Here is just the first part of this article:
WASHINGTON – Pointing with dismay to the AIG debacle, the nation's top economic officials argued Tuesday for unprecedented powers to regulate and even take over financial goliaths whose collapse could imperil the entire economy. President Barack Obama agreed and said he hoped "it doesn't take too long to convince Congress." (Z: TAKE OVER?? And what is the big hurry? Can't we do ANYTHING anymore without rushing it through? Is there a reason for the huge hurry? How about the good ol' American way of letting stock holders ride herd on their companies?)
Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, in a rare joint appearance before a House committee, said the messy federal intervention into American International Group, an insurance giant, demonstrated a need to regulate complex nonbank financial institutions just as banks are now regulated by the Federal Deposit Insurance Corp.
"AIG highlights broad failures of our financial system," Geithner told the House Financial Services Committee. "We must ensure that our country never faces this situation again." (Z:, so THAT is IT? AIG messed up so we need to take over financial institutions because we can't trust ANY of them??? WHAT?)
But the two appeared divided over where the authority should reside. Geithner suggested his Treasury Department's powers be expanded. Bernanke was noncommittal, even suggesting the FDIC.
Don't you KNOW Geithner and Obama were DELIGHTED about the AIG bonus situation? Boy, this really puts a huge nail in the coffin of capitalism ("Yippeee! Now all we have to do is show how ya just can't trust American companies anymore, you need US'") More from the article: Both officials sought to channel the widespread public outrage over the millions of dollars AIG spent in post-bailout bonuses into support for regulatory overhaul. Geithner was expected to lay out more details on the administration's plan Thursday when he appears again before the committee.
Um. Can somebody convince me that this won't lead to completely nationalizing big American businesses?
I wrote a bunch more but then my dear blogger buddy Heidianne at BIG GIRL PANTS emailed me this Cal Thomas article, and what the heck...Cal Thomas can say it better than I ever could. Someone else who's better on this subject than I am (but no angrier or sadder) is my buddy, Rich Galen, from Mullings.com, who wrote a good piece tonight..the date's March 25 on it, in case you're reading this aftewards and the column doesn't jive with my post). Read them both and weep.
WHAT DO WE DO as we watch our country slip from capitalism to nationalizing businesses? And SO FAST!
z
37 comments:
thanks for the linky love, z. but it's worse than all this - aig didn't make mistakes, congress did.
barney frank led the charge in the house and chris dodd did the same in the senate to force banks to make loans based on some statistical utopia of home ownership. then they forced fannie and freddie to guarantee these loans.
then when fannie and freddie sold these loans as grade a paper, they (frank, dodd and their ilk) "encouraged" the good folk at aig and other houses to deal in derivatives for these bad loans. then when the whole house of cards blew down, they stand there pointing fingers at the failure of capitalism. capitalism my badonkadonk.
as for the speed with which they're acting? they know that sooner, rather than later, the american public will wake up and "...hurl the demagogues and tyrants from their imaginary thrones" (alexander hamilton)
Right, that's all we need -- the Obama administration running a capitalist system.
oops forgot to mark it to email me follow up comments.
"But I also know that we need not choose between a chaotic and unforgiving capitalism and an oppressive government-run economy. That is a false choice that will not serve our people or any people."
Z,I like the juxtaposition of this article, and Obama's in the NYT which you posted earlier. Both appearing in the papers today.
The excerpt above is from Obama's remarks in the earlier article.
Looks like it's not a false choice after all. That didn't take long did it?
What a laugh, they're in the catbird seat already, and flying by the seat of their pants, and they want to regulate? No, they want to take it over and continue not knowing what they're doing.
I do believe this would be called an oppressive government-run economy.
I only have one question, who's going to regulate these geniuses? They've taken over, making their own rules while Obama is supposed to make it palatable to the American people.
He and Hugo Chavez are two of a kind, no difference. They both hate America.
Pris
Pris, GREAT tie-in...of course, you're right...if this isn't "oppressive gov't-run economy", ..well...........!! GOOD point.
I'm thinking there will be a Summit with obama, chavez and castro soon, too. wait for it..
See? I'm NOT crazy afterall. I listened to Geitner and Bernenke and it all clicked.
The only real tangible difference between Obama's economic plan and that of the leftist labor activist Adolf Hitler in the 1920 Nazi Party platform is that it doesn't explicitly mention Jewish bankers.
z until the left's intent is felt in individual lives by these "initiatives" most will remain silent. but when they do realize what has occured, it may be too late.....
As I listened to part of Geithner's testimony yesterday, he said, "We want the power to..." over & over & over. I was astounded b/c they're not even attempting to veil their appetite for power. And it made me sad, too, b/c this Congress is likely to give it to them. (Heaven help us.) I'm w/ Cal Thomas - term limits, term limits, term limits...
take care all~
I don't have time to read all the links. I'll try to do so after work today.
The above said, these men are indeed suggesting changing America into a nationalized, socialistic state. Worse, so many "common people" are so angry right now that they are supporting the move by the feds.
I wonder....Was this the same tone of the people -- such anger -- in Germany in the 1920's?
Say it loud and often my friend. I'm in your corner.
No sir Heidi, AIG didn't make any mistakes.
They have a division writing insurance products that assume housing prices will continue to rise, leverage this stuff at an unheard of ratio and carry ZERO reserves and they didn't make a mistake?
Fannie and Freddie sold the paper as investment grade? When did Fanny and Freddy get into the business of grading bonds? The guilty were Moody's, Fitch and Standard and Poor.
We just came off years of unregulated capitalism where our only serious growth came from financial institutions leveraging junk paper and you want to blame Frank and Dodd who were minority members of their committees when the crimes were being committed.
Although it beats me why everyone is upset with Timmy Taxes and "Bubble Boy" Summers. They are intent on making their Wall Street buddies whole while tax payers assume the risk. People are a little upset, to say the least, so they run a misdirection play and write the bonus tax bill which hasn't been passed and is going to be tabled going in to recess and probably never will be passed but it doesn't take much to fool the right.
We are a sorry people.
Is there a reason for the huge hurry? How about the good ol' American way of letting stock holders ride herd on their companies?
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That's an interesting idea. Warren Buffet has always been held up as the model but Berkshire Hathaway is being given a credit downgrade and has been a miserable performer like everything else. And he was quite happy to ride the wave as it smacked a wall like nearly everyone else.
Seems the stockholder doesn't have a lot of leverage.
Punch drunk is right!!!what a freak show this man is!..he takes NO responsibility for poisoning our eco or anything else for that matter!
As I listened to part of Geithner's testimony yesterday, he said, "We want the power to..." over & over & over. I was astounded b/c they're not even attempting to veil their appetite for power.
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No, you want people like the derivatives branch of AIG to have unbridled power, they've done such a grand job.
This is the very reason why I believe that armed uprising is in our future (whether or not you subscribe to it's effectiveness). People will only take this open usurpation of our rights for very long.
"A government big enough to give you everything you want, is strong enough to take everything you have." -Thomas Jefferson
"[W]hen in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation... That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government..." -Declaration of Independance
Yes, Ducky, I would rather a corporations messed up than having my gov't take over. YOU BET. Thanks for the reminder.
BAD THINGS HAPPEN, Ducky...there is no need to completely redo America's financial situation because of it.
Leftists have to grow up and realize that, and we have to educate stock holders into standing up to the bigwigs, something I believe they'd learned by now...we were doing too well in this country and people got lax, that's a plus, not a negative, but the obama people are playing on the negative...and it's working, congratulations...no doubt about it.
thanks.
We just came off years of unregulated capitalism.
I realize it is too much to ask Daffy to demonstrate even a modicum of intellectual honesty, but I think blatant lies are beyond the pale even for this communist.
But, I do want to be fair. I suppose Daffy could argue that congress didn’t fulfill their regulatory responsibility when they browbeat banks into making loans that consumers could not afford to repay, and when two leading democrats were on the take from Countrywide and Fannie and Freddie.
Now just this morning, when asked about the squabbling going on among leading democrats with respect to the 2009 appropriations bill, a democratic senator began her reply with, “Well, as you know the Bush Administration doubled the national debt and . . .” The interviewer cut her off and said, “Excuse me, but I wasn’t asking about Bush in 2007, I am asking about the 2009 budget process.” Then this twit said that democrats in both houses are dedicated to formulating a bill that is financially responsible and fair to the American taxpayer; democrats want very much to cut our deficit in half by 2010.
Yes, of course. I suppose that adding another two trillion dollars to the debt in the first 45 days of the new administration could be regarded as “financially responsible,” if you happen to be Daffy or a complete idiot (but I repeat myself), but I don’t see too much responsibility in the amount of spending these bastards have obligated us to.
Moreover, if they are dedicated to cutting the deficit in half by 2010, what does this portend for the average Joe and major corporations in terms of their tax liability? And as these nincompoops continue to screech about job loss in the United States, let us recognize the reason for this is onerous taxes imposed by congress an the high cost of American labor.
Naturally, these issues are not a concern among people like Daffy, who close their eyes real tight and wish with all their might for a command economy ala Stalin, but the federal government’s ability to “seize at will” private and publicly traded corporations is a hazardous road. But most people simply don’t understand what is going on because they graduated form American public high schools, and this has been the goal of socialist education from its very beginning.
Mustang, it's the schools that really started all of this, you're right; Otherwise good Americans would have never let things get this far..not THIS FAR, NO WAY.
That's why I don't scoff or find it funny when even leftist journalists are now saying obama is "still campaigning"..He IS..for SOCIALISM. He has a lot of obfuscation and big beautiful phrases to use to keep selling the agenda.
I can't believe this ever happened in America. Mr Z is even more stunned than we are; he picked this country because he loved its freedoms and opportunities....like an adopted child...he CHOSE it and now look.
And with Mustangs words of wisdom on the lack of education, I'm gonna throw yet another shameless plug for a product,
Mark Lavin from the Landmark Legal Foundation, put out a book a couple days ago called "Liberty and Tyranny". I'm just into it, but it's a good read and one of the most complete manifestos for the Conservative American.
But, I do want to be fair. I suppose Daffy could argue that congress didn’t fulfill their regulatory responsibility when they browbeat banks into making loans that consumers could not afford to repay
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You sir are intellectually dishonest.
Congress browbeat nobody. Minority loans under CRA defaulted at a lower rate than the general the wider range of loans but the default rate is really not the issue.
The Fed (and Greenspan has admitted this) kept the money tap wide open way too long. Entities like Countrywide couldn't write mortgages fast enough. They bundled them and sold them upstream and got an immediate commission.
Then the investment banks started leveraging at 50 to 1 and we were off to the races.
Now, loan terms can be enforced but what entity has that power? THE FED ! And by his own admission Greenspan failed to enforce any regulation because he felt KAPITAL would have enough sense not to get too greedy.
Well, it didn't work out did it?
Now, do you wish to discuss your theory that the AIG tax bill represents a bill of attainder? I am struck that the right often thinks they can close an argument by bringing up some exotic term and then use it to profess a knowledge of the Constitution.
Well, you don't have that one down any better than you have who has jurisdiction over non commercial bank (and hence not subject to CRA) mortgage issuers.
Just as comrade Marx (this really stirs them up) predicted, capitalism fell in on itself.
Well, I'll be damned! Ducky actually made a stab at rational arguments. He's completely wrong, well nearly completely but at least he's not throwing a crap grenade and running away as usual.
Here's your education Ducky, please pay attention.
In 1992 there was a very flawed study that claimed there was mild descrimination being used in the banking industry in writing loans. Even though it was shown that it was flawed Congress and President Clinton took up the charge to change the Community Reivestment Act to force banks to write loans they would have otherwise found too risky or uneconomicle.
Traditional lending requirements were labeled 'outdated' and discriminatory. What 'traditional lending requirements' were viewed as 'outdated'and 'discriminatory'? (1) banks were told that a "lack of credit history should not be seen as a negative factor" and that "past credit problems" should be viewed and considered in light of any "extenuating circumstances" so loans could be extended when they otherwise would have been denied; (2) banks were encouraged to let borrowers without enough money for a down-payment make-up any deficiency with "gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies" even though banks considered this risky as the home buyer would have little or no equity in the house; (3) banks were also instructed that borrowers who received child support, welfare payments or unemployment benefits could count that as 'income' for borrowing purposes.
Banks soon learned, however, that making subprime loans actually could increase their profits without increasing their risk. Once the banks extended a loan to a subprime borrower that loan could then be sold by the bank to Fannie Mae or Freddie Mac, two government sponsored entities charged with making home ownership affordable to all Americans.
Banks, Wall Street, and mortgage lenders were soon eager to extend mortgages to subprime borrowers because they could make lots of money without carrying any risk. Fannie and Freddie carried all the risk once the original lending agency sold the loan to them. And once Fannie and Freddie bought the loan this freed up the banks to make even more subprime loans.
The problem was that in order to keep all of this going lending standards were continually lowered to help the next level of subprime borrowers qualify for mortgages and no one had an incentive to make sure that the new subprime borrowers would actually be capable of making regular mortgage payments. The banks which extended the loans really didn't care because they were just going to sell the loan off to Fannie or Freddie. Fannie and Freddie weren't too concerned because it wasn't their money-they knew that they were insured by the 'full faith and credit' of the federal government (that's government lingo for "you and me").
So when federal regulators began to warn the executives at Fannie and Freddie about the increasing risks of non-payment by subprime borrowers the companies did nothing and when the regulators took their concerns to congress their warnings were met with scorn and contempt. The politicians who received the most political contributions from Fannie and Freddie, by pure coincidence, just happened to be their biggest defenders: Chris Dodd (D-$133,900), John Kerry (D-$111,000) and Barack Obama (D-$105,189).
So, tell me again how congress and the government didn't browbeat anyone into this situation.
And finally, capitalism didn't collapse in on itself, government intruding in the free market by both law and creation of GSE's (freddie mac/fannie mae) are the direct cause of the entire problem our financial and economic systems are having.
What education?
Greenspan refused to enforce prudent loan requirements and allowed them to get away with untold amounts of mischief.
That doesn't conflict with my opinion at all. The REPUBLICAN congress along with the Federal Reserve allowed KAPITAL to run wild.
They ran a game and the fact that you only mention Dems as money recipients instead of the range of pols they greased (the mentally ill John McCain was a big recipient) also indicates you are intellectually dishonest which is not unusual on the right.
We were bought and sold by KAPITAL, just as I have been saying and KAPITAL knows no political party.
... also Greywolfe I don't notice any assertion on your part that banks were compelled (as the right frequently suggests) to make these bad loans.
ducky, i have clients in this industry; some are mortgage bankers and some are mortgage brokers. these folks were COMPELLED to write loans that they did not want to write. that they did not want the responsibility for.
these guys are audited with less than three days notice multiple times throughout the year. the auditor is NOT looking to that they have people's correct information and documentation, the auditors are looking to see if the lender/broker has been discriminating. they have to file reports six times a year to PROVE that they are lending to a diverse crowd of people - diverse in terms of race, location and income. obtw, these are GOVERNMENT auditors, not capitalist auditors.
yes there are greedy people in business. but guess what, there are at least as many greedy people in government/politics - on BOTH sides. in a free market there are corrections that take place to fix things - not so with government. there is no oversight.
the three democrats mentioned by greywolf were mentioned as the top three recipients. this is an accurate statement. but you are correct that fannie mae did give money to republican's as well. you can see the actual breakdown (as of 09/11/2008) here. as you can see in contrast to the $126.349 that barry obama received, john mccain got a mere $21,550. i might also point out that all of the money mccain received came from individuals and not from pacs.
as for your assertion that the majority of foreclosures are not in the sector of these low income mortgages, please site your source(s). everywhere i looked i found the exact opposite information to be true. heck, i even find that cnn agrees with me on this one.
in a free market there are corrections that take place to fix things - not so with government. there is no oversight.
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Then why did Alan Greenspan, Ayn Rand's cabana boy come out and completely disagree with you?
Greenspan simply stated that his expectations were wrong and in fact the capitalist snake ate its own tail.
In that article you link to I don't see any data on CRA loans. My contention that anti-redlining loans made by commercial banks did not default at any greater rate than other 30 year fixed loans and those are the loans that CRA governs.
Good article on CRA in Business Week which I pick because they were one of the few responsible publications during this fiasco.
The stock market has fallen over 7000 points (from 14,000+) since the day (October 1, 2007) that the economic regulatory standards of the party (Democrats) in control of the branch of government (Congress) responsible for any government power over the economy began.
It isn't a concidence that over 3500 of those stock market points were lost between the election of America's first Messianic president and today.
America wanted the economy to go full speed into the toilet, and empowered the party that could make it happen.
Ducky won't even admit he's a moron, and you expect honest discussion?
"... also Greywolfe I don't notice any assertion on your part that banks were compelled (as the right frequently suggests) to make these bad loans."
Ducky, When Obama was a lawyer working with Acorn, he sued or threatened to sue banks for discrimination if they didn't approve these loans which had relaxed requirements.
That's a fact.
"Just as comrade Marx (this really stirs them up) predicted, capitalism fell in on itself."
Any system can and will fail when corruption runs rampant within it. It should be obvious to you given that Washington is run by the Democrats exclusively, that absolute power corrupts absolutely.
You know, you've said you're wealthy. Why? you didn't have to take the money did you? You could have said, "no, wealth doesn't fit with my ideology, give it to someone who needs it".
In fact you could have moved to a paradise like North Korea! Sounds like a plan to me. In other words put your money where your mouth is "comrade"!
Pris
Ducky, your friggin IDOL, NObama even went so far as to be one of the lawyers sueing Citibank for NOT making enough bad loans. They ended up being forced to cough up $2 BILLION in funds to offer even riskier loans. I call that arm-twisting at the very least, but more like criminal actually.
now ducky, we get down to your assertion that the dems KNEW this was an issue because fannie had been privatized and it's all function of capitalism. here're a few pearls for you, ducky.
1. dwight d. eisenhower's congress moved fannie from the full government entity it was as created by fdr's new deal to a jointly owned commodity - private and tax payer owned. sort of like timmy g is recommending we do now with aig, et al. the congress of eisenhower was controlled by democrats.
2. amidst rising fiscal pressures created by the vietnam war, lbj converted fannie into a fully private gse in order to get the debt off the budget. if i'm not mistaken, lbj was a liberal democrat.
3. when fannie became a "privately" held gse, it was - unlike EVERY OTHER PRIVATE FORTUNE 500 FIRM IN THE NATION - exempted from informing the public about any potential or active financial difficulties. yes in 2003 they voluntarily registered its common stock with the sec, but they were still not required to comply with the rules that everyone else was required to comply.
4. in 1999 bill clinton's democratic congress reversed the glass-stengall act (the banking act of 1933. this act had been created to forever separate commercial banking from investment banking and securities firms.
5. in 1991 fannie created the "open doors" initiative designed to produce $10billion in purchases for those with low & moderate income or "other special housing needs".
6. having met the goal of the first open doors initiative, fannie expanded that goal to $1 TRILLION in target home finance meant to serve 10 million low to moderate income families.
7. this was converted into the american dream act in 2000 for $2 TRILLION - same target area, now only hoping to serve 18 million families.
so what was the effect of pouring TRILLIONS OF TAXPAYER guaranteed dollars into the marketplace? why the market responded as markets do:
banks competed for the loan business and interest rates plummeted - that was the goal. however there was a flip side to the whole pancake. because there was a seemingly unending amount of money to be had, the prices of housing increased dramatically. it's called inflationary pressures and it happens everytime there is this much of an influx of money available. but you need to understand that it was also the goal because it boosted overall consumer spending.
this whole manipulation of the market was done in the name of social engineering. period. the whole thing was contingent on the price of housing NEVER falling.
and how is it that this whole house of cards plan to get housing for those of low and moderate income escaped the geniuses at hud (fannie & freddie's direct regulator) and the entire oversight apparatus of the congress? well it would probably have helped things IF hud weren'tcomplicite with the shenanigans ...
"In October 2000, HUD published a new rule (the 2000 rule) that increased the affordable housing goals for the GSEs for the 2001–2003 period. Under the 2000 rule, the share of all eligible units that each enterprise finances that must be affordable to low- and moderate-income families increased from 42 percent to 50 percent."
yep, that's right folks. hud REQUIRED fannie and freddie to increase their risk. ok, so who oversees hud? well that would be the united states house of representatives committee on appropriations
subcommittee on va, hud, and independent agencies. so, yep, congress.
and while it's important to recognize that while the whole thing started to unravel with the reversal of the glass-stengall act it was the acceptance of the gramm-leach-bliley act overall that wreaked so much havoc. i should also note that this act was written, in part, by three republicans - phil gramm (tx), jim leach (ia) and thomas bliley (va).
however, in their defense it did not originally include any language about who money would be lent to. howver, clinton vowed to veto the bill if it wasn't rewritten to include specific "requirements that banks make loans to minorities, farmers, and others who have had little access to credit."
in 2003 the combined debt of fannie and freddie were already at 46% of the national debt of the usa. and this didn't show up anywhere, even though it was a real debt for the taxpayer, because these are "private" entities.
there are several sources siting where bush and other members of congress questioned the lunacy of these initiatives - but no one did anything. in fact, there are several sources that show the democrats who received the most money from these entities discounted the notion the most.
but now these same people are claiming having known this all a bad idea. well, ducky, the dems have been in control of congress for more than a year now. why didn't they IMMEDIATELY begin to deal with the issue when they got in last year instead of continuing to kowtow to their buds at fannie, freddie, wall street, etc?
On the bright side, if Osama Bin Laden ever gets caught downloading pirate copies of Brokeback Mountain, the Democrats will track him down.
But only because they're stymied not knowing where to send the flowers and candy.
... and beyond that, the mere existence of "subprime" loans -- i.e., mortgages given to less-creditworthy individuals at higher interest rates -- isn't the problem here. The problems have to do with what was done with the loans after they were packaged, sold and used to make leveraged plays.
above you do not say conventional loans given as part of cra - you have [once again] changed the criteria used in your argument. the problem is ducky that loans made for cra using traditional guidelines - read conventional loan criteria - are defaulting at no hire of a rate than other conventional loans. i cannot find anything to support your assertion that they are defaulting at a lower rate.
the issue is with the sub-prime loans that were given at the strong-arming of the initiatives of fannie, freddie, hud, etc - all in response to the edicts of the cra.
in short, not all people who received money under the cra (in all its iterations) are defaulting. but more than 40% of them are. you see, ducky, the VAST majority of funds were loaned in the sub-prime market because the low to moderate income people could not qualify under the traditional guidelines.
furthermore, each of the recipients of the sub-prime loans were counciled on how to get their debt under control and be prepared to refinance before the arm was readjusted. how many of them followed the guidelines and refinanced? i can't find statistics on this number, but i have spoken to my mortgage clients and in returns to them for refinance they all estimated less than 15%. but again, i have no idea what this percentage is in the larger population.
"...and beyond that, the mere existence of "subprime" loans -- i.e., mortgages given to less-creditworthy individuals at higher interest rates -- isn't the problem here."
You'd better explain THAT to the poor people who got caught in these loans with big balloons, etc.......they're out of their homes, Ducky. They were duped into thinking the bank would finance them forever. Now they're wondering how the country can finance them forever.
//Congress browbeat nobody. //
One sentence tell us all just how naive Ducky is.
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