Tag Archives: Regulation

Videos

If you had to blame the recession on one person, who would it be?

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My pick would be the Massachusetts Democrat Congressman Barney Frank.

Here he is in 2005 claiming that fears of a housing bubble are unfounded.

Here’s the timeline showing who wanted to regulate Fannie and Freddie, and who blocked regulation.

Here’s video from a hearing showing Democrats opposing regulations:

That’s right – Republicans wanted to regulate Fannie Mae and Freddie Mac, and Democrats said Fannie Mae and Freddie Mac are “doing a tremendous job”.

Fannie Mae and Freddie Mac had paid the Democrats off handsomely during multiple election cycles, but I’m sure that the Democrats’ opposition to regulations had nothing to do with those political contributions.

I found these videos at Ace of Spades, thanks to ECM.

News

Why American employers are not hiring any more workers

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Here is a Wall Street Journal article from a New Jersey business owner who knows.

Excerpt:

With unemployment just under 10% and companies sitting on their cash, you would think that sooner or later job growth would take off. I think it’s going to be later—much later. Here’s why.

Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She’s been with us for over 15 years. She’s a high school graduate with some specialized training. She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.

[…]My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay.

[…]Then the federal and state governments want a little something extra. They take $56 for federal unemployment coverage, $149 for disability insurance, $300 for workers’ comp and $505 for state unemployment insurance. Finally, the feds make me pay $856 for Sally’s Medicare and $3,661 for her Social Security.

When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally’s job each year.

[…]In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare.

Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums—for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%.

[…]As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company’s vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment.

This is why the unemployment rate is continuing to rise as the Democrats continue to pay off their special interests and raise taxes on US businesses. The more money they transfer away from private businesses to non-producing public sector workers, the more American companies will stop hiring, or just shift their hiring overseas. Some will just move their entire companies overseas. If depends on how far the Democrats go in implementing their left-wing agenda.

News

Who benefits from the Democrats financial regulation bill?

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From the Washington Times.

Excerpt:

The financial reform bill expected to clear Congress this week is chock-full of provisions that have little to do with the financial crisis but cater to the long-standing agendas of labor unions and other Democratic interest groups.

Principal among them is a measure to make it easier for unions, environmental groups and other activist organizations that hold shares to put their representatives on the boards of directors of every corporation in the United States.

[…]Business groups are also rankled that the legislation would impose costly new burdens on airlines, utilities and other non-financial businesses that were victims rather than villains in the crisis, simply because they use financial derivatives to hedge their businesses against risks such as fluctuations in oil prices, interest rates and currencies.

Such hedging practices played no role in the crisis, though they helped many businesses weather the financial turbulence and recession that followed in the aftermath of the Wall Street storm.

Other provisions of the financial legislation, which goes before the full Senate on Thursday for a vote and likely passage, favor Democratic constituencies directly by requiring banks and federal agencies to hire and do more business with them.

The bill would create more than 20 “offices of minority and women inclusion” at the Treasury, Federal Reserve and other government agencies, to ensure they employ more women and minorities and grant more federal contracts to more women- and minority-owned businesses.

CNBC explains more.

Excerpt:

Fannie Mae and Freddie Mac are the real ‘black holes’ in the inancial regulation bill before Congress and they both need to be addressed, Robert Pozen, Chairman of MFS Investment Management, told CNBC Monday.”They were too political volatile to handle and are not in the bill,” said Pozen who is a former vice chairman of Fidelity Investments.

The non-partisan libertarian Cato Institute think tank.

Excerpt:

The House and Senate will soon vote on a finalized financial-regulation bill, one that was mostly hammered out in a closed-door conference between the two chambers. Legislators will have a stark, simple choice: support a bill that gives us more of the same flawed banking regulations, or reject it in the hopes that new congressional leadership next year will address the actual causes of the financial crisis.

Perhaps it should come as no surprise that Sen. Christopher Dodd and Rep. Barney Frank, the bill’s primary authors, would fail to end the numerous government distortions of our financial and mortgage markets that led to the crisis. Both have been either architects or supporters of those distortions. One might as well ask the fox to build the henhouse.

Nowhere in the final bill will you see even a pretense of rolling back the endless federal incentives and mandates to extend credit, particularly mortgages, to those who cannot afford to pay their loans back. After all, the popular narrative insists that Wall Street fat cats must be to blame for the credit crisis. Despite the recognition that mortgages were offered to unqualified individuals and families, banks will still be required under the Dodd-Frank bill to meet government-imposed lending quotas

[…]While one can debate the motivations behind Fannie and Freddie’s support for the subprime market, one thing should be clear: Had Fannie and Freddie not been there to buy these loans, most of them would never have been made. And had the taxpayer not been standing behind Fannie and Freddie, they would have been unable to fund such large purchases of subprime mortgages. Yet rather than fix the endless bailout that Fannie and Freddie have become, Congress believes it is more important to expand federal regulation and litigation to lenders that had nothing to do with the crisis.

[…]Washington subsidizes debt, taxes equity, and then acts surprised when everyone becomes extremely leveraged.

Until Washington takes a long, deep look at its own role in causing the financial crisis, we will have little hope for avoiding another one. And the Dodd-Frank legislation, sure to be heralded as strong medicine for perfidious financiers, is actually not even a modest step in the right direction.

Fannie Mae and Freddie Mac were not regulated AT ALL by this bill. And that’s because the Democrats love the idea of giving loans to people for homes they can’t afford. The trick is to overload the system and then redistribute wealth in the form of bailouts from the responsible people to the irresponsible people. It’s not a reform bill. It’s a job-killing bill that attacks businesses.

Remember that Democrats forced banks to make these loans in order to avoid discriminating against people who could not afford homes. They rebuffed efforts by the Republicans (including Bush and McCain) to regulate Fannie Mae and Freddie Mac, because they like the idea of giving people with no resident status, no job, and bad credit homes anyway. That, and the low interest rates, is what cause the mess in the first place. And this “reform” bill did nothing to fix that problem.

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