The bankrupting of the nation for political gain

The bankrupting of the nation for political gain

The following is based in part on excerpts from an article by Cliff Kincaid for Accuracy in Media.

A lot will be said and written about the presidential election, but one central fact remains: John McCain was ahead in the polls until the financial crisis emerged and President Bush was pushed by Treasury Secretary Paulson into seeking a $700-billion Wall Street bailout on Sept. 18. The crisis benefited Obama, even though he voted for the bailout, because he was not a Republican, like McCain or Bush. Republicans were blamed because a Republican was in the White House.

 

The exit polls on Nov. 4 still found the public opposed to the bailout by a 56-39 percent margin.

The panic around mid-September infected the Mainstream Media and even the conservative media, especially Fox News, which became a soapbox for the bailout that now exceeds $1.8 trillion. But rather than bail out or “rescue” anything, the hastily-passed measure, ironically named the “Emergency Economic Stabilization Act of 2008,” started a process that now threatens national bankruptcy.

Because Wall Street has gotten its bailout, the Democrats figure that they can now spend even more, supposedly to benefit Main Street. Which means spending and debt will get even more out of control and more socialist measures, this time under President Obama, will be taken.

The Global Europe Anticipation Bulletin, which predicted the current financial crisis, is warning that the U.S. government will default on its debts by the summer of 2009 and that the “unfolding implosion” of the U.S. economy will result in the dramatic decline of America as a world power.

This is not a natural disaster, like a hurricane or earthquake. It has been brought about by reckless decisions made by people on Wall Street and in the federal government, including Congress. It was man-made, [but] the media has not demanded accountability for how the Bush Administration and the Congress permitted the nation to come to this point?

Incredibly, we still know very little about what happened behind closed doors. Rep. Scott Garrett, Republican of New Jersey, is one member of Congress who wants some answers. One White House official simply shrugged his shoulders when I asked him how this crisis just happened to emerge six weeks before the election. Either they don’t know or don’t care to know, and who from the media are asking any questons?

We do know that the powerful pro-China investment banking firm of Goldman Sachs, which backed Obama and the Democratic Party, has its fingerprints all over this debacle. Not surprisingly, the firm now benefits (so far to the tune of $10 billion) from the “rescue” package forced through Congress by its former chairman, Henry Paulson, and even got $5 billion from Obama booster Warren Buffett.

This would not pass the smell tests were the circumstances and the players different.

It was Paulson, let us not forget, who pushed this deal through as the U.S. Secretary of the Treasury in a Republican administration. His solid Democrat credentials have protected him from the scrutiny of a press corps that has lost all curiosity for anything resembling scandal unless a conservative Republican happens to be involved.

Meanwhile, even before the election results were in, Kimberly A. Strassel of the Wall Street Journal was urging the Republicans “to start elevating the new generation of reformers, folks like Virginia Rep. Eric Cantor or Wisconsin’s Paul Ryan” in the House. She called them intellectuals, never mentioning the fact that they backed the Wall Street bailout that her colleague, Stephen Moore of the Journal’s editorial page, now admits was a big mistake. “I want to apologize,” Moore said. “I drank the Kool-aid.”

Cantor and Ryan, a member of the House Budget Committee, were good conservatives until they drank the Kool-aid and backed the bailout. Now they have lost their credibility on fiscal issues.

Of course, there were a lot of Kool-aid drinkers in Congress, including House Minority Leader John Boehner, Minority Whip Roy Blunt, Cantor, and House Republican Conference Chairman Adam Putnam of Florida. However, in the end, most House Republicans opposed the bailout, objecting to its socialist nature and questioning whether it would even work. By any objective measure, they were right. It hasn’t “stabilized” anything.

This is critical to note: all of the House Republican leaders, including Cantor, Putnam, Blunt, and Boehner, supported the bailout. But they couldn’t get a majority of House Republicans to support them.

Putnam has now resigned as chairman of the House Republican Conference, and Rep. Jeb Hensarling of Texas, the chairman of the conservative Republican Study Committee who opposed the bailout, will run for that post.

Blunt may resign, and Cantor is said to want that post. Boehner says he will seek to remain in his position. On the Senate side, Republican Leader Senator Mitch McConnell not only voted for the bailout but ran for re-election on a platform of bringing home the federal pork to his constituents. He has also lost his credibility on spending issues.

Rep. Thaddeus McCotter, who called the bailout “Fleece in our time,” is beginning to receive more and more attention. He is the chairman of the House Republican Conference Policy Committee, the principal source of legislative initiatives for the party in the House. He won re-election in part because he came across as a leader in a revolt by House conservatives against Bush and Paulson over the bailout plan.

In a discussion with a local newspaper, McCotter was blunt, alluding to McCain’s double talk when he suspended his campaign to come to Washington to address the financial crisis. “McCain put himself in an interesting position,” McCotter said. “At the White House meeting, he said he liked what House Republicans were doing. Then the next day, he decided it was his job to get House Republicans to support the bailout.”

This erratic performance meant that McCain had blown any chance to exploit the financial crisis to his political advantage.

McCotter noted that it was a lot harder for McCain to complain about $70 billion in earmarks when he pushed for a $700-billion bailout. This sealed McCain’s fate, making his warnings about Obama’s socialism ring hollow.

Remaining true to his constituents and his own beliefs, McCotter rejected the notion that we need “just a little socialism to prevent a lot of socialism later” and said Republicans “abandoned principle for expediency” when they supported the bailout.

The same goes for the faux conservatives in the media.

One thing that I have realized, in analyzing the coverage of the campaign, is that the media are populated by many “conservatives” who are not really so conservative. It is a strange phenomenon. It is a form of false advertising.

This category includes the Fox News cheerleaders for the Wall Street bailout, such as Bill Kristol, Fred Barnes, Charles Krauthammer and Bill O’Reilly, and columnists David Brooks (New York Times), Peggy Noonan (Wall Street Journal) and Kathleen Parker (Washington Post Writers Group), who ridiculed Sarah Palin because she doesn’t enjoy the New York Times and appeals to ordinary people.

 

Chuck Schumer has a lot of explaining to do

Chuck Schumer has a lot of explaining to do

Thomas Lifson
Susan Schmidt of the Wall Street Journal has discovered a disconcerting coincidence: Senator Chuck Schumer took a highly unusual step of publicly criticizing a bank, sparking a run on it, just as big Democrat hedge fund donors were examining assets of the bank in hopes of buying them on the cheap should the bank fail.

Schumer of course denies any impropriety. But the odor from this is very, very bad. If a Republican had done something like this, the headlines and network news features would be screaming for his head.

 

Read the excellent article here. A few samples:

 

Sen. Schumer’s office said recently he didn’t know anything about Oaktree’s possible interest in IndyMac until after the bank failed. Oaktree Chairman Howard Marks said he never talked to the senator about IndyMac. [....]

 

The group of investors led by Oaktree are big political contributors, predominantly to Democrats. They have donated more than $700,000 to Senate Democrats and the Democratic Senatorial Campaign Committee during the four years that Sen. Schumer has chaired the campaign committee.

 

Oaktree’s Mr. Marks gave the Democrats’ Senate Campaign Committee $20,000 in late March. Executives of his firm and three other equity firms that considered investing in IndyMac along with Oaktree — Thomas H. Lee Partners, Ares Capital Management LLC and Fortress Investment Group LLC — have been generous donors to the DSCC under Sen. Schumer’s chairmanship, as have many Wall Street financial-services firms.

 

Mr. Marks said he is a longtime Democratic donor and has gotten fund-raising calls from Sen. Schumer. But, he said, “I know him socially. I’ve never talked business with him.” [....]

 

We were interested in taking a look,” said Mr. Marks. His firm has raised $11 billion this year to invest in distressed assets. “We’re bargain hunters. And we have a long history in distress,” he said.

 

The investors knew after a few days of due diligence in mid-June that they weren’t interested in buying the bank, said Mr. Marks. He read from a June 22 email from Oak Tree managing director Skarden Baker, who was assessing IndyMac’s business. “I am taking the view of doing enough here to jump in if it goes to receivership,” wrote Mr. Baker.

 

Four days after the email was sent, Sen. Schumer released publicly letters he sent to bank regulators and to the Federal Home Loan Bank of San Francisco. “I am concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers,” the senator wrote, warning that “the bank could face a failure if prescriptive measures are not taken quickly.”

 

Hat tip: Ed Lasky

Opposing view: The sky is not falling

Opposing view: The sky is not falling

By John Shadegg

 

Every Republican who voted against the Emergency Economic Stabilization Act on Monday believes that Congress must address this crisis. They take it seriously and stand ready to vote for reasonable legislation. They were unwilling to give Treasury Secretary Henry Paulson a blank check.

The sky is not falling. The market will return. Secretary Paulson is getting a lesson in civics. The world he has entered is different than the wheeling-and-dealing Goldman Sachs world where he made his fortune.

Members of Congress have a duty to protect the interests of the American people. That is precisely what they did. The vote against the measure was solidly bipartisan.

Paulson’s $700 billion dollar plan was fundamentally flawed. The bill asked for a blank check. It did not specify which assets could be purchased or the procedure by which they would be purchased.

Regrettably, Congressional Democrats inserted extraneous provisions and chose to put groups such as ACORN (a liberal housing advocacy group) and trial lawyers before the American people. After Sen. John McCain, R-Ariz., courageously halted the stampede, most negotiation time was spent removing harmful Democrat language, rather than improving Paulson’s proposal.

House Republicans want to protect the American people and our nation’s financial institutions, enabling them to make the loans needed to run America’s economy. It is also critical to calm public anxiety.

To begin, “mark to market,” the accounting rule that requires mortgage-backed securities to be valued at fire-sale prices, must be suspended. For reasons that are incomprehensible, Paulson and congressional Democrats refused to include such a provision. It’s a systemic reform Congress must insist upon to reduce taxpayer exposure and prevent this crisis from reoccurring. Further, an update to the Federal Deposit Insurance Corp., increasing its $100,000 limit, would relieve the concern of millions of Americans for their life savings. It’s hard to imagine why anyone would oppose such a change.

Many House conservatives do not like the structure of Paulson’s proposal to have the government purchase troubled assets. But there is nothing inherent in this plan that’s inconsistent with the two reforms outlined above.

Americans need to understand that the Senate was not scheduled to vote on this bill until Wednesday evening, as a result of the Jewish holiday of Rosh Hashanah today. We have ample time to reach an acceptable compromise if all parties act in good faith. The Democratic House majority can move to reconsider its bill if Speaker Nancy Pelosi will allow an amendment to improve it by making changes, including those I have outlined.

This problem can be solved in the very near future, and the market will come back.

Rep. John Shadegg, R-Arizona, first elected in 1994, has held a number of Republican leadership positions in the House.

When Watchdogs Snore: How ABC, CBS & NBC Ignored Fannie & Freddie

 

When Watchdogs Snore: How ABC, CBS &
NBC Ignored Fannie & Freddie

     The two mortgage giants Freddie Mac and Fannie Mae — seized by the government September 7 before they went completely bankrupt, at a potential cost to taxpayers of more than $25 billion — have been in obvious trouble for much of the past five years — with criminal investigations, accounting scandals, firings, resignations, huge losses and warnings from the Federal Reserve that their huge portfolio of mortgage securities posed a risk to the overall financial system.

     But prior to this year, the watchdogs at ABC, CBS and NBC found time for only 10 stories on the financial health and management of Fannie Mae and Freddie Mac. A review of the three networks’ morning and evening news programs from January 1, 2003 through December 31, 2007 found nine anchor-read items or brief references to the companies troubles, plus one in-depth report by CBS’s Anthony Mason on the May 23, 2006 Evening News, after Fannie Mae was fined $400 million for accounting fraud.

     [This item, by the MRC's Rich Noyes, was posted Thursday afternoon on the MRC's blog, NewsBusters.org: newsbusters.org ]

     It’s not that the networks eschew business news. A 2005 report from the MRC’s Business and Media Institute found heavy coverage of the scandal surrounding Enron, but no interest in the growing scandal surrounding Fannie Mae: “A LexisNexis search of ABC, CBS, NBC, and CNN on the term ‘Enron’ from the nine months around when the story first broke — Oct. 1, 2001, to July 1, 2002, produced 3,017 hits….A similar LexisNexis search was performed for the term ‘Fannie Mae’ for those same media, from June 1, 2004, to March 1, 2005, again during the time the story was breaking. This search discovered a paltry 37 matches.” See: www.businessandmedia.org

     But the networks should (presumably) be more interested in monitoring these mortgage behemoths, since they’re not normal private companies but rather Government Sponsored Entities (GSEs) chartered by Congress to promote the specific cause of promoting home ownership. This special status, along with the presumption that taxpayers would bail out the firms if they got into trouble, amounts to an implicit federal subsidy that the Federal Reserve in 2003 calculated was worth between $119 and $164 billion a year.

     Writing in Tuesday’s Wall Street Journal, Charles Calomiris and Peter Wallison of the American Enterprise Institute explained how these two GSEs — plus members of Congress who refused to hold them accountable — are “largely to blame for our current mess.” An excerpt:

Many monumental errors and misjudgments contributed to the acute financial turmoil in which we now find ourselves. Nevertheless, the vast accumulation of toxic mortgage debt that poisoned the global financial system was driven by the aggressive buying of subprime and Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and Freddie Mac. The poor choices of these two government-sponsored enterprises (GSEs) — and their sponsors in Washington — are largely to blame for our current mess.

How did we get here? Let’s review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of “affordable housing.” They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse….

In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill, introduced by Republican Sens. Elizabeth Dole, John Sununu and Chuck Hagel, and supported by then chairman Richard Shelby. The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Democrats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Democrats, remained silent.

Now the Democrats are blaming the financial crisis on “deregulation.” This is a canard. There has indeed been deregulation in our economy — in long-distance telephone rates, airline fares, securities brokerage and trucking, to name just a few — and this has produced much innovation and lower consumer prices….

If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it.

    

Thanks To 3 Democrat Senators Our “Evil Big Oil Co.s” Won’t Be Pumping Iraqi Oil, But China Will Be

Was Schumer’s Attack On Indymac Coordinated with ‘activist’ group?

Was Schumer’s Attack On Indymac Coordinated

with ‘activist’ group?

Clarice Feldman

CNBC is suggesting that Senator Schumer’s unprecedented role in breaking Indymac, a Pasadena bank, was part of a coordinated scheme with The Center for Responsible Lending , as usual, a name from a  far left “public interest” operation which, as is often the case,  disguises its objectives and operations.  It is for anything but responsible klending practices, in my opinion. (See this.)
“The Center for Responsible Lending issued an attack on Indymac within a few days of Schumerʼs letter. CRL is part of a small army of left of center ʽresearchʼ groups, community organizers, and public interest law firms who make their living accusing home lenders of racial redlining and predatory lending. On June 20th the Center accused Indymac of unfair practices regarding minority borrowers.
“A suspicious person might think that a network of lefty attack groups proficient in bank bashing and frequently funded by trial lawyers and short-sellers, coordinated their activities with a law firm on the hunt and a Senator who works closely with the network. “
Just imagine how much damage Schumer and his party will do should they control all three branches of the federal government.

Feds Blame Schumer for Run on Indymac

Feds Blame Schumer for Run on Indymac

Rick Moran

This may be a first in the history of the United States Senate. Federal regulators have cited New York Senator Charles Schumer as the proximate cause for the run on mortgage giant Indymac’s deposits. That run caused the feds to take over the ailing institution to guarantee its remaining deposits.

It seems that while engaging in his favorite pastime of trying to get his mug on TV and his name in the headlines, Schumer released a letter he wrote to the Office of Thrift Supervision and the FDIC 

 

The OTS has determined that the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors’ demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac’s viability. In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts.

“This institution failed today due to a liquidity crisis,” OTS Director John Reich said. “Although this institution was already in distress, I am troubled by any interference in the regulatory process.”

There was absolutely no reason for Schumer to release the letter except to garner headlines. The publicity hound is going to cost the American taxpayer billions.

Maybe we should take it out of his salary…

Fear the Terrorists, Not President Bush — On the left, my former party of choice, feels that the biggest issues confronting America are corporate greed, “the culture of corruption” (as if this does not occur on both sides), Wal-Mart, “big business,” churchgoing Christians, global warming and an assault on the civil liberties of us and terrorists. To deny this would be scandalously untrue — The “Drive-by” big city media feels the need to rant about how we “torture” terrorists, keep “secret prisons,” check phone records of suspected terrorists, regress back to Katrina whining, yada, yada and yada. The ACLU, “peace organizations,” the legal world, academia and Hollywood, not surprisingly, fall for this flawed, inane logic too. History has always proved these acrimonious fools wrong, and will again this time… if we’re not killed first by our enemies because of their devious behaviors.

Fear the Terrorists, Not President Bush
October 31st, 2006

Next Tuesday is midterm election day. When you cast your vote – if you choose to partake in this most honorable American tradition – please remember what is at stake.

On the left, my former party of choice, feels that the biggest issues confronting America are corporate greed, “the culture of corruption” (as if this does not occur on both sides), Wal-Mart, “big business,” churchgoing Christians, global warming and an assault on the civil liberties of us and terrorists. To deny this would be scandalously untrue.

On the right, my current “fearmongering” party of choice feels the biggest issue (singular) is to eliminating and freeing the world of Islamo-fascist Nazis. There is no denying this, and the sooner we, as in all other world wars, are free to do this, the better. My party wants to save the non-Muslim world, America, Israel and especially “liberal values” like sexual and gender freedoms (not just libertinism, but the freedom of women) freedom of religion, speech and of the press.

Unfortunately, aside from Radical Muslims, we have many domestic factors working against us:

The “Drive-by” big city media feels the need to rant about how we “torture” terrorists, keep “secret prisons,” check phone records of suspected terrorists, regress back to Katrina whining, yada, yada and yada. The ACLU, “peace organizations,” the legal world, academia and Hollywood, not surprisingly, fall for this flawed, inane logic too. History has always proved these acrimonious fools wrong, and will again this time… if we’re not killed first by our enemies because of their devious behaviors.

President Bush, sadly as of late, has fallen prey to dangerous political correctness and multi-cultural balderdash as he tries to unite this country. He has attempted to make good on his promise to be the great uniter, and the man has undeniably been more liberal than conservative the past year.

There is no need to do this, Mr. President.

This country was divided long before President Bush took office, and he has done his best to unite it. But many who hypocritically seek “redistribution of wealth” spend their weekends picking up wheatgrass at Whole Foods on their way to Nantucket, do not want to be united with Americans who attend church on Sunday, wave the flag, and enjoy Nascar, Applebee’s and saving money at Wal-Mart. Too bad for them. These arrogant, misguided folks have chosen to regressively look back, to sacrifice their platform to go after Mr. Bush (who is not up for re-election, by the way).

Fatuous liberals like Paul Krugman — who saw nothing wrong with comparing the backlash against the Dixie Chicks to the rise of Nazism — or the countless jabberers who have over the years denounced William F. Buckley Jr., Barry Goldwater, Sean Hannity et al. as fascists are difficult to respect, much less take seriously. As Jonah Goldberg wrote in September,

“One gets the sense that today’s liberals — beyond their phobia of offending the coalition of the oppressed (in this case, the Muslims of CAIR) — are reluctant to let Bush use “Islamic fascism” because they don’t want to give up their monopoly on the F-word.”

George Bush needs to stop trying so hard to make “peace” with those who despise us within our nation and are more concerned with meaningless impeachment than saving our world. His efforts have never been appreciated, but someday, like Reagan and those before him, perhaps they will. 

Thankfully, by the grace of G-d, the patriotic men and women of the military will save this nation as they always have. They will not get thanks from the coastal elites, but this is expected.

It’s not just that the wrong party could take power, but this party’s leaders, some of those who would be in charge of essential committees like Ways and Means, the Judiciary, Commerce, etc, are variously on record as not supporting Israel (and being proud of it!), raising taxes, ending free trade, drilling in ANWR (animals are more important than people, usually) and naturally, impeaching Bush. That will surely take our attention away from the Islamic Nazis, North Koreans and by October of next year, as opposed to fraudulent filmmakers who dream of Bush being dead, we all could be in severe peril. I’d personally put it at 50/50.

I hope that most Americans will take a deep breath, realize Bush had noble, correct intentions for freeing tens of millions from a madman and then remember that unemployment is the lowest in five years; the Dow is over 12,000 points. Inflation is 2.1 percent, the deficit is being dramatically reduced, and gas prices are falling. Let’s just hope that if the GOP maintains control, we don’t waste time, effort and money on Democrat protests and recounts. Which state this time? Indiana? Missouri? Do I hear Maryland?

Vote accordingly, and consider whether you want to tell your grandchildren you defeated carbon dioxide emissions or Islamo Nazi Fascists who threatened the free world.

Ari Kaufman is a freelance writer in Indianapolis, regularly contributing to the Indianapois Star and the Jewish Post and Opinion. He’s also the co-author of an upcoming book on educational reform. His archived work can be accessed here.

Ari Kaufman

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