I thought this was well done, and accurate.
Unfortunately, Bernanke was confirmed by the Senate. Hayek would not approve.
I kind of minimized the low interest rate problem before, but I changed by mind after my Dad talked to me about Robert P. Murphy’s “The Politically Incorrect Guide to Depression”. (I got it for him because he liked “The Politically Incorrect Guide to Capitalism” so much, as did I!)
Excerpt:
Seventy Republican members of Congress want Treasury Secretary Timothy Geithner to cancel up to $6 million in bonuses and deferred compensation — approved before Christmas 2009 — for the chief executive officers of the failed mortgage giants Fannie Mae and Freddie Mac.
“(T)here’s a letter that’s going to Sec. Geithner from a number of us calling for a rescission of those bonuses,” Rep. Michele Bachmann (R-Minn.) told CNSNews.com Wednesday.
On Christmas Eve, at the same time the Obama administration announced that it was removing any cap on the amount of taxpayer aid to Fannie Mae and Freddie Mac, the failed mortgage giants announced that they had received approval from their financial regulator to pay $42 million in compensation packages to 12 top executives for 2009.
The compensation packages included up to $6 million each to Fannie Mae and Freddie Mac chief executives. For the CEOs, annual compensation consists of a base salary of $900,000, $3.1 million in deferred compensation and incentive pay of as much as $2 million. Public disclosure that the retention bonuses were being copnsidered first surfaced in the Spring.
And naturally my favorite member of Congress was involved:
“(We are pushing) for an ending — an unwinding, if you will — of the U.S. owning Fannie and Freddie. We want out of this sinking business as quickly as we possibly can, and we want to pull the plug on an unlimited taxpayer bailout of Freddie and Fannie,” Bachmann said.
[…]“When Sec. Geithner said that there’d be unlimited taxpayer funding continuing to go into this sinking ship, and then bonuses they’re given?,” she said. “On what basis? What did they do? What was the criteria that they could possibly be given a bonus? The fact that they got unlimited taxpayer money?”
Bachman was referring to Treasury’s announcement that it would send unlimited tax money to Fannie Mae and Freddie Mac, thereby eliminating the current $400 billion cap on emergency aid that Treasury can give without having to come back to Congress for authorization.
Fannie Mae and Freddie Mac are closely tied to Democrats.
Excerpt:
Freddie and Fannie used huge lobbying budgets and political contributions to keep regulators off their backs.
A group called the Center for Responsive Politics keeps track of which politicians get Fannie and Freddie political contributions. The top three U.S. senators getting big Fannie and Freddie political bucks were Democrats and No. 2 is Sen. Barack Obama.
Now remember, he’s only been in the Senate four years, but he still managed to grab the No. 2 spot ahead of John Kerry — decades in the Senate — and Chris Dodd, who is chairman of the Senate Banking Committee.
Fannie and Freddie have been creations of the congressional Democrats and the Clinton White House, designed to make mortgages available to more people and, as it turns out, some people who couldn’t afford them.
Fannie and Freddie have also been places for big Washington Democrats to go to work in the semi-private sector and pocket millions. The Clinton administration’s White House Budget Director Franklin Raines ran Fannie and collected $50 million. Jamie Gorelick — Clinton Justice Department official — worked for Fannie and took home $26 million. Big Democrat Jim Johnson, recently on Obama’s VP search committee, has hauled in millions from his Fannie Mae CEO job.
The Democrats are pushing a “cramdown” bill which is a bill designed to allow federal judges to renegotiate the terms of delinquent mortgages when the person who entered into a contract to borrow the money cannot repay it. The problem with this bill is that it hurts the very people it is intended to help – because as soon as banks see that they cannot rely of the courts to enforce contracts, they will immediately stop making loans to those with mediocre credit ratings. So, the people who most need to borrow money will be the hardest hit. And it opens the door for the government to then seize control of the banks and force them to make the loans, so that we turn into Venezuela.
Consider this article from the Heritage Foundation:
Just as the housing market is showing definite signs that it is stabilizing after a lengthy drop in housing prices, the House of Representatives is about to vote on proposal that would destabilize it once again while also raising the cost of mortgages for future home buyers.
The proposal – to be offered by Rep. John Conyers (D-MI) as an amendment to the financial regulation bill now before the House -would allow bankruptcy judges to reduce the principal owed on a mortgage, a practice often referred to as a “cramdown.” Judges would also be able to reduce interest rates or lengthen the term of the mortgage.
This is a huge policy mistake that would help only a few people while raising the cost of borrowing for thousands of moderate-income and first-time homebuyers.
Fortunately the bill failed to pass, but it does show you the fatal flaw of Democrat emotion-based policy-making. They hurt the very people they are trying to help – the cause the very crisis they are trying to alleviate. That is standard operating procedure for Democrats. They don’t understand the incentives they are creating when they pass “compassionate” laws.
Democrat secures TARP funds for unemployed homeowners
On another subject, take a look at this AP article. (H/T Michelle Malkin)
Excerpt:
Call it the $6 billion boycott.
By boycotting a key House committee vote last week and threatening to abandon support for banking regulations, members of the Congressional Black Caucus got $4 billion added to a Wall Street regulation bill and $2 billion to a proposed House jobs bill in spending they sought for African American communities.
House Financial Services Committee Chairman Barney Frank, D-Mass., this week inserted $3 billion to the legislation to provide low-interest loans to unemployed homeowners in danger of foreclosure. He added $1 billion for neighborhood revitalization programs.
The money would come out of the $700 billion financial rescue fund.
“For those of us who walked out, it was absolutely essential that we have parts of that legislation directed toward helping people who have been left out of all of these bailouts,” Rep. Emanuel Cleaver, D-Mo., one of 10 black caucus members in the Financial Services Committee, said…Among the caucus’ demands were greater assistance for minority-owned auto dealerships and banks that lend in African-American communities and more government advertising in minority-owned media.
This is taking money out of the private sector, which creates jobs, and bailing out people who bought too much house. Taking money out of the private sector destroys economic growth. And that is why we have a 10% unemployment rate.
WINTERY KNIGHT 