The following words of mine were published in the Star Tribune on 11-28-08.
So the Federal Reserve is going take over debt from the failed dealings of Fannie Mae and Freddie Mac all in an effort to ensure economic stability. The approach is suppose to help "Main Street" as well because it will allow the credit card companies and banks to free up cash to make loans at low-interest rates and increase one's line of credit. Is this not how America started down the road to economic ruin? What types of controls are being placed on lending institutions to ensure another collapse does not occur in five or 10 years?
Owning a home is not a right that all Americans are guaranteed. The direction the Democratic Party has America going is right behind the changes that took place in the final days of Rome. Congress wisely asked the Big Three for a recovery plan before it will give any bailout, or rather, loan. Why is Congress not doing the same for the financial realm? Could it be because leading Democrats are in bed with those who benefit from the bailout? Yes!
Sen. Barack Obama is going to bring "change" to America; the "change" will be in the form of a penny that used to be a $20 bill.
http://www.startribune.com/opinion/letters/35267544.html?page=3&c=y
The same people that are trying to fix our Economy are the same that felt Freddie Mac and Fannie Mae were solvent. President Obama’s administration is using Socialism to right the ship instead of identifying the root cause for America’s economical woes. America’s economical woes root cause is the Socialistic view that everyone has the right to own a home. Simply put, it is not a right to own a home.
Government backed Freddie Mac and Fannie Mae mortgage programs enabled the financial industry to package the “toxic” asset trade by guaranteeing mortgages. Armed with the backing of the Federal Government, mortgage companies proceeded to push the socialistic ideal of homeownership through ARM’s, interest only, and no money down loans.
In 2002 a number of concerned legislators warned the Judiciary Committee about the future insolvency of Freddie Mac and Fannie Mae. The warnings fell on deaf ears as Democrat Barney Frank stated over and over that nothing in the balance sheet or any projections supported the charge of insolvency. Why might this be?
Had Barney Frank heeded the warnings it would have meant a halt, most likely temporary, to the Democrats Socialistic agenda. Thus turning the average citizen into hedge fund managers as many that entered into mortgages they knew was going to break them in three or four years. Instead of holding homeowners accountable for their actions and the Government crafted the notion of predatory lending.
The topic of predatory lending opened the door for Socialism to thrive through a collapsing American economy and the partial nationalization of the financial industry. The House of Representatives even treaded on the U.S. Constitution by passing a bill of attainder to recoup bonuses paid to executives of TARP fund recipients. Now Secretary Geitner is asking for Congress to expand his powers to control of potentially failing companies that are vital to our economy. Barney Frank has proposed a bill that will allow the Government to establish wages for companies that take bailout money. The kicker to Barney Frank’s bill is that it will allow it to be retroactive.
On the surface the additional powers may make sense for those accepting money from the Government but that is only being short sighted. The shell game is Democrats attempt to entrench Socialism while removing Capitalism. Government has failed us by not identifying the root causes and using Socialism to attempt to right the ship. When will America wake up and realize that our freedoms are being stripped away?
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"Why is Congress not doing the same for the financial realm? Could it be because leading Democrats are in bed with those who benefit from the bailout? Yes!"
ReplyDeleteHrmmm...
Your argument is interesting, but your fingers missed the pulse of a central concept of the economic crisis that no political party can claim a monopoly on: greed.
Greed is a human problem, not a public or private sector problem. We cannot expect government to fix problems that humans created. Only problems government created.
"Our problems are man-made, therefore they may be solved by man. And man can be as big as he wants. No problem of human destiny is beyond human beings."
-J.F.K
We should all remember this crisis starts with us when we use a credit card or make a student loan payment or make a house payment or make a car payment. It isn't our money, period.
“Be the change you want to see in the world.”
-Ghandi
Well... I think you've got it about half right.
ReplyDeleteThere's plenty of blame to go around in this mess, and pinning it on a perceived socialist agenda isn't going to completely cover it. This is a complicated situation that took ten years to develop.
When you look back to 1999, there were several moves the congress (republican led in both houses at the time) made in order to ease restrictions on the banking industry and make it more market friendly.
Yes, President Clinton put pressure on Fannie Mae to expand mortgage loans to lower income folk. But they were also feeling pressed by mortgage companies and thrift institutions as well as their stock holders. But that wasn't the only issue.
Here's an excerpt from New York Times reporter Stephen Labaton in a Nov. 5 article:
''The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.''
...... [more below].....
The opponents of the measure gloomily predicted that by unshackling banks and enabling them to move more freely into new kinds of financial activities, the new law could lead to an economic crisis down the road when the marketplace is no longer growing briskly.
''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''
Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''
.....
There's also another article from the Times from Sept. 30, 1999 that detailed the changes to Fannie and Freddie to allow them to take on more risk that was similar to the above article.
In retrospect, easing restrictions on the banking industry didn't work. The freedom for subprime lenders, mortgage companies, banks, etc. to take on more risk failed badly, ending up with our current situation after only ten years.
As far as the House vote on the bill to tackle the bonus situation: Yes, that was a clear overreaction and would have been constitutionally questionable had it not been stomped down.
But I do think there's a valid point in there somewhere. No matter how you feel about the TARP money, stimulus whose-a-whatsit (whatever you want to call it, it's still billions of government bucks), there needs to be a point when the banks (et al) should lose their right to keep doing things completely their way. I can't say that I agree with all of the bailing out the government is doing... but these companies are no longer playing with just their money... and they must pay respect to their newest and biggest investor... the people of the United States of America.
At some point, haven't they failed too much by playing the game their way? And, if these mega-gigantic corporations are so key to our economy and they're taking such huge amounts of money from us, shouldn't the government be able to oversee them in some way? Shouldn't there be somebody looking out for the best interest of the people?
Now, I can't say whether or not Frank's bill will pass as it is, or whether Geitner will get expanded powers, though I think the idea of oversight of the bailout packages is a good idea. It should have been done since the beginning.
Government has actually identified several causes, and have been closing them up since August 2008 by putting in stricter loaning guidelines, which will mean less risk to the banks moving forward. So when we have a low mortgage rate now, at least the lenders should be able to be repaid. The only problem is that we were already in this mess, stemming from 1999's "market friendly" easing of banking and home loan regulations.
As for the democrats being in bed with those who benefit from the bailout, it's most likely very true. It's also most likely very true that many republicans are too. If not individual congress people, you know that the RNC and DNC are, along with other political groups. And while in times of prosperity nobody's watching, it's during times like these that skeletons come out of closets. So I think the motivation of anyone in Congress now has had to shift to actually trying represent their constituents.
Where's the answer to the problem we face now? It's probably somewhere in the center, where it should have stayed. And you may see that as being socialist, but that's what I call being responsible.
CWS
ReplyDeleteIn the immortal words of Gordon Gecko, "Greed is good". What Gordon Gecko meant to say was,”Greed is good if regulated with ethical and moral standards”.
The Greed that is at the root of our current economic situation is the Government. Congress and the White House were warned in 2002, some may argue earlier, that the policies governing Freddie Mac and Fannie Mae were pushing the up, artificially, housing prices and the program was insolvent.
It was through Democratic leadership that allowed Freddie and Fannie to go unchecked. I acknowledge a Republican President did reside for a time since 2002 but let’s not kid ourselves. President Bush acted more like a liberal then a conservative.
I do agree with you on the aspect of accountability. For every homeowner that entered into an ARM, no money down, or interest only loans believed in a housing market with no ceiling and placed the bet that in four or five years they could sell their house for a handsome profit.
Instead of holding these homeowners accountable, the current regime is looking to bailout them out. The American financial industry has this neat tool to reset the table; bankruptcy. Donald Trump has made a career with the tool. Why is President Obama’s administration not allowing for corporations and private citizens to follow the path of Donald Trump and restructure their debt through bankruptcy?
These things you're saying are good things to know, but mostly common knowledge. However, you're only describing the water we're drowning in.
ReplyDeleteWhat actions have you personally taken to be the change you'd like to see in the government's actions? How have your spending habits changed so that you can teach your children a better way?
re: " Why is President Obama’s administration.."
I can't speak for why an administration does what it does or why Chapter 11 isn't used more. I can only speak for my own spending.
Very little is needed to make a happy life.
I agree that the banking industry went unchecked. The driver of the unchecked trading of derivatives and lending practice stem to the policies that governed Freddie Mac and Fannie Mae. Had legislators heeded the warnings of those raising the issue in 2002, we may have been able to mitigate the situation we see the US and the World in now.
ReplyDeleteGoing forward to rectify the situation is rather simple and increased Government intervention is not required. Government will need to establish a “watch-dog” group to ensure the financial industry does not craft instruments that jeopardize America going forward. And that is where it ends. Nationalization of any sort is not required. Allowing companies that made bad decisions to fail is required. Government needs to send the signal that taking risk without the ability to fail is no longer the norm.
The trouble with that philosophy is it runs contrary to the power grab the Democrats are trying to make. President Obama and his socialist are drunk with power and greed. They will fail to understand that a regulated, not over regulated, free market will bring America and the World out of the depression. By allowing the market to correct itself with limited regulation, we will see America come out of this stronger then it went into it.
My daughter has asked me if we could go to Yogi campground this summer and if we will be heading north again. I have told her, repeatedly, that will depend and only time will tell. I do not go into the particulars with her as she does not need to know the exact reason. As for personal actions taken to see government change, I have sent weekly emails to my representatives and left phone messages to voice my opinion on certain topics.
Just a few weeks ago I stood before a committee in Norwood Young America to voice my concern on Hamburg’s ability to meet the demands of Federal and State guidelines on urban cities. Since Hamburg falls in the metro area, being part of Carver, we must meet the standards of the metro and cannot partake in outstate programs to attract business or upgrade our infrastructure. From what I could tell I was the only citizen at the meeting that spoke while others were local city officials.