We heard from a few "admirers"regarding our last post. How dare we highlight Obama’s complicity in halting reform of the Fan/Fred twins when we know good and well that some of McCain’s advisers were or even remain on contract to these GSE’s?
Could it be that Democrats expectorate by instinct even the most well founded, rock solid evidence that may just run contrary to their view? We have trouble accepting this, even from our dear libtard friends; naive perhaps we are (love the syntax?) in welcoming, even relishing as we do the give and take of respectful debate, the willingness to say, "Oh, well, that may be. Let me look at that one. Perhaps you have something there..." and a re-consideration of our earlier position is a strength, not an admission of total defeat. Something like that. An awareness of scale and gravity. We expect that in others. Yet is seems that if for example Pelosi were to shoot her neighbor’s pet dog squarely between the eyes for peeing on her lawn, the Democrats response would be a "So?". "What about Palin? She’s killed a moose."
It is true that Rick Davis, McCain’s campaign manager, received a good deal of money ($2MM over 5 years) from Freddie. In fact, McCain has other advisers who have lobbied for the twins. Are these advisers running for president? How does Davis’ situation even come close to the Democratic CANDIDATE’S acceptance while a senator of $125,000 in campaign funds from the Fan/Fred twins? Trouble with that? Think it does? OK, let’s for the sake or argument, concede even that.
Far more important - how can the left deal with the fact that it was the Senate Democrats that single-handedly quashed legislation in 2005 co-sponsored by McCain (S-190), that would have prevented this entire mess in the first place, or that earlier, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage, or that Clinton’s HUD secty Cuomo demanded that this junk make up 50% of the twin’s portfolio by 2001? Huh? Come on. I mean, what is there to argue here for goodness sake (except perhaps to save face)? Our Marin Cty friends whine about their 401K being in the outhouse. Look to your own party. With Democrats, political correctness trumps sound business practices every time.
The sad truth is that to camouflage their now #1 vulnerability, the left has created a smoke screen in Davis.
Robert Craven
Thursday, September 25, 2008
Wednesday, September 24, 2008
Key to the White House
If McCain cannot accomplish the simple task of explaining to the public just how his effort along with that of some of his colleagues through proposed legislation in 2005 would have prevented the present crisis, then he certainly does not deserve to be president. There is no shading here, no nuance, no argument even - just black and white. Stop the stupid complaints about greed; stop the persecution of Cox. Make it simple.
Our readers know that the financial crisis was birthed in Washington by 1) politicians who wanted to increase home ownership and 2) Greenspan’s enabling behavior. From Charles Calomiris, professor of economics and finance at Columbia, "How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of ‘affordable housing.’ They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse."
One of the several reasons so many of these risky loans were originated is that Barack Obama’s celebrated community organizers made their careers out of forcing banks to do so. ACORN, for which Obama worked, is one of many left-wing organizations - shake down artists really - that spent decades pressuring banks and bank regulators to do more to make mortgages available to people without much in the way of income, assets, or credit. The result was the Community Reinvestment Act. The CRA empowered the FDIC and other banking regulators to punish those banks which do not lend to the poor and minorities at the level that Obama’s fellow community organizers would like. Banks were required to keep extensive records of their minority lending practices. Those that didn't pass muster could be denied the right to expand their branches, merge with other banks, or boost lending in new markets.
Lenders cannot blame the CRA entirely; they made a lot of bad bets on rising home prices. But the CRA did influence lending standards across the banking industry, even in those institutions that are not strictly liable to its jurisdiction. The subprime debacle is in no small part the result of lending decisions in which political extortion trumped businesses’ normal bottom-line concerns.
As explained in an earlier post, Fannie & Freddie, forsaking FDR’s intent, strayed into speculation themselves (and implicitly putting on taxpayers the risks of their business while the rewards were enjoyed, and to the tune of hundreds of millions of dollars, by largely Democratic political opportunists, who then gave generously to Democrats, the top recipients of their largesse being: Chris Dodd, Hillary Rodham Clinton, John Kerry, and Barack Obama) Both became a profit center in their own right because of incentive deals to Raines and others and as part of that accumulated sub-par mortgages on speculation. Their increased risk taking was not a problem they told Congress because Wall St took them out of the stuff by inventing ways to package/combine the junk paper with prime debt, then peddle the whole lot to institutional investors by representing it as safe. Watch out.
In 2005 the Bush administration pushed for reforms. Those efforts were rebuffed by Congress with Barney Frank and Chris Dodd in the lead. Fannie and Freddie had not spent millions on campaign contributions to these clowns and their pals for nothing!. Still, for the first time a serious Fannie and Freddie reform bill actually passed a Senate committee. It would have required these two GSE’s to eliminate their investments in risky assets. If that bill would have become law today’s world would be different. McCain co-sponsored this legislation (S-190) to thwart what he called ‘the enormous risk that Fannie and Freddie pose to the housing market, the overall financial system and the economy as a whole." All the Republicans on the Committee supported the bill; all the Democrats voted against it. Obama, like all other Democrats, remained silent. Peter Wallison of the AEI wrote at the time, "The Democrats who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''
The roadblock built by Senate Democrats is unforgivable. There has been a lot of talk about who is to blame for this crisis, especially from our good friends from the left. They need only to look within.
Robert Craven
Our readers know that the financial crisis was birthed in Washington by 1) politicians who wanted to increase home ownership and 2) Greenspan’s enabling behavior. From Charles Calomiris, professor of economics and finance at Columbia, "How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of ‘affordable housing.’ They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse."
One of the several reasons so many of these risky loans were originated is that Barack Obama’s celebrated community organizers made their careers out of forcing banks to do so. ACORN, for which Obama worked, is one of many left-wing organizations - shake down artists really - that spent decades pressuring banks and bank regulators to do more to make mortgages available to people without much in the way of income, assets, or credit. The result was the Community Reinvestment Act. The CRA empowered the FDIC and other banking regulators to punish those banks which do not lend to the poor and minorities at the level that Obama’s fellow community organizers would like. Banks were required to keep extensive records of their minority lending practices. Those that didn't pass muster could be denied the right to expand their branches, merge with other banks, or boost lending in new markets.
Lenders cannot blame the CRA entirely; they made a lot of bad bets on rising home prices. But the CRA did influence lending standards across the banking industry, even in those institutions that are not strictly liable to its jurisdiction. The subprime debacle is in no small part the result of lending decisions in which political extortion trumped businesses’ normal bottom-line concerns.
As explained in an earlier post, Fannie & Freddie, forsaking FDR’s intent, strayed into speculation themselves (and implicitly putting on taxpayers the risks of their business while the rewards were enjoyed, and to the tune of hundreds of millions of dollars, by largely Democratic political opportunists, who then gave generously to Democrats, the top recipients of their largesse being: Chris Dodd, Hillary Rodham Clinton, John Kerry, and Barack Obama) Both became a profit center in their own right because of incentive deals to Raines and others and as part of that accumulated sub-par mortgages on speculation. Their increased risk taking was not a problem they told Congress because Wall St took them out of the stuff by inventing ways to package/combine the junk paper with prime debt, then peddle the whole lot to institutional investors by representing it as safe. Watch out.
In 2005 the Bush administration pushed for reforms. Those efforts were rebuffed by Congress with Barney Frank and Chris Dodd in the lead. Fannie and Freddie had not spent millions on campaign contributions to these clowns and their pals for nothing!. Still, for the first time a serious Fannie and Freddie reform bill actually passed a Senate committee. It would have required these two GSE’s to eliminate their investments in risky assets. If that bill would have become law today’s world would be different. McCain co-sponsored this legislation (S-190) to thwart what he called ‘the enormous risk that Fannie and Freddie pose to the housing market, the overall financial system and the economy as a whole." All the Republicans on the Committee supported the bill; all the Democrats voted against it. Obama, like all other Democrats, remained silent. Peter Wallison of the AEI wrote at the time, "The Democrats who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''
The roadblock built by Senate Democrats is unforgivable. There has been a lot of talk about who is to blame for this crisis, especially from our good friends from the left. They need only to look within.
Robert Craven
Saturday, September 20, 2008
The Bush Legacy
For seven years George Bush has kept this nation free from terrorist attack. For this legacy every single one of us owe him a debt of gratitude. For those seven years as commander-in-chief he demonstrated a focus, a resolve, a constitutional emotional balance, a self-possession that was not disturbed by the most trying of circumstances.
The President’s strength and his dedication to his country were distilled in a 20 minute speech of Jan/10/07 that announced a new initiative designed to win in Iraq. The speech was not greeted with applause. Few within the administration supported what now has become known as "the surge". The Joint Chiefs of Staff were not in favor, nor was Gen Casey, the American commander in Iraq, nor was Centcom commander John Abizaid, nor was Condy Rice, nor was the foreign policy establishment led by the Iraqi Study Group. Yet that day the President wasn’t looking for affirmation. He was not, Clinton–like, directed by the polls. He was focused solely on victory; he decided to spurn public opinion and political pressure and fly by his own lights. He was right. That decision can be regarded as the single greatest of that whole series of decisions that successfully confronted an enemy whose creed is nothing more than an atavistic inheritance of the dark ages. As Charles Krauthammer reminds us, "The surge...effected the most dramatic change in the fortunes of an American war since the summer of 1864."
We are reminded too by Ann Coulter of the western classic "High Noon". The sheriff is about to leave office just when a gang of toughs ride into town. He could leave but he waits to face the killers. All his friends and all the townspeople who supported him during his years of keeping them safe, slowly abandon him. In the end, he walks alone to meet the killers, because someone had to.
In an interview George Bush noted with some pride that he has bequeathed to his successor the kinds of powers and institutions the next president will need to protect Americans. Yet despite this heritage he leaves as an unpopular president. Krauthammer confirms that, "In this respect Bush is much like Truman who developed the sinews of war for a new era (Dept of Def, CIA, NSA), expanded the powers of the presidency, established a new doctrine for active intervention abroad, and ultimately engaged in a war (Korea) that also proved to be highly unpopular." So unpopular that Truman left office disparaged, persecuted by both sides of the aisle as if he were some sort of nefarious character. History has revised that verdict. There is no doubt that Bush will be the subject of a similar reconsideration.
Robert Craven
The President’s strength and his dedication to his country were distilled in a 20 minute speech of Jan/10/07 that announced a new initiative designed to win in Iraq. The speech was not greeted with applause. Few within the administration supported what now has become known as "the surge". The Joint Chiefs of Staff were not in favor, nor was Gen Casey, the American commander in Iraq, nor was Centcom commander John Abizaid, nor was Condy Rice, nor was the foreign policy establishment led by the Iraqi Study Group. Yet that day the President wasn’t looking for affirmation. He was not, Clinton–like, directed by the polls. He was focused solely on victory; he decided to spurn public opinion and political pressure and fly by his own lights. He was right. That decision can be regarded as the single greatest of that whole series of decisions that successfully confronted an enemy whose creed is nothing more than an atavistic inheritance of the dark ages. As Charles Krauthammer reminds us, "The surge...effected the most dramatic change in the fortunes of an American war since the summer of 1864."
We are reminded too by Ann Coulter of the western classic "High Noon". The sheriff is about to leave office just when a gang of toughs ride into town. He could leave but he waits to face the killers. All his friends and all the townspeople who supported him during his years of keeping them safe, slowly abandon him. In the end, he walks alone to meet the killers, because someone had to.
In an interview George Bush noted with some pride that he has bequeathed to his successor the kinds of powers and institutions the next president will need to protect Americans. Yet despite this heritage he leaves as an unpopular president. Krauthammer confirms that, "In this respect Bush is much like Truman who developed the sinews of war for a new era (Dept of Def, CIA, NSA), expanded the powers of the presidency, established a new doctrine for active intervention abroad, and ultimately engaged in a war (Korea) that also proved to be highly unpopular." So unpopular that Truman left office disparaged, persecuted by both sides of the aisle as if he were some sort of nefarious character. History has revised that verdict. There is no doubt that Bush will be the subject of a similar reconsideration.
Robert Craven
Friday, September 19, 2008
Economics and the Campaign
Near term developments in Afghanistan and Iran are the key to the security of this country, eclipsing all else. Recent domestic events however have trumped this concern in the collective mind of Americans. So be it. Thus the change in the landscape of Wall St triggers a change in the landscape of the campaign, sculpted for the duration by the scythes of the sub-prime crisis.
The economy is not easy for anyone. "Ex-spurts" abound, all chattering away but of course - after the fact. Some economists understand the economy but very few can close the pattern successfully, that is, predict. McCain admitted that he had trouble fathoming these events. We applaud his candor.
The DNC welcomed the sub prime crisis just as the RNC will welcome buoyancy (if that may be the result of the current rescue effort). For weeks Obama has tried to keep voters focused on the economy betting this was his best chance to pull away. Until yesterday at least, one saw nothing but smiles on the faces of short sellers, vulture buyers and Democratic strategists.
It is true that Obama easily evokes race, changes his mind weekly, often sounds like he is lost and is the world’s foremost gaffe machine. It is also true that he has past associations with shady characters. None of this matters now. For the balance of the campaign it is the economic "crisis". However, Obama’s strength is not crisis management. His instinct is to equivocate and temporize. He is not the strong, virile male figure of say a Hank Paulson; he is not a commander as is McCain.
Nor does his leftist background spawn confidence. As David Frum of the AEI reminds us, "Obama is a classic big-city welfare-state politician. He has lots of ideas about how to share wealth created by others - but very few about how to ensure that wealth is created in the first place."
Thus although the DNC was gifted by the failure of Wall St’s instruments-of-the-cosmos, Obama lacks the skills, the instinct to capitalize on what could have been a bonanza. And key to this failure is his vulnerability. For example, in attributing the sub-prime situation to "Bush-McCain" policies Obama conveniently omits the fact that the key policy change underlying the whole breakdown is one he endorsed enthusiastically - the use of public loan guarantees to stimulate private home construction. As Frum again illustrates, "As a state legislator, Obama famously championed ‘public-private partnerships’ to renovate slum housing. Thus he advocated the same approach that just stuck the American taxpayer with liability with tens or hundreds of billions of dollars of Fannie/Freddie obligations."
McCain for his part must stop with the "greed" bit (there is nothing in the Constitution, nothing on state or national books which makes greed unconstitutional or illegal). Issues of judicial activism, earmarks, energy, education, health care, even national security, all key yes but now to play the cameo role. Tell ‘em what he knows and as before don’t fret party affiliation - the fat Fannie & Freddie, the Democrat’s encouragement of reckless activity through these two conduits and the payback, principally through the person of Barney Frank; the near incestuous relationship between regulator and regulated (Fed / Street). For the near term endorse Democrat Paul Volker’s RTC idea - massive government intervention, yes, but it worked before; take a crash course in credit flows and explain that to the masses. Make it easy, make is simple; we are not launching a satellite for goodness sake (and by the way, fire Phil Gramm). The landscape may be changing too fast for more specific proposals this week or next. Fine, capitalize on that - first the main structure, later the accent.
And McCain - recall and then highlight to your listeners the maxim, for us a golden rule - complexity remains, still, the very last refuge of the scoundrel.
Robert Craven
The economy is not easy for anyone. "Ex-spurts" abound, all chattering away but of course - after the fact. Some economists understand the economy but very few can close the pattern successfully, that is, predict. McCain admitted that he had trouble fathoming these events. We applaud his candor.
The DNC welcomed the sub prime crisis just as the RNC will welcome buoyancy (if that may be the result of the current rescue effort). For weeks Obama has tried to keep voters focused on the economy betting this was his best chance to pull away. Until yesterday at least, one saw nothing but smiles on the faces of short sellers, vulture buyers and Democratic strategists.
It is true that Obama easily evokes race, changes his mind weekly, often sounds like he is lost and is the world’s foremost gaffe machine. It is also true that he has past associations with shady characters. None of this matters now. For the balance of the campaign it is the economic "crisis". However, Obama’s strength is not crisis management. His instinct is to equivocate and temporize. He is not the strong, virile male figure of say a Hank Paulson; he is not a commander as is McCain.
Nor does his leftist background spawn confidence. As David Frum of the AEI reminds us, "Obama is a classic big-city welfare-state politician. He has lots of ideas about how to share wealth created by others - but very few about how to ensure that wealth is created in the first place."
Thus although the DNC was gifted by the failure of Wall St’s instruments-of-the-cosmos, Obama lacks the skills, the instinct to capitalize on what could have been a bonanza. And key to this failure is his vulnerability. For example, in attributing the sub-prime situation to "Bush-McCain" policies Obama conveniently omits the fact that the key policy change underlying the whole breakdown is one he endorsed enthusiastically - the use of public loan guarantees to stimulate private home construction. As Frum again illustrates, "As a state legislator, Obama famously championed ‘public-private partnerships’ to renovate slum housing. Thus he advocated the same approach that just stuck the American taxpayer with liability with tens or hundreds of billions of dollars of Fannie/Freddie obligations."
McCain for his part must stop with the "greed" bit (there is nothing in the Constitution, nothing on state or national books which makes greed unconstitutional or illegal). Issues of judicial activism, earmarks, energy, education, health care, even national security, all key yes but now to play the cameo role. Tell ‘em what he knows and as before don’t fret party affiliation - the fat Fannie & Freddie, the Democrat’s encouragement of reckless activity through these two conduits and the payback, principally through the person of Barney Frank; the near incestuous relationship between regulator and regulated (Fed / Street). For the near term endorse Democrat Paul Volker’s RTC idea - massive government intervention, yes, but it worked before; take a crash course in credit flows and explain that to the masses. Make it easy, make is simple; we are not launching a satellite for goodness sake (and by the way, fire Phil Gramm). The landscape may be changing too fast for more specific proposals this week or next. Fine, capitalize on that - first the main structure, later the accent.
And McCain - recall and then highlight to your listeners the maxim, for us a golden rule - complexity remains, still, the very last refuge of the scoundrel.
Robert Craven
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