Friday, October 3, 2008

The Five Biggest Myths about the Bailout

After much arm twisting and second guessing, the House of Representatives passed the Senate version of the $700 BILLION dollar bailout of Fannie Mae and Freddie Mac. It should be noted that, once signed, this legislation will cost $50 Billion MORE than the total amount paid to all Social Security recipients this year. This bill will cost over $100 Billion dollars MORE than has been spent on the 5 years of the Iraq War. If fact, it will cost $150 Billion dollars MORE than ALL non-military discretionary spending in the 2008 federal budget.

When something this colossal is passed this quickly and with such limited debate it is often difficult to get accurate information. In this case, a number of myths have been promoted by the supporters of this bailout and echoed by the Mainstream Media.

MYTH #1: Democratic Speaker of the House, Nancy Pelosi, claims the economic policies of President George W. Bush's caused the current financial crisis.

NO, it was the Clinton Administration's aggressive expansion of the powers of the Community Reinvestment Act which forced banks to make loans to high risk borrowers in low income neighborhoods. President Bush tried multiple times to rein in Fannie Mae and Freddie Mac but all new attempts at regulation for these fiscal black holes were foiled by the democrats.

MYTH #2: Barack Obama claims John McCain's support for deregulation caused this problem.

No. Senator John McCain was one of four co-sponsors of bill S. 190 Federal Housing Enterprise Regulatory Reform Act of 2005 which sought to tighten the regulations on Fannie Mae and Freddie Mac while there was still time to save the financial collapse were experiencing today. Then, Freshman Senator Barack Obama -- along with nearly every other democrat on Capitol Hill -- opposed adding more oversight to Fannie Mae and Freddie Mac. The Washington Post noted “he (Senator McCain) pushed for stronger regulation of Fannie Mae and Freddie Mac -- While Mr. Obama was notably silent.”

MYTH #3: The Republicans in the House stopped the original bailout bill from passing.

No. Unlike the Senate where a bill can be filibustered, in the House all you need is a majority. The Democrats have enough seats in the US House of Representative that they can pass whatever bill they want without a single Republican vote. Ninety-five democrats -- including 5 Committee Chairmen -- voted against the bill. This means over 40% of the DEMOCRATS didn’t support their own bill. If only 12 of the 95 nay votes on the Democratic side had gone with Pelosi, the bill would have passed.

When the Senate version of the bill – which passed 74-25 – came to the House, this time it passed 263 – 171. In this vote an additional 32 Democrats and 26 Republicans voted for the bailout.

First Vote Second Vote

Democrats 140-95 172-62

Republicans 65-133 91-108

MYTH #4: This meltdown was caused by greedy Republicans looking for Special Interest campaign contributions.

No. Exactly the opposite is true. According to “”, a non-profit that tracks political donations, the Democrats who have shielded Fannie Mae and Freddie Mac from additional regulation have been the largest recipients of cash from the PACs created by the two now bankrupt companies. In all fairness, a number of Republicans had their snouts deep in the trough as well but generally they also supported tighter oversight. One of the most troubling items in the article titled: Fannie Mae and Freddie Mac Invest in Democrats” concerned Senator Obama. Despite being in office less than 4 years, the Illinois Senator was #3 on the list of top cumulative recipients for the past 20 years. Which raises the question of why did a freshman senator with no seniority, who is not even on the Banking Committee, receive so much money?

MYTH #5: Fannie Mae and Freddie Mac are dominated by Republican Fat Cats.

No. It is dominated by Fat Cat Democrats. James A. Johnson, who was the head of Fannie Mae from 1991 -1998, ran Walter Mondale’s 1984 presidential campaign. Johnson served on the Barack Obama VP search committee until it became public he had gotten a sweetheart mortgage from Countrywide Financial Corp. Johnson was replaced by Franklin Raines who was CEO from 1999 through the end of 2005. Raines served as President Clinton’s Director of the U.S. Office of Management and Budget. Raines was involved in accounting scandals that pocketed him millions of dollars he later had to repay.


Red Flags were raised as early as 2001

Democrats Defending Fannie Mae and Freddie Mac in 2004

Wednesday, October 1, 2008

Sarah Palin verses the Mainstream Media

Syndicated columnist Charles Krauthammer, a psychiatrist by training, was the first to give the recent phenomena in American politics a name; he called it the “Bush Derangement Syndrome.” Krauthammer describes this affliction as “the acute onset of paranoia in otherwise normal people in reaction to the policies, the presidency — nay — the very existence of George W. Bush.”

This disorder is not limited to President Bush, an earlier equally virulent strain affected many Republicans during the Clinton administration. The virus appears to be spreading beyond the White House and now you can see outbreaks in the media as well as politics. If you are at a cocktail party where the attendees have mixed political views, the mere mention of Dan Rather or Rush Limbaugh can send the host scrambling to pack away the breakables.

Move over boys; there is a new player in town. Meet Sarah Palin.

The Mainstream Media (MSM) has trouble hiding their personal preference for democrats in normal times and the unexpected selection of Governor Palin to be John McCain’s running mate has caused them to drop any pretense of impartiality. Need proof? Do a Google search for “hate Palin” and you get 8.6 MILLION sites.

In a recent Wall Street Journal editorial, Why Feminists Hate Sarah Palin, Cathy Young observed:

Left-wing feminists have a hard time dealing with strong, successful conservative women in politics such as Margaret Thatcher. Sarah Palin seems to have truly unhinged more than a few, eliciting a stream of vicious, often misogynist invective.

On last week, Cintra Wilson branded her a "Christian Stepford Wife" and a "Republican blow-up doll." Wendy Doniger, religion professor at the University of Chicago Divinity School, added on the Washington Post blog, "Her greatest hypocrisy is in her pretense that she is a woman."

The same folks who would have branded as a Neanderthal anyone who suggested that Nancy Pelosi was a bad mother for trying to be a congresswoman while raising her 5 kids; firmly believes Palin should be headed back to Wasilla instead of to Washington.

Those who would have needed smelling salts if Barack Obama’s personal email had been hacked by the son of an elected Republican, instead demanded to know why she – like millions of other Americans -- had a private Yahoo account? What was she hiding?

While the MSM has ignored the sweetheart deal the Obamas got on their home from a convicted embezzler; they demand to know more about a tanning bed which was installed in the Governor’s mansion which Palin bought with her own money.

These same people think Michelle Obama – despite actively campaigning for her husband – is off limits, while attacking Sarah Palin’s 17 year old daughter and new born son is fair game. Apparently “Palin Derangement,” in addition to causing a total loss of reason and logic, also causes the moral compass to malfunction as well.

The saddest thing for the MSM, all of these wild eyed, frothing at the mouth attacks on what appears to be a perfectly nice lady you would love to have as next door neighbor are only making them look angry and, well, demented. Palin’s popularity has been going up while the MSM approval rating has slid below used car salesmen and trial lawyers. With the internet and cable news, the MSM has lost its monopoly on the news outlets and they don’t like it one bit and its desperation is starting to show.

This Sunday the Associated Press, after weeks of digging, found, at least in their minds, the smoking gun. While Palin didn’t have her political career launched in the living room of an admitted terrorist or be #2 in political cash received from Fanny Mae whose corruption is a major cause of the current financial mess or even have her spouse's salary tripled as soon as it was clear a senate seat was at hand, she did get....wait for it... a free facial! But it gets worse. The AP has irrefutable proof that Sarah Palin, while Mayor of Wasilla, also received a bouquet of flowers and some fresh salmon.

The AP’s paper trail consists of copies of “Thank You” notes Sarah sent to the people who had given her the personal gifts. What an awful woman.

If you want to have some fun, here are links to videos of some of the more outrageous attacks on Sarah Palin and some of her most eloquent defenses.

From the Mainstream Media

Why does Sarah Palin hate women? “ABC News

NBC Sarah Palin Fact Check (Clue: She's Lying)

MSNBC “Fact: Sarah Palin is Stupid”

CNN’s Jack Cafferty Tells Us How He Really Feels About Sarah Palin

Roland Martin of CNN Goes Off on Sarah Palin

From Hollywood

(Note we didn’t include a link to infamous Sandra Bernhard’s video where she wished Sarah Palin would be sexually assaulted by a gang of Blacks in Manhattan. After deleting out the vulgarities there was less than a handful of words left from her diatribe.)

Matt Damon Rips Sarah Palin

“The View” Gets Heated Over Sarah Palin

Stars Slamming SARAH PALIN: Politically Hollywood! (CNN)

Palin’s Defenders

There are still those that will point out the Mainstream Media’s hypocrisy

The Media Lies about Palin Fox News

The Extreme Liberal Bias of Journalism Today Dennis Prager

Fred Thompson Slams Media on Palin Attacks

Rush (Limbaugh’s) Comments on the Media Treatment of Gov. Palin

This week is the Vice Presidential Debate between Sarah Palin and Joe Biden. Any bets the MSM hasn’t already been searching their thesaurus for new ways to say “unqualified” and “stupid” without sounding too biased or sexist?

Thursday, September 25, 2008

Financial meltdown insights...

With the financial markets in disarray, nearly everyone has one eye on Washington and one eye on Wall Street. The tone of the current debate on Capitol Hill and the price tag being discussed are endemic of why Congress has an approval rating hovering below 10%. On paper, the financial crisis should help Barack Obama’s presidential aspiration but so far it has not. There is one question that seems to be nagging at the American public.

Can we trust Obama to do a better job with the economy than the last two Democratic presidents?

This lack of trust may be well deserved. The “sub-prime” melt down can be traced to three major events – all caused by the Democrats playing politics. While Barack Obama was not around for the first two, he was elbows deep in the most recent turning point and, despite his limited time in the Senate, he was second largest recipient of campaign cash from Fannie Mae and Freddie Mac.

But first a bit of history on how we got into this mess.

Carter and the Community Reinvestment Act of 1977
In 1977 Democratic president Jimmy Carter pushed through the “Community Reinvestment Act” (CRA) to make it easier for low income families and those living in sections of cities that were in transition to buy a home. This law was passed to stop banks from “red lining” – refusing to make loans in certain parts of a city – and not providing loans to credit worthy minorities and other low income families. While the concept was noble and well intended, like so many Washington mandates, the devil was in the details.

Here is how the National Review described the problem in a recent editorial:
...The Community Reinvestment Act, a bit of legislative arm-twisting much beloved by Sen. Obama and his fellow Democrats. One of the reasons so many bad mortgage loans were made in the first place is that Barack Obama’s celebrated community organizers make their careers out of forcing banks to do so. ACORN, for which Obama worked, is one of many left-wing organizations 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. These campaigns often were couched in racially inflammatory terms. The result was the Community Reinvestment Act. The CRA empowers 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. Among other things, mergers and acquisitions can be blocked if CRA inquisitors are not satisfied that their demands — which are political demands — have been met. There is a name for loans made to people who do not have the credit, assets, income, or down payment to qualify for a normal mortgage: subprime.

The bankers cannot blame CRA entirely; they made a lot of bad bets on rising home prices. But 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 trivial part the result of lending decisions in which political extortion trumped businesses’ normal bottom-line concerns. (Read the article HERE)
Bill Clinton and the “Reform” of 1995
In 1995 Democrat Bill Clinton pushed through a major reform of the CRA. In 2000, Howard Husock, the former Director of Case Studies at Harvard’s Kennedy School of Government and current Director of the Manhattan Institute's Social Entrepreneurship Initiative wrote “The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities.”
The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.” (Read the article HERE)
Howard Husock's City Journal article didn’t get much notice when it was published but, like the ancient Greek prophet Cassandra, time proved him correct.

The masterminds from the Clinton administration of this massive expansion of CRA did quite well for themselves. John Gibson of Fox News recently wrote an editorial on this subject titled: “Barack Obama's Fannie Mae/Freddie Mac Connection
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. (Read the article HERE)
The Proposed Reform of 2005
After a series of accounting scandals at Fannie Mae and Freddie Mac, in 2005 the Bush administration proposed tightening the regulation on these financial giants. Along near straight party lines, the Democrats and a handful of entrenched Republicans blocked the reform. Why were the Democrats, who never saw a government regulation they didn’t like, so bent on protecting the shady practices of Fannie and Freddie? Why would the Republicans, who controlled Congress and the White House, be so quick to run up the white flag? The Associated Press may have the answer; lots and lots of money. Fannie and Freddie have been stuffing the pockets of powerful members of congress for years.
The contributions are part of a lobbying arsenal that has invested $80 million over the past five years to win hearts and minds in the capital. Fannie and Freddie have spent big on hiring former White House officials and lawmakers. Some members of Congress have received tens of thousands of dollars from the PACS, especially those on committees with jurisdiction over the companies, including Frank.

They had huge armies of lobbyists that were tripping over each other, so they developed friends on both sides of the aisle over the years," said Peter Fitzgerald, a Virginia banker and former Republican senator from Illinois. "Republicans got very tight with them over the years and they got very powerful."

Stephen Ellis, vice president of Taxpayers for Common Sense, a Washington-based watchdog group, said the PACs' campaign cash to Congress has helped insulate Fannie and Freddie from oversight. (Read the article HERE)
Neither party was exactly a profile in courage during the 2005 reform attempt. With a $700 BILLION dollar bailout looming, the stench from this scandal has finally prodded some action with the FBI launching an investigation. Don’t expect big headlines here. When both political parties have dirt on their hands, things like this tend to get settled behind closed doors.

To gain America’s trust, Barack Obama needs to answer these questions
  1. What exactly is his relationship to the former CEO of the bankrupt Fannie Mae, Franklin Raines?
  2. Since 1989 Fannie Mae and Freddie Mac have used PACs and individual contributions to support candidates. Why is Barack Obama – who has only been in the Senate for 4 years – second in total campaign contributions from Fannie Mae and Freddie Mac for the past 20 years?
  3. Why did he stand silent in 2005 and vote with the other Democrats to block financial reform which could have prevented the current crisis in the financial markets?
  4. Why should a person with no experience in finance who has never studied economics be trusted to find a solution to this incredibly complex problem?
In fairness to Obama, as a former “community organizer” it is entirely understandable that he would support the goals of the Community Reinvestment Act. However, by seeking the job of president, he must show ALL Americans that he has the entire country’s best interest at heart and not just the special interest groups that helped get him a Senate seat.

Like Ricky used to say to Lucy. “You got some 'splaining to do!”