Tag Archives: Barney Frank

Commentary

Thomas Sowell explains how politicians cause recessions while getting elected

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Article here at Townhall.com. (H/T ECM)

Excerpt:

After the cascade of economic disasters that began in the housing markets in 2006 and spread into the financial markets in Wall Street and even overseas, people in the private sector pulled back. Banks stopped making so many risky loans. Home buyers began buying homes they could afford, instead of going out on a limb with “creative”– and risky– financing schemes to buy homes that were beyond their means.

But politicians went directly in the opposite direction. In the name of “rescuing” the housing market, Congress passed laws enabling the Federal Housing Administration to insure more and bigger risky loans– loans where there is less than a 4 percent down payment.

A recent news story told of three young men who chipped in a total of $33,000 to buy a home in San Francisco that cost nearly a million dollars. Why would a bank lend that kind of money to them on such a small down payment? Because the loan was insured by the Federal Housing Administration.

The bank wasn’t taking any risk. If the three guys defaulted, the bank could always collect the money from the Federal Housing Administration. The only risk was to the taxpayers.

Does the Federal Housing Administration have unlimited money to bail out bad loans? Actually there have been so many defaults that the FHA’s own reserves have dropped below where they are supposed to be. But not to worry. There will always be taxpayers, not to mention future generations to pay off the national debt.

Very few people are likely to connect the dots back to those members of Congress who voted for bigger mortgage guarantees and bailouts by the FHA. So the Congressmen’s and the bureaucrats’ jobs are safe, even if millions of other people’s jobs are not.

Congressman Barney Frank is not about to cut back on risky mortgage loan guarantees by the FHA. He recently announced that he plans to introduce legislation to raise the limit on FHA loan guarantees even more.

Congressman Frank will make himself popular with people who get those loans and with banks that make these high-risk loans where they can pocket the profits and pass the risk on to the FHA.

So long as the taxpayers don’t understand that all this political generosity and compassion are at their expense, Barney Frank is an odds-on favorite to get re-elected. The man is not stupid.

Can you guess which political party Barney Frank represents?

News

Democrats planning government regulation of more large companies

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Story from Investor’s Business Daily.  (H/T ECM)

Excerpt:

Washington is quietly preparing a hostile takeover of Wall Street with a new bill that would put regulators in control of managing asset prices.

While all eyes are fixed on the cobra poised to strike the health care industry, a python is wending its way through Hill banking panels that would squeeze the life from the whole economy.

By Christmas, House Financial Services Committee Chairman Barney Frank hopes to pass legislation that would create an uber-regulatory body called the Financial Services Oversight Council.

It would give the Treasury secretary power to pick which large finance firms are “systemically critical,” or too big to fail. He’d have the final call when the government steps in to save or unwind a troubled firm.

The bill would “essentially turn over control of the financial system to the government and seriously impair competition in all areas of finance,” says former Treasury official Peter J. Wallison. It would put the government permanently in the business of picking winners and losers, he adds, creating a kind of permanent TARP.

[…]The new regulatory agency can regulate banks, bank holding companies, insurance companies, hedge funds, finance companies and any other kind of company that might be designated too big to fail.

“The existence of these designated companies will impair competition in every market they are allowed to enter,” says Wallison, “and will force the consolidation of competitors so that markets become dominated by government-backed giants like themselves.”

Under the new regime, designated companies will not be able to finance their affiliates’ sales, putting them at a severe disadvantage against foreign competitors. GE Capital, for example, would not be able to finance GE sales of aircraft engines.

In effect, designated companies will fall under the control of the feds, unable to start new activities or enter new markets or perhaps even open new offices without federal approval. “This is a degree of political control of business that has never been attempted before,” Wallison says.

When government gets involved in business, business must turn around and direct money toward influencing politicians through political contributions. And that causes them to spend less money hiring workers and producing goods, unless they avoid the regulations completely by shipping their operations, and jobs, overseas. Democrats cause firms to outsource by interfering in the free market.

My previous post explained how government regulation of business caused the recession that Obama is prolonging right now.

News

Republican governors Bobby Jindal and Tim Pawlenty cut off ACORN funds

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Two candidates for the Presidency in 2012 make their case.

Bobby Jindal: (H/T Michelle Malkin)

Louisiana Governor Bobby Jindal today cut off state funding for the community activist group ACORN.

Jindal has also blocked any state agency for entering into contracts with the organization.

The executive order also cuts off any future state funding of ACORN, on the heels of a series of embarrassing incidents for the organization.

The governor’s action follows a subpoena of documents from the group’s national headquarter office in New Orleans.

According to Jindal’s executive order, “ACORN’s actions make clear that financial involvement with ACORN is contrary to the public policy of the State of Louisiana and the best interests of its citizens.”

Tim Pawlenty:

Minnesota Gov. Tim Pawlenty (R.) sent a letter Wednesday afternoon to the director of the Minnesota Commission of Management and Budget ordering him to stop all state funding to ACORN (the Association of Community Organizations for Reform Now).

Meanwhile, the Republican governor of California launches an investigation of ACORN operations. (H/T Hot Air)

And what about the lovely Michele Bachmann?

Well, naturally I am concerned more my favorite politician Michele Bachmann, who is also willing to running for the Presidency in 2012. And I think it may be a good time now to remind you all that she was attacking ACORN before attacking ACORN was cool. You can send her a donation, if you like!

She was fighting to cut off ACORN funding in JUNE of 2009.

And she’s much prettier than those other candidates, too!