lies & Scandal” — a marked contrast from its gushing review of Barack and Michelle Obama that ran two months ago.

Critics say this cover, which was released a day ahead of Palin’s acceptance speech at the Republican National Convention, is a sucker punch aimed at the GOP ticket, and is a blatant attempt to influence the votes of the magazine’s 12 million mostly female readers.

Us Weekly publisher Jann Wenner is an outspoken supporter of Barack Obama and the Democratic Party.

“When you look at this Palin cover and contrast it with the super-friendly story on Obama, it’s hard not to see that they’re clearly biased,” said Jane Hall, associate professor at the American University School of Communication. “It’s not fair and it’s also offensive. I think that they are going to be offensive to many people regardless of whether you’re for Sarah Palin or not.”

Us Weekly’s June 19 cover featured a photo of the Obamas with the headline, “Michelle Obama: Why Barack Loves Her.” In smaller print: “She shops at Target, Loved Sex and the City, and never misses the girls’ recitals. The untold romance between the down-to-earth mom and the man who calls her ‘my rock.’”

In contrast, this week’s Palin cover shows the Alaskan governor cradling her baby Trig in her arms. The captions: “Under attack, admits her daughter, 17, is pregnant. Investigated for firing of sister’s ex-husband. Mom of five: New embarrassing surprises.”

An article inside the magazine focuses on a January 15 incident in which Palin laughed along with an Alaskan shock-jock DJ who called her political rival, a cancer survivor name Lyda Green, a “cancer” and a “bitch” and ridiculed her weight.

Wenner, the magazine’s publisher, has given $130,308 to Democratic causes and candidates since 1993 — and only $3,500 to Republicans, according to records. Wenner also runs Men’s Health Magazine and Rolling Stone Magazine. In March, Rolling Stone featured a glowing endorsement of Obama, “Barack Obama: A New Hope,” on its cover.

Hall said she found the Wenner-owned magazine’s coverage transparent and troubling. “I mean look at the Obama cover and look at this new one,” she said. “New embarrassing surprises? Really? You couldn’t have a stronger contrast, at least between these two covers,” Hall said.

Rumors about Palin’s personal life and public record have been swirling since John McCain named her to be his running mate last week.

On Monday, Palin released a statement confirming that her 17-year old daughter, Bristol, is five months pregnant, prompting the media spotlight. Despite calls from both Democrats and Republicans to leave Palin’s family out of the media, many political watchers say that it is contradictory for a public official who has a staunch stance against sex education and promotes abstinence-only programs to have a teenage daughter who is pregnant.

While Hall said McCain’s camp should have done more to vet Palin, she said this level of media depiction is unfair.

“Publications like this one are taking it too far. Calling it ‘Babies, Lies and Scandal’ looks out of bounds,” she said

____________________________________

In addition to the above smears, US Weekly also felt it necessary to make the Presidential election about Sarah's husband Todd's DUI charge from 21 years ago, adulterating on CBN's gracious report when he was 22, and even daughter Bristol's boyfriend Levi Johnston, publishing a story, libelously titled: "Father of Bristol Palin’s Baby: 'I Don’t Want Kids'" as if any of these details have anything to do with the election of a qualified woman as Vice President. These are the politics of personal destruction invented by Lee Atwater and perfected by the Clintons.

This is pathetic, disgusting, revolting and absolutely infuriating!

Barack Obama is, in the least, facilitating these digusting politics by not intervening (outside the spotlight) with the media that is VERY OBVIOUSLY at his beck and call.

BlogBlurb - The Definition of Sick Politics of the Lowest Regard!

Democrats Release Sarah Palin's Social Security Number and Home Phone Number!

This story was posted on RedState.com:

The Politico has received an opposition research file from the Alaska Democrats. You can read it in PDF here.

In the file, the Democrats have released Sarah Palin's social security number minus the last four digits. Also tied to the information are her various home addresses.

Back in 2005, Democrats used Michael Steele's social security number to get his credit record.
It is atrocious that the Democrats would not only seek out Sarah Palin's social security number, but release it in opposition research to the press.

We need to know who did this. We also need to know what happened. We also need to know if it was used to bolster the Democrats' opposition research.

When it happened to Michael Steele, it turns out the Democrats knew about it and did nothing.
They cannot not take action now.

UPDATE:

The Alaska Democratic Party says it did not release the information. From Ben Smith, at the Politico, I got this:

Our story doesn't say that "Alaska Democrats" gave us that document. It was a document prepared for Tony Knowles two years ago. We haven't revealed our source.

You should also note that it's a partially REDACTED social security number. That seems relevant. If less sensational. It's missing four digits.

Here is the key take away: Yes, the SSN is redacted and people can pay for themselves.

Now, here are additional points:

If the AK-Dems didn't do this, who did? Obama? The DNC? Who? They're releasing the whole thing now and letting the media make hay of it.

Why didn't the SSN get fully redacted?

It's ironic the party that thinks only Republicans invade privacy, invaded the privacy of Sarah Palin enough to learn her social security number and distribute it to the media.

Rave #9 - Obama ACTUALLY Said His Pursuit of the White House Qualifies Him to be President!!

In his own words, Obama said yesterday:

“Well, my understanding is that Governor Palin’s town of Wasilla has, I think, 50 employees. We’ve got 2,500 in this campaign. I think their budget is maybe $12 million a year. You know, we have a budget of about three times that just for the month. So I think that our ability to manage large systems and to execute I think has been made clear over the last couple of years."

First of all, apparently Obama thinks that his campaign managers have done a great job handling the last 18 months of his pre-packaged life, and for that much I agree... they're the best liberal business universities have to offer, and I'm sure they're running a fantastic "corporation" using all the fundamentals of any reasonable firm: outsourcing where necessary, and hiring based upon merit, not skin color (how ironic).

But secondly, I am laughing at the notion that Barack's "handlers" mistakenly informed him only of the stats regarding her mayoral and city council years, which even a 5th grader could find by googling "Sarah Palin experience". Great job, Campaign Managers and Mr. Experience - Barack Obama.

But my amusement is this: Obamuhh used her Wasilla experience as a counterpoint, failing to mention her other experience:

Running a corporation (a.k.a. the state of Alaska)
Employer of over 25,000 people
Managing a budget of $10 billion
Facilitating the proper management of 18 different State departments

She is currently in charge of a state that borders and negotiates with two foreign countries (Canada and Russia), manages land that would stretch from Georgia to California and is currently negotiating a $40 billion pipeline to bring alternative fuels to the United States.

Obamuhh has experience managing a political campaign. ...and maybe a lemonade stand when he was a kid.

BTW, Obamuhh, she has 20 months of experience managing this one, 2 months more than your blessed campaign which started out a lot smaller than your little darling. THEN, you can add her Wasilla experience on top of that if you want. And for that matter, Wasilla isn't some podunk "town of 7,000". First of all, the city proper has nearly 10,000 residents drawn by it's access to Anchorage, spectacular growth, it's plentiful jobs, low sales taxes (less than 3%), low property taxes (down 60% during Palin's administration) and good schools. It is also the economic center of a larger borough that is home to over 65,000 residents.

But, even I digress... she still has more experience than Obama as GOVERNOR, not including her experience in any other capacity.

Its laughable that Obama thought his PURSUIT of the White House would qualify him as President. That's like saying the Freshman in High School who campaigns to be student body President is therefore qualified to be Principal of the school.

I can't believe Obamuhh actually said something so imbicile on the campaign trail - does he really think Americans are going to smile and nod on something as idiotic as this?

Not this one.