Tag Archives: Barney Frank

Obamacare’s Legacy

With the end of their careers near, several Democrats are opening up about the truths of Obamacare, what it cost them, the party and possibly Obama.

The elections are right around the corner and the campaign season is right on top of us.  Lot’s of people are gonna be out front and talking about the issues that might impact this season.  And Obamacare certainly will get it’s chance to shine.

Continue reading

Government’s Role In The Housing Bubble And Bust

It’s the classic tribal warfare.  The Republicans wanna blame the Democrats for the boom then bust of the housing bubble.  Specifically they wanna blame Carter for the CRA, then Clinton for accelerating it and finally Barney Frank for enabling Fannie Mae and Freddie Mac.

For their part, the Democrats wanna blame the Republicans for easing regulations and over site of the financial markets.  Most especially with regards to leveraging, allowing banks to act as investment firms and the existence of the derivative market.

I have long been a believer that it was Fannie and Freddie that drove us up to and then over the cliff.  And for a long time have held the Democrats responsible.  I am learning and need to amend my position.

It was government policy that drove us up to and then over the cliff.  Policy that began with the noble intention of  providing affordable housing to more and more people.

However, when government subsidizes, we often always get poor results:

It was perhaps a worthwhile goal, but it caused the financial crisis when it was done by lowering mortgage underwriting standards. In the end, it was a colossal policy error by Congress and two presidential administrations.

Data from the article demonstrates the government’s involvement:

The affordable housing law required Fannie and Freddie to meet government quotas when they bought loans from banks and other mortgage originators.

At first, this quota was 30%; that is, of all the loans they bought, 30% had to be made to people at or below the median income in their communities. HUD, however, was given authority to administer these quotas, and between 1992 and 2007, the quotas were raised from 30% to 50% under Clinton in 2000 and to 55% under Bush in 2007.

It is certainly possible to find prime mortgages among borrowers below the median income, but when half or more of the mortgages the GSEs bought had to be made to people below that income level, it was inevitable that underwriting standards had to decline. And they did. By 2000, Fannie was offering no-downpayment loans. By 2002, Fannie and Freddie had bought well over $1 trillion of subprime and other low quality loans. Fannie and Freddie were by far the largest part of this effort, but the FHA, Federal Home Loan Banks, Veterans Administration and other agencies–all under congressional and HUD pressure–followed suit. This continued through the 1990s and 2000s until the housing bubble–created by all this government-backed spending–collapsed in 2007. As a result, in 2008, before the mortgage meltdown that triggered the crisis, there were 27 million subprime and other low quality mortgages in the US financial system. That was half of all mortgages.

In short, the government created the criteria, or the supply, and then the government created the agencies, or the demand.

Of these, over 70% (19.2 million) were on the books of government agencies like Fannie and Freddie, so there is no doubt that the government created the demand for these weak loans; less than 30% (7.8 million) were held or distributed by the banks, which profited from the opportunity created by the government.

So yes, it was the government POLICY that created this bubble.  But, back to Fan and Fred, did they have a role?

Of the 19.2 million subprime and low quality loans that were on the books of government agencies in 2008, 12 million (about 62%) were held or guaranteed by Fannie and Freddie.

Yes.  And a big one.

However, I’m forced to amend my position.  It was not the SOLE fault of Fan and Fred for the crisis, but they are certainly a major player.

To his credit, and to complete the Liberal tragedy, even Frank himself acknowledges his errors:

I hope by next year we’ll have abolished Fannie and Freddie … it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.

 

Good News For The Market

This news alone should drive the market 200 points:

Rep. Barney Frank (D-Mass.) will announce Monday that he is not seeking re-election, a spokesman said Monday morning.

Frank, the ranking member of the House Financial Services Committee was the architect with Sen. Chris Dodd (D-Conn.) of the sweeping financial reform bill that bears their names.

If there is any one single individual who is the face of blame for the housing bubble and the resulting recession, it’s Barney Frank.

Very good news that this man is retiring.

I’m With The Government, I’m Here To Help You

I wish life were a Jon Stewart show.

I love watching me some Stewart.  Now, I don’t watch it daily, in fact, I don’t watch it weekly, but I record it and watch 4-5-6 episodes a night every so often.  And I’m always glad I did.  He’s hilarious.  His comedic rhythm is very nearly unmatched, his voices are crazy funny and the physical communication he brings to his verbal communication is nothing short of perfect,

The man is mad skilled.

And he’s able to see the funny in the everyday.

Yes indeed, I wish that everyday was a Jon Stewart show.

Today, I have good news for you.  Today is a Jon Stewart show kinda day.  The day when you blissfully walk through life and the normal inane aspects of the day strike you as hilarious.  Simply hilarious.

So, we all know that the bankers on Wall Street caused the crash in 07 ’cause they’re greedy.  Right?  And after the crash of 07, the government bailed out those bankers in order that our financial system didn’t completely crash.  And, after getting bailed out by said government, those banks went on to report record profits and lavish themselves with more high salaries and bigger bonuses.

With me still?

So, then, in response to the unfairness of the whole thing, the government, led by the Intrepid Due of Frank and Dodd, crafted and then passed legislation into law that would protect the consumer from the predatory actions of those mean banks that crashed the system and then stole the government’s bailout money.

One of the things that said legislation did was to restrict the amount of money that banks could charge merchants for using a debit card at the point of transaction.  See, banks have record profits already and by the use of those fees, they were strangling economic growth at the checkout counter all over America.

Poof.  Just like that, the fees used to pay for the use of a debit card were sliced in half.

Thank gawd for that, right?

Wrong.

It turns out that managing debit card transactions isn’t free.  Further, that cost isn’t negligible.  And now that the banks are unable to charge the merchant, the banks went after another target to gather their money; the consumer!  Ahh yes, the very consumer that Dodd and Frank were trying to protect.  The irony is as delicious as it was unpredictable.  Certainly NO ONE would have seen this coming.

Dear Government, thank you for trying to save me from myself by passing ignorant laws that only make matters worse.  However, the consequences of your well intentioned law is that I am actually worse off now than I was before.  Can you please help me?

Love,

pino

And just like a great Jon Stewart show, the hits just keep coming:

WASHINGTON — North Carolina Democrat Congressman Brad Miller has introduced legislation he said will make it easier for customers to change banks if they aren’t happy with new fees.

The bill will modernize and streamline the opening and closing of personal checking and savings accounts, Miller said Tuesday.

“As megabanks flirt with menus of new fees, an increasing number of Americans will want to switch banks,” Miller said. “That is the way things work in a competitive, free market as unrepentant banks are still trying to rake in vulgar profits from their customers.”

With such flowing and beautiful language, I’m sure, just SURE, that this bill is gonna be a good one!

Miller’s legislation would allow customers to close an account without being charged a fee, even if the account has a negative balance. Customers would also be allowed to close accounts without actually showing up in person.

It would also prohibit banks from levying fees to a customer’s account after the account has been requested to be closed.

The great thing about great comedy is that future riffs are set up by hilarious content early in the show.  A great comic is able to set himself up for future use.  Most often this is done within the context of the single show and will have to be re-created for the next one.  But the truly great are able to so skillfully build content that it can span episodes.

This is one of those times.

I predict nothing but really great news for consumers should Brad Miller’s bill make it to law.

Okay okay okay.  In all seriousness.  I have already demonstrated that Liberals don’t understand things like economics.  So the fact that Miller is proposing this legislation isn’t so much surprising as it is an argument for better public education.

Becaue They Are Funny AND Because He Leaned Into It

http://www.youtube.com/watch?v=xaG4A0Bm8c4

Farts are hilarious.

On live TV they are even better.

Fannie and Freddie Done

Thank gawd!  To finally see the two agencies almost single-handedly responsible for the financial crisis of the last 2 years on the ropes almost makes up for last night’s horror show.  Almost.

“It’s clear that Fannie and Freddie, as they currently exist, should be put out of existence, which means the important question is what combination of entities public and private will replace them,” said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.

Continue reading

More of the Same

Wanna know why we are in the trouble we’re in right now?  People spent too much money.  Many times, money they didn’t even have.  They either bought a house they had no business buying or they refinanced that house and spent the money somewhere else.

Either way, we simply spent too much money.

And the only way that we are going to be able to get better is to let this thing play out.  The over spending, and the bubble that it created,  has GOT to play out, and get out, of the system.  Pure and simple.

Which makes me shake my head when I read this:

Under the program, eligible borrowers who are behind or at risk of default can have their mortgage interest rate reduced to as low as 2 percent for five years. They are given temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete necessary paperwork, including proof of income and a hardship letter.

See, the Government has set up a program that allows folks who are in trouble with their mortgage to get help.  Ignore, for a second if you can, the fact that the government has no business stepping and helping these people.  Focus instead on if the program works or not:

Only one in three homeowners who have signed up for the Obama administration’s mortgage relief plan have sent back the necessary paperwork, highlighting continuing problems for the government’s effort to stem the foreclosure crisis.

It doesn’t.  And how could it?

Lenders, however, say the majority of borrowers either don’t complete the paperwork or don’t make the payments. At Bank of America, for example, only a quarter of the 65,000 borrowers in trial modifications have sent back their paperwork.

The bank blamed “ineffective communications with customers, shortcomings in document maintenance, misunderstandings about program requirements, and the inability to comply by some borrowers,” according to written remarks from Jack Schakett, Bank of America’s credit loss mitigation strategies executive.

I mean seriously.  Can you imagine going to the DMV for help on your mortgage?  Can you imagine the confusion that must reign at these offices?

Government.  Sheesh

What Have We Become

Stumbled across a letter to Joe Lieberman tonight over at American Hatriotism today.  It’s awesome.  Basically you have someone over there talking about how awful, simply AWFUL, Mr. Lieberman is for coming out against the health care bill.  After a WHOLE bunch of discussion on the fact, we get to the point where a letter is penned and delivered to the Senator’s office.  I’ve captured all I could stand the beginning and then added my response to it.  If ya want, stop on over the Hatriotism and see if the comment got any action:

Dear Mr. Lieberman,

Do you sleep well while …..

so many Americans struggle to bear the pain and anguish they are experiencing today?

Far be it that people ought to struggle.

somewhere in America a hard working student finds out there is no means, no money, no way to college?

Is that hard-working student willing to work hard at a job?

a mother and father are struggling to provide the bare necessities for their disabled child?

Good bless then for being able to supply the necessities for their child; disabled or not.

an elderly man who fought for his country eats a can of beans for dinner and must dress in several layers of clothing because he can not afford a decent meal or to heat his meager home?

We thank him for his service; service to ensure that we are all free.  Free to be responsible.  Or not to be responsible.

a Mother over-medicates her baby with tylenol for his earache because she can not take him to the urgent care or doctor for treatment?

She should take the bay to urgent care or the doctor for treatment.

a family will huddle in the cold behind a dumpster to block the wind because they have nowhere else to go?

Before they go to the government, they should go to church.

a husband and wife lie in bed discussing how to break it to their children that they will soon lose their home and have to move?

The tender mercies of learning not to borrow money you can’t afford to pay back.

a couple that saved thousands for a home they will now lose when the bank takes it away?

This should be sent to Senator Frank actually.

a father tells his family he has lost his job and they can no longer count on him to take care of them?

A real father would say that he has lost his job and will do whatever it takes to take care of them.  Even if it means working 3 others.

a mother tells her children there isn’t anything left in the house to eat?

How many different ways can you say the same thing?

another father wonders how many more days, weeks, months before he will work again and worries how they’ll make it until then?

Jeez.

The whole rest of your letter is the same point on and on and on.

And the real tragedy?  Passing a law isn’t going to change any of that.

Shocker

Because buying money isn’t any different than buying plywood it is no surprise that banks are going to change the way in which they sell plywood.

On Friday, Rep. Barney Frank, chairman of the House Financial Services Committee, will join FDIC Vice Chairman Marty Gruenberg and others in a discussion of “new, safe and affordable credit options for America’s underbanked.”

The policy discussion on Capitol Hill comes as banks – reacting to new credit card rules imposed by Democrats – start pulling the plastic from current credit-card holders, a move that is sure to lead to even more “underbanked” Americans.

Press reports note that Citibank recently canceled a number of credit card accounts affiliated with the Shell, ExxonMobil, Citgo and Phillips 66-Conoco oil companies.

Citibank also has notified some customers that interest rates on unpaid balances are going up – to a whopping 29.99 percent APR, effective Nov. 30. As the new law requires, customers have been notified that they may reject the change to their accounts, in which case their accounts are closed immediately and they may continue paying off their balances at current rates over five years.

So, when people who have a track record of not paying back their loans no longer have to pay the price of not paying back their loans, banks are going to react by no longer loaning them money they have no hope of paying back, that’s news?

Stop.

But then again, maybe it is.

Dave seems to think that credit card companies are simply soaking the folks that use their cards and imposing new rules will not result in increased fees:

The new rules are likely to reduce some of those profits (that is, to the extent that companies don’t find new “gotcha” fees to replace the old ones). However, the rules are not likely to raise rates or fees for responsible card holders.

But that is not what we are seeing, in fact, it’s the opposite:

On Wednesday, USA Today noted that starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99 – an “experimental” move. Even card holders who have never carried a balance or paid late fees could be among those affected, the newspaper said. “You could be spanked for staying out of debt,” the article stated.

So once more, we see government stepping in and regulating where they have no business regulating.  The result?  Predictable.  Higher prices and reduced supply.

Go Obama!

Obama: I Inherited This Crisis

How many times do we have to hear The Blessed Leader report to the fainting masses that the financial crisis we find ourselves in was given to him by the previous administration?  I have been listening, and so far as I can tell, it’s every time he’s in front of a camera.  Now, I get it.  He wants to separate his time; Pre – Blessed Leader and then, well, you know, just Blessed Leader.

The problem that I have with this is not so much that he says it, after all, they have all said it. Dubya said it when he took over the recession from Bubba.  Bubba from 41 and Reagan from the Peanut Vendor.  They all say it.

However, in this case, Obama has it wrong.  You see, another disadvantage of being a Senator turned President is that you can actually be called on your record.  I mean, Obama was part of the organization that CREATED the mess that his current President self inherited.

And as it concerns Fannie Mae and Freddie Mac, he was warned and woo’d, to the tune of ranking #3 on the Active Leader Board.  Does that register?  Senator Obama, he of 4 short years, ranked 3rd on the currently serving members of the Senate.  John Kerry, who has been serving since forever, has only taken 6 large more than Obama.

And he has the stone to say that he inherited this.  He created it.

[youtube=http://www.youtube.com/watch?v=cMnSp4qEXNM]