CBC holds financial reform hostage as Congress gets angry with Obama over economy

posted at 9:30 am on November 20, 2009 by Ed Morrissey

The Obama administration may have to learn to deal with an unfriendly Congress long before the Republicans have a chance to win control of the House in the midterm elections.  Angry over the failure of the administration to slow unemployment and get real growth started in the US, Congress lashed out at Treasury Secretary Tim Geithner yesterday, with Democrats and Republicans demanding his resignation for poor oversight of the bailout funds in 2009.  And the Congressional Black Caucus unexpectedly froze Barack Obama’s high priority of finance-sector reform over lost jobs:

Growing discontent over the economy and frustration with efforts to speed its recovery boiled over Thursday on Capitol Hill in a wave of criticism and outright anger directed at the Obama administration.

Episodes in both houses of Congress exposed the raw nerves of lawmakers flooded with stories of unemployment and economic hardship back home. They also underscored the stiff headwinds that the administration faces as it pushes to enact sweeping changes to the financial regulatory system while also trying to create jobs for ordinary Americans.

President Obama’s allies in the Congressional Black Caucus, exasperated by the administration’s handling of the economy, unexpectedly blocked one his top priorities, using a legislative maneuver to postpone the approval of financial reform legislation by a key House committee.

The CBC wants Obama to offer a jobs package aimed at curbing rampant unemployment among African-Americans.  Obama has already announced a jobs summit and the Senate has started to turn its attention to a new jobs package — which no one wants to call a “stimulus” after the failure of Porkulus — but Maxine Waters wants something more specific to the black communities.  The CBC has apparently attempted to get the attention of the White House for several weeks, but didn’t get enough of a response.  Now they have decided to hold the financial-reform package hostage to make a point.

Others made the point more directly with Geithner.  Republicans Kevin Brady and Michael Burgess demanded that Geithner resign, as did Democratic Rep. Peter de Fazio, who hardly represents a blue-dog district, coming from Oregon.  Burgess underscored his unhappiness by telling Geithner, “I thought you should have never been hired.”

If Obama wants to free his financial-reform package, he may have to give up Geithner.  In one sense, that is the role of Cabinet officials: act as lightning rods for controversy and be expendable to protect a President’s standing and agenda.  Obama has not exactly been shy about throwing people under the bus when they become a liability.  Geithner started off as a liability with his history of tax evasion, and has done nothing since to improve his standing.

But Congress has a problem, too.  They have done little to focus on jobs in the nine months since passing the $787 billion flop of a stimulus package.  They’re so afraid of making its failure obvious that they have to strategize a way to pass another stimulus package without calling it “stimulus.”  This “anger” on Capitol Hill, especially by Democrats who have controlled this process, is at least in part a show for the constituents back home, who have wondered when Congress would stop looking for ways to spend money and control their lives (ie, health-care reform) and get the nation back to work.


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Dump the assets, commercial properties will drop in price.

That makes small businesses much better positioned. Less start-up money is required.

That total disregard aborts as irrelevant all struggling small businesses that exist now but are being devalued, both in property and assets, and will have no way to re-”start-up”.

maverick muse on November 20, 2009 at 10:45 AM

“I think, however, that everything is artifically inflated right now…..”

Alright, who turned on Ann’s lightbulb? Bahhhhbaaahhh-BINGO, ANN. This would truly be a thread-winner if BB or GrowingFins had said this, but it would have to also include Obama and the democrats egos.

Rovin on November 20, 2009 at 10:46 AM

My business is in Automotive Recon work (PDR) and the increased taxes, regulations,and operating expenses combined with a serious decrease in business are killing the smaller guys who cannot weather the storm.

Baxter Greene on November 20, 2009 at 10:40 AM

Luckly, we are are bigger fish, but in a big pond. I know a new EPA reg we are adapting to is priming cars in a spray booth. It appears soon that if a shop does not have a spray booth, your out.

We have been doing some CYA stuff in case we get inspected by OSHA\EPA. One of my favorites is signs all over the shop that say “This is Not an Exit”. Fricken have bathroom doors with this sign. Makes you shake your head.

WashJeff on November 20, 2009 at 10:47 AM

Dump the assets, commercial properties will drop in price.

That makes small businesses much better positioned. Less start-up money is required.

Until they see the prices reflect actual value, in other words, they are holding off lending.

AnninCA on November 20, 2009 at 10:36 AM

A lot of pension plans are invested in commercial real estate. Once those assets are marked down, pensions are in big trouble.

The sad thing is, we are going to have to go through a year or two (or three) with investment (and thus pension) losses, sort of a mini great depression in order to digest all the bad investments. That was clear last September, but Congress & Bush & McCain & Dear Liar all wanted a stimulus to avoid it. That did not work and now we still have to go through that, but with an added trillion or more in debt to pass on to the next generation (who will have to pay it back, with interest, to the Chinese.)

Ann, you do seem like a decent person who doesn’t want people to hurt. But there are times in life when we all do hurt and that is a necessary and proper thing. Kids fall down and get a bruise when learning to walk, and investments are not a sure thing. It’s called risk. And without risk — and the real possibility of failure — there cannot be a reward.

Sort of like Holder & The Whine promising a conviction & execution of KSM. If there isn’t a risk of acquittal & him wlaking free it isn’t a real trial, which then puts all our liberties at risk.

rbj on November 20, 2009 at 10:48 AM

The government is trying let the pain trickle out slowly over years

I agree. We’ll never know if it would have been faster the other way, though. That was debatable.

Or heck, we may get to learn. It may not work except to postpone it.

I was supportive of both Bush and Obama on TARP, since I guessed that the collapse would be worse than the Great Depression. The roots go even deeper in our current economy. I can’t think of anything that would have survived. Every single city, institution, retirement plan, business…are invested in the market.

But that always will be the big question. Which is better?

I thought a slower ride down was smarter and would help more people than a complete collapse.

Plus, I’m still convinced it would be global. We are the lynchpin for the global economy, even today.

AnninCA on November 20, 2009 at 10:48 AM

Hope and Change has delivered no rainbows or unicorns to the private sector that I or anybody else I know can see.

Baxter Greene on November 20, 2009 at 10:40 AM

Same story, from manufacturers in America to small independent service providing businesses.

maverick muse on November 20, 2009 at 10:50 AM

Close to 50% of my accounts(franchise and independent) have told me that another few months like Sept.08-Feb.-09
and they are finished..

Baxter Greene on November 20, 2009 at 10:40 AM

What sucks for these business people is that their real estate is potentially worthless. In IL, the business property taxes ar Soooooooooo high, if the building is vacant — no business in it producing a revenue stream — it is not worth holding on to the building. Two, maybe three, years of property taxes would pay for the building. You are better off walking away.

THIS IS WHAT BIG GOVERNMENT DOES. IT SWALLOWS ECONOMIES AND SOCIETIES.

WashJeff on November 20, 2009 at 10:50 AM

Good lord, this country is sick, sick, sick . . . and I’m certainly glad that Obama has restored our credibility with the rest of the world because it’s taking a nose dive here at home.

rplat on November 20, 2009 at 10:51 AM

That total disregard aborts as irrelevant all struggling small businesses that exist now but are being devalued, both in property and assets, and will have no way to re-”start-up”.

maverick muse on November 20, 2009 at 10:45 AM

I know. One thing we can all agree on, there’s no great solution that would work for everyone.

AnninCA on November 20, 2009 at 10:51 AM

Well, it’s an interesting topic. Thanks for the perspectives.

As for the Waters CBC, she’s a nut.

AnninCA on November 20, 2009 at 10:53 AM

AnninCA on November 20, 2009 at 10:48 AM

The trickle does postpone it…it being the bubble popping. And it must pop.

If the free market was allowed to operate, it would have been worse than what we have now, I do not doubt it. But the recovery would have been much quicker. We would have survived it and we would be better off. People would more likely learn to:
- live within their means.
- Defined benefit retirements plans are STUPID and never ever to be done again.
- Regulators cannot protect from all bads things…trust yourself

WashJeff on November 20, 2009 at 10:56 AM

Yet the Obama administration appears shocked, shocked! that our allies haven’t shown any more enthusiasm for setting trained terrorists loose in their countries as we have for doing so here.
WashJeff on November 20, 2009 at 10:47 AM

EPA has hit us with that also.
One big problem is that many mid and small size independents spent tens of thousands of dollars putting everything in while business was humming along.
Now that their business has have been cut close to 50%,
these facilities have become wasted space and employees have been laid off in bunches.

This also threatened the paint vendors that were mobile (not hurting the bodyshop’s feelings a bit) because they are spraying outside and not in a controlled environment.

We actually had competitors calling the EPA on their competition trying to get them put out of business.

So not only are the increased regulations and expenses crippling a lot of the private sector, they are also being used as a weapon much the same way the Clinton’s used the IRS.

Glad you are able to carve out some success during these times.
Consider yourself smart and lucky.

Baxter Greene on November 20, 2009 at 10:57 AM

This morning Fox put up these numbers:

Blacks unemployed 15%
Hispanics unemployed 13%
Whites unemployed 9%

And we are being told these numbers are only going to rise. We are also told that unemployment is really hovering around 17.6%. What I will never get is minorities who are suffering the most, they are still going to vote for Democrats and of course The Manchild despite the tremendous about of suffering not only they are enjoying, but some of these people do not even look around and consider the suffering of their children or the elderly in their families!

I saw this chat with Geithner and was shocked the weasel wanted to blame the members of Congress for this debacle. They are guilty for voting for this mess, but it was Geithner and Obama which created this crap for them to vote for.

It is really interesting that Sarah Palin is supposed to assume responsibility for messing up the Couric interview and various other mistakes, but no Democrat ever is supposed to assume responsibility for ANY mistakes they make! I wonder if it is because the mistakes made, like those regarding AIG, these mistakes are not admitted to because a Democrat’s mistakes are intentional? Hmmmm?

freeus on November 20, 2009 at 10:59 AM

I have a suggestion. Why don’t Senate Republicans give health care, judges and everything else they’ve been filibustering (or threatening to filibuster) an up or down vote so that business in Congress can get done a little quicker and there will be more time to focus on jobs?

The fact is, the Stimulus was supposed to be a JOBS creation bill – ALL Democrats, including Obama declared so from the onset (“unemployment will be held at 8%”…). The Dems have failed; They focus on healthcare while Americans file for unemployment claims.

TN Mom on November 20, 2009 at 11:00 AM

Every Depression is a huge boon to tycoons.
Great deals if you can buy it.
Great work if you can find it.
Nothing new.

We know what led us into today’s Depression. Yet the very legislators and their exactingly corrupt legislation are not simply still ruling the Federal Government, THEY ARE CALLING TO LEGISLATE MORE BAIL-OUTS AND UNCONSTITUTIONAL MANDATES.

Whoever hasn’t yet read The Forgotten Man by Amity Schlaes chooses the stuck of stupid re-invention of the wheel now and every next recession. Damn if the stupid still rule the day!

maverick muse on November 20, 2009 at 11:01 AM

THIS IS WHAT BIG GOVERNMENT DOES. IT SWALLOWS ECONOMIES AND SOCIETIES.

WashJeff on November 20, 2009 at 10:50 AM

Same story, from manufacturers in America to small independent service providing businesses.

maverick muse on November 20, 2009 at 10:50 AM

What pisses me off even more is that we (most working American business owners) knew this and stated this over…and…over..and…over only to be called “racist” and “extremist” by the “smart ones”.

We need to end this train wreck starting in 2010.

Liberalism sucks!!!

Baxter Greene on November 20, 2009 at 11:02 AM

Dump Geithner for the obvious corruption.

Geithner was among the most illegitimate choices for US Treasury Secretary.

So is a worse thief than Geithner waiting in the wings for that job?

Refuse nominees from the likes of Goldman Sachs and JPMorgan, corrupt banking institutions or schools that enable thievery and organized crime within our government.

NEVER CONFIRM A CROOK. CONVICT THE CROOK.

Where are the disciples of Milton Freedman?

maverick muse on November 20, 2009 at 10:25 AM

Jon Corzine needs a job.

rockmom on November 20, 2009 at 11:03 AM

That total disregard aborts as irrelevant all struggling small businesses that exist now but are being devalued, both in property and assets, and will have no way to re-”start-up”.

maverick muse on November 20, 2009 at 10:45 AM

I know. One thing we can all agree on, there’s no great solution that would work for everyone.

AnninCA on November 20, 2009 at 10:51 AM

You don’t “cure” cancer by murdering victims.

maverick muse on November 20, 2009 at 11:03 AM

I remember when this country planned to survive a nuclear war. This talk about having the entire planet become Zimbabwe because of numbers on paper is fidiculous.–yeah I know, confidence drives the system. Ever heard of Bretton Woods? Enough firms like Wells Fargo had solvent assets to preclude total permanent collapse. It will be bad, it may be worse than it is now, but afterwards the financial markets may have some prudence beat into them, and that’s what’s missing from this “recovery”.

“That did not work and now we still have to go through that, but with an added trillion or more in debt to pass on to the next generation (who will have to pay it back, with interest, to the Chinese.)”

I no longer believe they’re going to saddle themselves with the burden.

Chris_Balsz on November 20, 2009 at 11:04 AM

NEVER CONFIRM A CROOK. CONVICT THE CROOK.

Where are the disciples of Milton Freedman?

maverick muse on November 20, 2009 at 10:25 AM

Jon Corzine needs a job.

rockmom on November 20, 2009 at 11:03 AM

Then the case for Corzine needs publicity.

maverick muse on November 20, 2009 at 11:06 AM

Baxter Greene on November 20, 2009 at 10:57 AM

The statists do not seem to realize their policies fall right into the hands of bigger business. Government is often used as a hammer to beat the competition and most of ther government hammers are created by illiberal policies.

Another favortie is that insurance companies are allowed to share pricing data, but collision repair shops cannot. Now you is bigger, insurance companies or collision repair shops?

Only if liberals were, well, liberal!

WashJeff on November 20, 2009 at 11:08 AM

The fact is, the Stimulus was supposed to be a JOBS creation bill – ALL Democrats, including Obama declared so from the onset (”unemployment will be held at 8%”…). The Dems have failed; They focus on healthcare while Americans file for unemployment claims.

TN Mom on November 20, 2009 at 11:00 AM


You are right on the money:

That is why I have moved quickly to work with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will immediately jumpstart job creation and long-term growth. …

Barack Obama
January 8, 2009


WHAT OBAMA PROMISED WITH THE PASSING OF HIS “STIMULUS”:


THE JOB IMPACT OF THE AMERICAN RECOVERY AND REINVESTMENT PLAN

BY:
Christina Romer: Chair – Nominee- Designate
Council of Economic Advisors

Jared Bernstein: Office of the Vice-President elect
http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf

G. Conclusions
This study has sought to investigate the likely job creation effects of the American Recovery and
Reinvestment Plan currently under consideration. As emphasized at many points in the analysis,
there is substantial uncertainty around all of our estimates. Nevertheless, we believe they can
provide useful guidance as we go forward. Among the key lessons from the analysis are:

. The recovery plan needs to be large to counter the tremendous job loss that is likely to occur.

. The plan needs to include a range of components, such as direct government spending, state fiscal relief, and tax cuts to ensure that jobs are created quickly and throughout the economy.

. The range of components is also important for ensuring that both male and female workers benefit from the program.

. An aggressive recovery program is important for protecting all Americans from job loss, but
particularly for aiding those groups disproportionately hurt by the rise in the overall unemployment rate.


. A well designed recovery plan will not only create numerous jobs, but also many jobs paying
good wages and providing full-time employment.

….But according to the “smart ones”…it is all Bush’s fault.

Baxter Greene on November 20, 2009 at 11:12 AM

The statists do not seem to realize their policies fall right into the hands of bigger business.
WashJeff on November 20, 2009 at 11:08 AM

Great points.

I would also like to add that some statists do realize the harm they are doing but if it does not affect their bottom line at that moment, they simply do not care.

Just like Obama and liberalism in general…it’s all about “me”.

Baxter Greene on November 20, 2009 at 11:15 AM

If the free market was allowed to operate, it would have been worse than what we have now, I do not doubt it. But the recovery would have been much quicker.

WashJeff on November 20, 2009 at 10:56 AM

If the free market was allowed to operate, the Real Estate bubble would not have happened to the extent it did in the first place.

alexwest on November 20, 2009 at 11:28 AM

Seems like a lot of Congress people are beginning to feel the heat from back home……..and the elections aren’t until next November.

Get the popcorn out.

GarandFan on November 20, 2009 at 11:31 AM

What I will never get is minorities who are suffering the most, they are still going to vote for Democrats and of course.

Of course they’re going to vote for Democrats. Where else will the welfare checks come from?

orlandocajun on November 20, 2009 at 11:34 AM

Interesting…

After all of that, they are just now starting to get it.

But wait!

… Anyone remember this?

Seven Percent Solution on November 20, 2009 at 11:40 AM

If the free market was allowed to operate, the Real Estate bubble would not have happened to the extent it did in the first place.

alexwest on November 20, 2009 at 11:28 AM

Very true. The further back in time we could go and have the free markets at work, the smaller the bubble, if at all, would have been.

I think the internet bubble of 2000 would have happened regardless of what the government did, but the real estate bubble was government induced all the way, and now they won’t let it pop…just a slow slow deflation (without letting prices fall though).

WashJeff on November 20, 2009 at 11:40 AM

We need to open our eyes and realize the thieves are in charge and simply riding the gravy train for as long as they can. Their rationale is simply to steal as much as possible.

It’s not hard to understand. It’s so obvious and it’s been right in front of us for so long that it’s almost embarrassing to realize it so late in the game. But screw embarrassment. Screw wasting time blaming. I’m sorry for those who don’t think they can make it on their on. I’m sorry for the people who have been taught that money just comes from the government for free. It’s time to let the chips fall where they may. Let the moochers move somewhere else.

Leeches will drain their host as long as the host lets them stay and our nation is infected with leeches. And I’m not talking about immigrants, blacks, whites, poor, rich; I’m talking about people who believe they have the right to steal from others.

My only question is: Does anyone have a reasonable plan to throw everyone out of Congress; fire 5/6 of all Federal employees, fire 3/4 of all State employees; write off the moochers and let the people who want to build and strive have another go at it?

Do we have enough true leaders to simply say, ‘Enough is enough.’

Of course, that’s a pretty hard view. That’s a hard realization to make, but anyone who has had an addict in their family will probably understand.

America is full of addicts. Some are responsible for their addictions and some were raised to be addicts. But either way, they’re addicts and they can’t or won’t stop. Anyone who has dealt with an addict knows the eventual end, the eventual decisions that family members must make. And it’s hard to make that decision. It’s painful to make that decision. But you either decide to cut them loose, or you decide to go down with them.

I have addicts in my family and I eventually had to cut them loose. I simply couldn’t come up with a good reason to justify sacrificing the welfare of myself, my wife and my child. Addicts rely on you to follow your morals, not theirs. Many thinkers have already realized this and written it down for all to read. This has all happened before, and when we start again, it will eventually happen again.

America has a disease, and like any doctor will tell you, unless you get rid of ALL of the infection, it will eventually come back.

I guess there is a case to be made for fighting as long as you can, but we know how this story ends. All you have to do is look back at the history of the world. We’ve seen this story played out many times and in our own country. Then, the leeches were across the ocean. Now, they are among us. But it’s the same story. It’s the same story that has always been.

One of the amazing qualities of the human mind is that we instinctively know that we are unique. And we are, each one of us, we are unique. No one like us has even existed before or will ever exist again. But, since we aren’t perfect, we often misunderstand our uniqueness and think we are different. But we aren’t very different.

I think it’s naive to think that we are somehow so special and different that we, unlike the brilliant men who built this Nation, can change the course of this story with only words or by putting forth the best argument. I’m by no means marginalizing the need to have brilliant men to put forth the argument, reason and logic for liberty.

I just wonder if, like in the past, we will decide to stand up and fight for our liberty. I wonder if we will resist with force, the tyranny of evil men. I wonder how long we’ll let the thieves in Congress, the the thieves in the government, the thieves in our community continue to steal from us.

I wonder what I can do. I wonder how I can fight.

Reason only works with reasonable men. Argument can only convince the man willing to listen, examine the logic, compare it to the evidence and the world around him and then decide if the argument makes sense. There is no point in arguing with irrational people, with thieves, with moochers. There is no point in wasting time beating your fists in the air crying ‘You fools! Don’t you see!’

There is not point in asking questions that you know the answer to.

We either act, or we don’t act.

Ideas don’t defend themselves. Men do.

j_galt on November 20, 2009 at 12:04 PM

I remember coming to work one morning and the WAPO headline was screaming about Obama creating 3 MILLION jobs. That was the selling point for PORKULUS

Says right here in b&w http://www.whitehouse.gov/issues/Economy/

And people were arguing it had to be done to get people back to work. Since then my state has taken stimulus funds, yet they’ve put out a statewide hiring/wage freeze. So where did all this money go?

scalleywag on November 20, 2009 at 12:10 PM

Why does everyone assume that Obama wants the economy to improve, and wants everyone to get jobs, and get back to work?

Far from it. His goal is to destroy this country. It’s the path he takes, to instill socialism, and possibly communism. He didn’t hang with questionable people, and not learn something. He’s the stooge, and they call the shots.

capejasmine on November 20, 2009 at 12:12 PM

Got some news for ya Ann. The dow is nothing but a balloon ready to pop, funded fully by a government infusion of cash THAT WILL RUN OUT REAL SOON. There is no, (NONE, ZERO), independent capital investment in the markets. When the pipeline of government funds run out, the DOW will crash faster than the ballon-boy story.

Rovin on November 20, 2009 at 10:10 AM

Not to mention the boost to dollar-denominated earnings due to the increasing value, relative to the dollar, of foreign-currency profits. In that sense, the increasing DJIA points to a sick economy in which earnings in other countries are more important than earnings related to value created in the USA. Hence the jobless recovery — the jobs are in China, India, and to some extent Eastern Europe, where labor, and labor-related, costs and taxes have not gutted productivity.

mr.blacksheep on November 20, 2009 at 12:28 PM

The CBC wants Obama to offer a jobs package aimed at curbing rampant unemployment among African-Americans.

Ummmm…what about curbing rampant unemployment among Americans in general?

Yeah, I know…raaaaacist.

uncivilized on November 20, 2009 at 12:35 PM

Kabuki.

hillbillyjim on November 20, 2009 at 12:53 PM

Got some news for ya Ann. The dow is nothing but a balloon ready to pop, funded fully by a government infusion of cash THAT WILL RUN OUT REAL SOON. There is no, (NONE, ZERO), independent capital investment in the markets. When the pipeline of government funds run out, the DOW will crash faster than the ballon-boy story.

Rovin on November 20, 2009 at 10:10 AM

And yet somehow, Soros will make huge profits from the devastation of America’s economy, and wealth.

capejasmine on November 20, 2009 at 12:56 PM

The CBC wants Obama to offer a jobs package aimed at curbing rampant unemployment among African-Americans.

Hey CBC, you passed porkulus just for this purpose. How’s that working out for ya?

dogsoldier on November 20, 2009 at 1:00 PM

Isn’t that a little dangerous to be crafting economic legislation aimed specifically at one demographic?
Doughboy on November 20, 2009 at 9:41 AM

News flash: when your economic policies are structured to “spread the wealth around” you already have crafted legislation aimed specifically at one demographic: slackers

ya2daup on November 20, 2009 at 1:03 PM

Logic on November 20, 2009 at 10:03 AM

I couldn’t make out the design (d@mned iPhone), nevertheless I’m ready and willing to begin stamping “Tax Cheat” over Timmah’s signature once paper money from his reign as SecTreas hit circulation

ya2daup on November 20, 2009 at 1:23 PM

***
The Congressional Black Caucus clowns went to Cuba and praised Fidel Castro and his handling of the Cuban (basket case) economy! And Maxine Waters talks about “socializing” (aka confiscating) large profitable parts of our economy.
***
Why should anyone think their agenda is helping the unemployed? These “democRAT” / liberal / socialist / statist / marxist / communist clowns are just about enriching themselves at taxpayer expense. And they are “bulletproof” in their racially homogeneous districts. They will be re-elected forever since they are just “heppin out the little people”–like Charlie Rangel does.
***
John Bibb
***

rocketman on November 20, 2009 at 1:29 PM

Wait a minute… I’m no fan of President Obama but I thought Congress controlled the nation’s purse strings, created regulation and determined the taxes.

myrenovations on November 20, 2009 at 9:35 AM

Yeah. I’ve noticed that whenever people start feeling the heat over their incompetence, they get mad at the those who are doing their bidding.
When you’re in charge, it’s ALWAYS your FAULT.

Badger40 on November 20, 2009 at 2:08 PM

From Karl D. today:

http://market-ticker.org/

It really doesn’t get much more damning than this.

Specifically, read starting at Page 20 of the PDF (Page 14 of the document) in which the profile of these “loans” is outlined:

More than half are cash-out refinances.
The AVERAGE FICO is 626. Nearly 1/3rd have a FICO below 600, and only 16.7% have a FICO over 660.
The pool’s DTI is 41.78%.
It gets worse.

Only 8.98% of the loans are 30 year conventional fixed-rate mortgages. 88.2% of the loans are 3/27 and 2/28 “teaser-rate” ARMs.
The majority of the loans amortize over 40 years but are for a 30 year term. This adds even more risk because the borrower will either have to refinance or face a balloon at maturity.
The typical loan (72.5%) also contains a prepayment penalty. In many cases the penalty period either matches or exceeds the “teaser” period, preventing a refinance at reasonable prices until that period has expired.
EXPECTED payment resets raise the DTIs to anywhere from 50-58%! This is clearly impossible for essentially all borrowers to carry – that is, either the borrower will have to refinance prior to this happening or they will default.
As if that’s not enough it gets better!

As the table in the prospectus shows, by dollar value:

72.21% were taken for cash-out refinances and 12.28% were to refinance existing loans. Only 15.52% of the principal balance was taken out to BUY a house.
Of that 72.21% balance, the AVERAGE FICO of the person taking the cash-out refinance was 604 (!) – the lowest average of all categories. (If that isn’t special I don’t know what it is – people with severely-impaired credit attempting to keep their head above water by cashing out alleged “equity” in their homes at usurious interest rates!)
The vast majority of the loans had a lifetime maximum rate of 15% or higher, with 26% having a cap OVER 16%. This in a time when “conventional” financing was at half that interest rate. If that’s not hard evidence of predatory behavior, what is?
46.85% of the principal balance was stated documentation. That is, no verification of income or assets.
Yet if I’m reading the prospectus correctly the entire set of tranches was rated investment grade (the worst being “BBB-”), with most of it being rated “AAA.”

Yeah, right.

Loans that were on the basics of sound credit impossible to pay as agreed to term, where the majority of the borrowers were distressed at the time of origination and took the loan for cash-out purposes – that is, to support their current income requirements, and where half of the principal balance was supported not by documentation but by STATED income and assets.

Yes, I know this was disclosed in the prospectus – if you read it.

Here’s a simple question: Would Ford have been perfectly ok in selling the Pinto with exploding gas tanks if buried in the owner’s manual was the statement that if involved in a rear-end collision the fuel tank would be punctured and thus lead to a high probability of fire and/or explosion?

No?

Then how did these BANKSTERS get away with pedding this TRASH, not to mention selling these “loans” to people in the first place when they knew full well there was not a snowball’s chance in hell the alleged “borrower” was going to be able to make the payments?

EVERYONE INVOLVED IN THIS CRAP SHOULD BE ROTTING IN FEDERAL PRISON.

WHERE ARE THE DAMNED INDICTMENTS?

IF OUR PROSECUTORS – INCLUDING HOLDER AND THE 50 STATE AGs – DON’T START ISSUING THEM SOON THE PEOPLE MAY START BUYING – AND CONTEMPLATING THE USE OF – THESE:

(picture of a pitchfork)

riverrat

riverrat10k on November 20, 2009 at 3:06 PM

also from Karl: (missing video and graphs that did not copy

http://market-ticker.org/

Paul/Grayson Amendment Passes In Committee
It’s about damn time.

Yes, it’s a first step – but an important first step, and it happened yesterday. Here’s what Representative Grayson said at the time of debate:

Bloomberg wasted no time giving the “loyal opposition” to transparency all the digital ink they desired:

“It’s going to be seen as weakening the independence of monetary policy with consequent negative implications,” Frank told reporters after the vote. “People are going to be worried about the impact on the dollar, on the interest rate.”

Go listen to Mr. Grayson’s statement again. Now tell me how The Fed’s move to dilute our currency literally by half isn’t going to “raise inflation expectations” and “have an impact on the dollar.”

Never mind the impact that has already occurred. Is Barney Frank freaking blind? What say you to this, Mr. Frank, considering that all of this dollar damage has occurred since The Fed decided to start monetizing Treasury and MBS debt:

Exactly what sort of “damage” are you worried about Mr. Frank? Is not this enough for you? This damage – a roughly 20% devaluation since March – occurred since The Fed announced its “purchase” programs, specifically the purchase of MBS paper for which it appears to have absolutely no legal authority.

How does an audit – determining if The Fed intentionally overpaid, if the transactions were commercially reasonable, if they were designed to help some people and screw others, if The Fed is hiding losses and if the transactions performed even comport with the law – hurt the dollar and inflation expectations? Have you seen the price of GOLD lately Mr. Frank? The gold traders clearly believe The Fed has every intention of re-creating Weimar Germany!

Justified or not, those are the current “expectations” that secrecy has brought us.

How much worse than Weimar could expectations get Barney? Are you now splitting hairs between Weimar and Zimbabwe?

“Everybody would like to beat up on the Fed and call them the bad guys,” Watt said during debate on the measures. “So if we make this decision on a political basis, I know what the result will be.”

“This committee is called upon to transcend the politics of the moment and do what is in the interest of the country,” Watt said.

Really Mr. Watt?

Are you advocating the “best interest of the country” or are you advocating for the best interest of Bank of America, with their corporate headquarters in your district – a firm that has been the beneficiary of unprecedented Federal Reserve largess along with a healthy dose of arm-twisting?

Let’s face the facts here. There are many people (myself included) who believe The Fed is “the bad guy.” They have behaved as a dictator, they have in my opinion ignored black-letter law and they have intentionally debased the currency of this nation for the explicit benefit of their bankster buddies while screwing the middle class. The Fed’s intentional bubble-blowing and now its “zero interest rate” policy has fostered a dollar carry trade now estimated to be over $500 billion – a carry trade that like all others through history will unwind in an uncontrolled and disastrous manner, trashing our economy and markets.

If all this was an “emergency response” that could not have been avoided I might even overlook it – after all, this has been a time of crisis.

But it was and is not.

No, The Fed is why we’re in this mess in the first place! They have been responsible for every asset bubble of the last 20 years – intentionally so. Greenspan’s foibles over the last 20 years, and now Bernanke’s, have guaranteed a complete “hands off” approach to risk by financial institutions and regulators, with both being comfortable in the knowledge that the Fed both could and would simply print up more “funny money” and shower it from helicopters if anything went wrong.

Indeed, Bernanke was dubbed “Helicopter Ben” years ago for suggesting exactly that response to a monetary crisis – that is, he propounded an intent to intentionally destroy every saver’s wealth, with the same effect on the victims – in this case the prudent in this nation – as if they were all subjected to armed robbery.

The Fed has intentionally ignored banks buying hundreds of billions of dollars worth of so-called “hedges” (CDS) from AIG, even though it knew or should have known AIG had no money to pay off on those instruments. It has permitted banks under its direct supervision to create and trade hundreds of trillions of dollars in notional value of derivatives ($605 trillion according to the BIS as of June 2009) traded with zero transparency over the counter – an amount so staggering that if these banks’ net exposure is even one percent of their notional value it is sufficient to bankrupt every large banking institution in the country several times over and if it is just two percent the net exposure to loss approximates US GDP!

It looked the other way on purpose while the large banks and other financial institutions put together garbage securitizations chock full of liar loans and other exotic products that the producers knew would never be paid as agreed – securitizations they were so sure would default that they were shorting them while selling them to their “marks”, er, “customers.”

The Fed sat back and supported, rather than speaking against, Hank Paulson’s entreaty to have the leverage limits removed from Investment Banks in 2004 – the very feature that was directly responsible for the failure of Bear Stearns and Lehman Brothers.

The Fed has not only allowed banks to circumvent leverage limits and reserve requirements through the abuse of off-balance-sheet vehicles and sweep accounts, it lobbied for and received from Congress the right to set the required reserve ratio for banks TO ZERO in the EESA/TARP legislation – a change buried in the law that received almost no attention (except by myself and a few other bloggers!)

When the crisis began The Fed responded by loosening leverage limits further through the issue of literally dozens of “23A” exemptions to Fed Regulations – including institutions that later failed. The damage done to the financial system was thus dramatically increased by allowing these firms to increase their exposure when they got in trouble rather than strictly limiting it as regulations allegedly required.

The Fed refused to crack down on predatory mortgage, credit card and consumer lending until literally forced by Congress, which passed the credit card bill over its objections. Until threatened with same, the very same Fed refused to intervene in the practice of automatically “opting in” customers for “overdraft protection” on ATM and point-of-sale charges, going so far as to permit banks to display ATM balances that included uncleared funds so as to encourage customers to generate overdraft charges by deception!

The public is well-justified in viewing The Fed as a “villain” because it is. Whether through active malfeasance or simple idiocy The Fed has been and is directly responsible for the impoverishment of millions of Americans who were punished for their imprudent borrowing while the imprudent lenders, who should have also gone bankrupt, were protected with money extracted by force from the very same people the lenders screwed!

Here’s the list of Representatives that voted against stopping the daily violations of America. They voted to allow The Fed to have their way in secret, to debase the dollar and destroy Americans’ purchasing power, to double the price of oil and essential energy products, to fund chicanery and even protect those who commit fraud. Worse, they violated their oath of office to uphold and defend The Constitution, which says on this matter:

Section 8. The Congress shall have power to…..

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

The Federal Reserve does not have the power of currency debasement (or the lack thereof) – Congress does, and with good reason. Congress is accountable to you, the people.

The Fed is, at present, accountable to nobody.

Each and every one of the Representatives listed below, by voting “NAY” today, has violated his or her oath of office, has committed an act of violence against The Constitution of The United States, is unfit for their office, and must resign:

NAY – Rep. Barney Frank, MA
NAY – Rep. Paul E. Kanjorski, PA
NAY – Rep. Maxine Waters, CA
NAY – Rep. Carolyn B. Maloney, NY
NAY – Rep. Luis V. Gutierrez, IL
NAY – Rep. Nydia M. Velázquez, NY
NAY – Rep. Melvin L. Watt, NC
NAY – Rep. Gary L. Ackerman, NY
NAY – Rep. Gregory W. Meeks, NY
NAY – Rep. Dennis Moore, KS
NAY – Rep. Michael E. Capuano, MA
NAY – Rep. Joe Baca, CA
NAY – Rep. Stephen F. Lynch, MA
NAY – Rep. Brad Miller, NC
NAY – Rep. Al Green, TX
NAY – Rep. Emanuel Cleaver, MO
NAY – Rep. Melissa L. Bean, IL
NAY – Rep. Gwen Moore, WI
NAY – Rep. Keith Ellison, MN
NAY – Rep. Ron Klein, FL
NAY – Rep. Charles Wilson, OH
NAY – Rep. Joe Donnelly, IN
NAY – Rep. Bill Foster, IL
NAY – Rep. Andre Carson, IN
NAY – Rep. Mary Jo Kilroy, OH
NAY – Rep. Jim Himes, CT

Why don’t you give ‘em a call and tell ‘em what you think of ‘em.

I’m sure they’d love to hear from you – you can find their phone and fax numbers at http://www.house.gov.
————————————————-

Give the traitors a call. riverrat

riverrat10k on November 20, 2009 at 3:12 PM

The FDIC is in deep trouble, trying to get banks to pay for future deposits NOW because the FDIC has dropped below its minimum reserves.

The FHA, Fannie and Freddie are going insolvent, and more money pushed at them will not solve this problem of covering loans that will not be paid back.

TARP worked so good for CIT didn’t it? What, its going under? Well so much for the wisdom of TARP saving institutions. Those that could pay the money back after getting strongarmed to do so have done so. What is the timetable for, say, Bank of America? Citibank? Also consider that all the money put out in TARP and Porkulus now comes due as government bonds that will have to be sold…and China has its own problems and is telling us to get our fiscal house in order, not pass health care and generally act like a sober Nation, fiscally. Because China did two 5-year rounds of passing off bad debt as ‘secure debt’ like our government did with home mortgages, save that China has done that for its industrial sector and now the creditors want their money…. and China’s ‘secure’ holdings were in the US financial and home mortgage sectors.

Geithner, if it is remembered, was the top NY FED regulator during the period those on the Left complain about ‘lax regulators’. He was the man who caused many of the problems by pushing FOR the inane regulations that allowed those with no job, income or assets to get home mortgages. Geithner threatened BofA as well as AIG over TARP. Then there is the Merrill-Lynch strongarming in which the FED told BofA NOT to tell its investors the true status of M-L.

Geithner is not competent and is, indeed, the cause of much of this mess and has helped to make it worse. TARP is a failure as it allows the FED to strongarm banks to do things and NOT tell their shareholders the true status of the actions taken. That leads to neither safety nor security nor recovery in the financial sector… and the bills are coming due, China is reluctant to trust us, and no one else in their right mind wants to invest in America that has so many bills coming due that the best scenario is printing lots of money to inflate the currency to pay it off. Not doing that will cause a huge net cash outgo… and while the dollars left would be worth more, there would be very few of them to go around outside of the large instititutions. There is no ‘soft landing’ without stopping government spending and cutting the tax rate to restore confidence in the financial sector, and having those institutions that can’t pay their money back go through bankruptcy.

No one trusts Geithner now due to his past actions. And no one trusts the FED to run banks, as the government’s own insurance system, much lauded, is going under to cover depositors. Would we like a run on the banks? Do you want inflation or deflation, each with its own set of horrors? And since ‘doing something’ drains money from the economy when government is the one acting, that means that doing nothing, actually stalling out the government, would be a good thing as it would stop the ability to meddle in the economy. There is nothing too big to fail. By trying to have moribund large institutions that made poor decisions at the government’s behest get taken over by government, or at least dictated to by government, then it is the government that now holds the financial bag. It wasn’t made to do that. So instead of normal, private institutions going through lawful bankruptcy and reorganization, we now make our government the one going bankrupt and no one willing to buy the debt.

Who would want to?

We no longer respect the rule of law and private contracts.

That causes businesses not to expand and hold on to any ready cash. Thus no new jobs, and cutting back on existing spending is the order of the day.

ajacksonian on November 20, 2009 at 3:46 PM

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