Tuesday, September 30, 2008


Understanding $700,000,000,000.00

Kevin at wizbang has done a yeoman's work in helping us understand the magnitude of 700 Billion!
Look at that number. It's amazing. Yet to hear our leaders talk about it, they need every penny to prop up the mortgage lenders. They don't. And I figured out how to put it in terms anyone can understand:.
At first, I saw that number and I had to ask... How many bad mortgages are there? Then after playing with that hypothetical in my head I wondered, how many mortgages are there in active in the whole country? So I looked it up. According to this 2006 pdffrom the U.S. Census, there are 33 million owner occupied dwellings with first mortgages active. (1)
Hmmm 700,000,000,000 / 33,000,000 = Over $21,000 cash the government could just give to everyone with a mortgage! What kind of stimulus would that have on the economy to hand 33 million people $21,000?....(wait, it gets better....)

Democrats Stage Sham Vote!

The whole voting process was a sham!

House Speaker Nancy Pelosi ordered her Majority Whip, Jim Clyburn, to essentially not do his job in the runup to the vote on Monday for the negotiated Wall Street bailout plan, according to House Democrat leadership aides.

"Clyburn was not whipping the votes you would have expected him to, in part because he was uncomfortable doing it, in part because we didn't want the push for votes to be successful," says one leadership aide. "All we needed was enough to potentially get us over the finish line, but we wanted the Republicans to be the ones to do it. This was not going to be a Democrat-passed bill if the Speaker had anything to say about it.".......

Emanuel, who served as a board member for Freddie Mac, one of the agencies that precipitated the economic crisis the nation now finds itself in, had no misgivings about taking a leadership role in tanking the bill. "He was cheerleading us along, mothering the votes," says the aide.

Further, according to House Oversight Committee staff, Emanuel has received assurances from Pelosi that she will not allow what he termed a "witch hunt" to take place during the next Congressional session over the role Fannie Mae and Freddie Mac played in the economic crisis.

Emanuel apparently is concerned the roles former Clinton Administration members may have played in the mortgage industry collapse could be politically -- or worse, if the Department of Justice had its way, legally -- treacherous for many.  MORE.... 

Video of Congress' Wall Street "Bail Out" Process

Video of Congress' Wall Street 
"Bail Out" Process
Here it is folks, a clear way to explain what's been going on in
Washington the past week....

Pretty accurate, I'd say.......

Tainted Paper At The Bottom Of It All

Jerry Bower has neatly (and with some humor) summed up the current mess:

No wonder nobody wanted to hold politically tainted paper. Owning a mortgage-backed security in this environment is like owning a pointy hat and a black cat in colonial Massachusetts.
These securities, which the government invented (through Fannie Mae(nyse: FNM - news people )) and foisted upon the banks (through the Community Reinvestment Act), now has regulatory cooties. Own it and you'll get sued. Sell it and you'll get sued. Keep it and the regulators will force you to write it down to panic-level prices--and then you'll get sued. Try to foreclose and state and local government will refuse to enforce the contract. Try to get private equity investment to keep your balance sheet alive and you find the door barred by 80-year-out-of-date regulations like the Bank Holding Company Act.
Government did this to us. This plan isn't a bailout--it's more like reparations.
But still, maybe we can improve it. Perhaps the mark to market regulations could be suspended before the taxpayers are forced to move in. Maybe if some of these rules are eliminated, little or no taxpayer dollars will be needed. If Congress doesn't want to put public dollars into this, it should let private equity put private dollars in.
It's a silly throwback to the 1920s, which only allowed bank-holding companies to buy a majority investment in a troubled bank. Back then, all banks were local. Now banking is an international industry. Mutual funds, private individuals, hedge funds, venture capitalists, leprechauns, unicorns…everybody should be allowed to buy bank shares. If everybody is not allowed to, I'm afraid everybody will be forced to.
Before more coercion, maybe we could try a little more freedom. The plan's getting there but there's something missing. Needs a little more liberty bell.

Full Story.... 

5 to 12 Year Old's Create Songs Fof Obama

It's Miraculous!
This group of 5 to 12 year old's spontaneously got together and crafted a perfectly harmonized song extolling the wonderfulness of Barack Obama.  Amazing!

Nah!  Just more propaganda.  Jeff Zucker is President & CEO of NBC.  He and a bunch of like-minded and savvy folks have figured another way to donate to Obama.  But this is somewhat scary.  It has all the trappings of a church or synagogue recital, but it's for a questionable politician.  Very creepy in it's implications and may provide greater insight to the methodology of the Obama supporters.
Here's the official Obama website story.  You may need to drink some kool-aid first.
Sing for Change chronicles a recent Sunday afternoon in Venice, when 22 children, ages 5-12, gathered to sing original songs in the belief that their singing would lift up our communities for the coming election. 
Sing for Change was a confluence of grassroots work, good will, and shared vision the first of which was the music itself.  Inspired by ideas raised at a grassroots Obama fundraiser, a music teacher, Kathy Sawada, and the children composed and rehearsed the songs in less than two weeks.  Several musicians heard of the effort and volunteered to accompany the children.  Parents and older siblings designed and provided the T-Shirts and the banner.  There’s a first for everything, but rarely do so many firsts come together at once:  for the children and their parents, this is their first performance, first video, first banner, and first involvement with grassroots work on a presidential campaign. As Sunday approached, a neighbor volunteered a home. Production wizards got wind of the project and offered their help in recording it.  The likes of Jeff Zucker, Holly Schiffer, Peter Rosenfeld, Darin Moran, Jean Martin, Andy Blumenthal, and Nick Phoenix rearranged schedules to participate.  Holly Schiffer was able to get three High Definition cameras (Panasonic HVX250’s), and an AVID editing facility.  When Jeff Zucker went to pick up the camera package, Ted Schilowitz happened to be there and offered a RED camera set up on a Steadi Cam. 
What the children and a few adults accomplished in a few hours on a Sunday afternoon embodies the nature of the Obama campaign:  its grassroots inspiration, its inclusiveness, its community building.  People pitched in quickly for a cause that resonated with them.  There were not many conditions: “Think this is a good idea? Want to help? Great. Sunday at 12:00.” At the heart of the project were 22 children and their music.  The willingness of all involved to come together for them was a testament to our hope, unity, courage, joy and belief in the future represented by these children. 

Questions for Biden

Debate Questions for Joe Biden

Softballs for the foreign policy 'expert.'  

from the Wall Street Journal's Bret Stevens

Read here... .

Monday, September 29, 2008

Joe Biden's Bridge To "Nowhere"

Yes.....he has one.

In Times of Crisis, Trust Capitalism

What is Going On?

Like many others who have ‘normal’ everyday lives, I’ve spent a lot
of time the past year attempting to understand the more arcane
machinations of the financial marketplace.

What I have come to believe, is that the current problem in liquidity,
stems primarily from the Democrats, who from Bill Clinton’s
administration on, pressured financial institutions to provide loans to
individuals who were not credit worthy; allowed Fanny and Freddy to
grow unfettered, by elbowing out more conservative financial institutions
from the market, by using their “government guaranteed” position to gain
competitive advantage; permitted Rep. Barney Frank and Sen.
Chuck Schumer and other Democrats, like the Congressional Black Caucus,
to block any effective regulation on Fanny and Freddy; initiated the policy
of “mark to market” which has been the current catalyst in causing the
complete devaluation of many financial institutions ‘suspect’ assets, which in
turn has caused the run on capital and the subsequent liquidity crisis.

To then have the architects of the current mess, Messrs. Frank, Schumer
and the Democrat Party, be the architects of the a Bill to correct the
situation, is complete lunacy. 

Joseph Calhoun, has provided additional real world perspective into
understanding the sticky gear works of the financial market machine.
I’ve attempted to edit his comments here to his essential arguments,
but suggest that you read the full article .

In Times of Crisis, Trust Capitalism
By Joseph Calhoun
If a bank can’t get other banks to lend it money, that tells the market something about the condition of the bank in question. Last August, Bernanke convinced three large banks to borrow at the discount window in an effort to remove that stigma. When that didn’t work, he concocted a scheme to allow banks to borrow from the Fed in anonymity via a mechanism he called the Term Auction Facility. When Bear Stearns blew up, he added the Term Securities Lending Facility for investment banks. By removing the stigma of borrowing from the Fed and hiding the identity of the borrowers, Bernanke removed important information from the market.”
This has introduced another roadblock to the re-capitalization and reorganization of the financial industry. Companies that are in need of capital are waiting to see if the plan will bail them out of their difficulties….Why not wait until they can offload the bad paper on the taxpayer and raise capital at a better price? Why take Tony Soprano terms when Uncle Sam is willing to let the taxpayer take the hit for you?
If this bailout goes ahead in its current form and the Treasury pays a high enough price to recapitalize the troubled banks, what has been accomplished? The plan may be enough to induce the banking sector to start lending again, although frankly, I don’t know why we would want institutions who have shown such poor judgment in the past to stay in that business. This plan short circuits the capitalist model which would allow the stronger, well-run institutions to gain market share and/or expand profit margins. The long-term effect will be to lower the overall return on capital in the financial services industry. The government apparently believes that the key to economic recovery is to allocate limited resources in an inefficient manner. Does that make sense?...
The market is functioning as it should. It is the Fed that is not functioning correctly. There is no reason we had to go through either the bubble or the aftermath. We got into this mess because we tried to avoid the consequences of the Internet bubble. We will only make things worse by trying to avoid the consequences of the housing bubble….
We are not on the verge of a new depression. The housing bubble collapse in California, Florida and a few other states is not enough to bring down the entire banking system. Investors who made mistakes in these markets should be held responsible and those who navigated the Fed-distorted market should be rewarded for their wisdom and prudence….
The Japanese tried to prop up failed banks in the aftermath of the bursting of their twin bubbles and the result was 15 years of stagnation. Why are we emulating a strategy that is a demonstrable failure? A better alternative would be to allow capitalism to work as it should and stop the interventions of the Fed in the money market. Trust capitalism. It works.

Full Story.... 

Open Letter To The Republican Party

Hear ye, hear ye, hear ye!
I am frustrated and disgusted with the Republican Party Representatives, Senators, and President over their completely inadequate response to this financial crisis.  Particular scorn is directed at the President for his lack of cogent and effective leadership, and Sen. John McCain for his inability to speak truth to power - his long term companions in the Senate.
You all have allowed the Democrats and the media to incorrectly characterize the cause of the problem, and as a result, you have failed to actually devise an effective plan to fix the problem, and generate the necessary widespread support for any plan.
Permitting the Democrats to claim that the problem has been caused by deregulation, Wall Street greed and corruption, and CEO compensation, has allowed them to push their anti-business and populist class warfare strategy in classic agit-prop style.  This demonizing of “Wall Street” and business, un-challenged, will lead to significant negative economic impact for the U.S.  going forward.  Listening to the Democrats and media is like listening to the chants of the barnyard denizens in “Animal Farm” yell out “four legs bad, two legs good”.
The problem in liquidity that we have stems from the Democrats, who from Bill Clinton’s administration on, pressured banks and other institutions to provide loans to individuals who were not credit worthy; allowed Fanny and Freddy to grow unfettered by using their “government guaranteed” position to gain competitive advantage, elbowing out more fiscally conservative private financial institutions from the market; permitted Rep. Barney Frank and Sen. Chuck Schumer and other Democrats, like the Congressional Black Caucus, to block any effective regulation on Fanny and Freddy; initiated the policy of “mark to market” which has been the current catalyst in causing the complete devaluation of the financial institutions assets, which in turn has caused the run on capital and the subsequent liquidity crisis.  The “mark to market” requirement singularly has caused a completely irrational devaluation of mortgage based assets to zero.  This is complete lunacy.
Where is the leadership in the Republican Party? 
It seems to me that all the Republicans are hunched over in a fetal position, fearful of speaking the truth, pointing out the causal elements, and speaking up for what needs to be done. If changes to requirements for credit worthiness, and “mark to market” are not included with the injection of capital, nothing will have changed.
I urge you to be a visible Republican, speaking out against the outright lies and deception of the Democrats, and educating people on what has really happened to cause this situation, and what needs to be done.

Sunday, September 28, 2008

1984 Miss Alaska beauty pageant video

Sarah Palin swimsuit video surfaces from 1984 Miss Alaska beauty pageant

Footage has surfaced of Sarah Palin - John McCain's running mate for the White House - taking the stage 24 years ago in a one-piece swimsuit for the title of Miss Alaska.
The quality is quite poor, which should be expected since it was likely pulled from a wornout VHS tape, but it apparently shows the governor of Alaska - then Sarah Heath - walking across a stage as an announcer offers tidbits of information about her.

More and Video.... 

Bailout Bill Scoop

According to the Wall Street Journal, here's the overview of the plan:
The Troubled Asset Relief Fund:
The bill authorizes $700 billion for the fund in installments. Treasury will first get $250 billion, with an additional $100 billion immediately accessible. Congress would have the option of blocking the final installment of $350 billion by issuing a joint resolution within 15 days of any requests.
How it works:
Treasury plans to hire asset managers to determine how to buy bad loans and other ailing assets from financial institutions. Many of the details, including pricing and purchase procedures, will be worked out between those managers and Treasury. The legislation requires Treasury to set guidelines within 45 days for pricing methods and setting the value of troubled assets, as well as mechanisms for purchasing assets, procedures for selecting asset managers and criteria for identifying troubled assets to buy.
The legislation requires Treasury to purchase assets at the lowest price, and allows the government to buy through auction or direct from institutions.
Treasury expects to start buying the simplest assets first -- mortgage-backed securities, for example -- followed by more complex securities. Treasury likely will publish a list of the assets it is seeking to purchase. Banks and other institutions are expected to submit bids in a competition to sell bad loans and securities.
Executive compensation:
The legislation places restrictions on executive compensation for certain companies that sell assets to Treasury. If Treasury buys assets from a company directly -- something it would do if a firm were failing -- then all "golden parachute" exit-pay provisions would be canceled. Companies that sell assets to Treasury through an auction process will be subject to some limits. Firms that sell more than $300 million of assets to Treasury won't be allowed to make any new golden-parachute payments to top executives. A tax-deduction limit on compensation above $500,000 also will apply.
Equity stakes:
The legislation requires Treasury to receive warrants in companies that participate in the program. If a company sells its assets through an auction, Treasury will get a nominal amount of nonvoting warrants. If Treasury buys assets directly, it would get a majority equity stake.
The Troubled Asset Relief Fund will be overseen by a bipartisan congressional commission that will receive reports from Treasury every 30 days. The program will also be overseen by a board comprised of the heads of Treasury, the Federal Reserve, the Securities and Exchange Commission, the Housing and Urban Development Department and the Federal Housing Finance Agency.
The office of accountability will have an inspector-general office within Treasury.
Treasury will have to submit a written report to Congress no later than April 30 on the overall financial regulatory system and "its effectiveness at overseeing the participants in the financial markets, including the over-the-counter swaps market and government-sponsored enterprises" and recommend improvements.
Protecting taxpayers:
If after five years the government has a net loss, the president will be required to submit a legislative proposal to seek reimbursement from the financial institutions that participated.
Help for homeowners:
Treasury will buy mortgage-backed securities, mortgages and other assets secured by residential real estate. The legislation requires Treasury to use its position as the investor in those loans and securities to "encourage the servicers of the underlying mortgages" to help minimize foreclosures.
It also calls for Treasury to "identify opportunities" to acquire "classes of troubled assets" that will improve the ability of Treasury to help modify and restructure loans. The idea is that Treasury would be more patient with homeowners who have fallen behind on their payments than commercial lenders.
The bill would require Treasury to establish, alongside the asset-purchase plan, a program to insure mortgage-backed securities. Financial institutions that want to participate would essentially pay the government a fee and, in return, the government would insure their assets against any future losses.
Here's a link to a pdf of the draft bill

Medieval Jewish Capital Found

 The Jews of Khazaria

This July 30, 2005 photo shows an excavation of an 11th-12th century house made of hard-burnt bricks in Itil, a Silk Road city that served as the Khazar capital, near Astrakhan, about 800 miles (1280 km) south of Moscow, The Khazars established the first feudal state in eastern Europe. A Russian archaeologist says he has found the lost capital of the Khazar empire, a powerful medieval state that once stretched from the northern shores of the Black Sea to Central Asia and whose rulers adopted Judaism as their state religion. (AP Photo/Dmitry Vasilyev)
A Russian archaeologist says he has found the lost capital of the Khazars, a powerful nation that adopted Judaism as its official religion more than 1,000 years ago, only to disappear leaving little trace of its culture.
Dmitry Vasilyev, a professor at Astrakhan State University, said his nine-year excavation near the Caspian Sea has finally unearthed the foundations of a triangular fortress of flamed brick, along with modest yurt-shaped dwellings, and he believes these are part of what was once Itil, the Khazar capital.
"The discovery of the capital of Eastern Europe's first feudal state is of great significance," he told The Associated Press. "We should view it as part of Russian history."
The Khazars were a Turkic tribe that roamed the steppes from Northern China to the Black Sea. Between the 7th and 10th centuries they conquered huge swaths of what is now southern Russia and Ukraine, the Caucasus Mountains and Central Asia as far as the Aral Sea.
Itil, about 800 miles south of Moscow, had a population of up to 60,000 and occupied 0.8 square miles of marshy plains southwest of the Russian Caspian Sea port of Astrakhan, Vasilyev said.
It lay at a major junction of the Silk Road, the trade route between Europe and China, which "helped Khazars amass giant profits," he said.
The Khazar empire was once a regional superpower, and Vasilyev said his team has found "luxurious collections" of well-preserved ceramics that help identify cultural ties of the Khazar state with Europe, the Byzantine Empire and even Northern Africa.
The Khazars' ruling dynasty and nobility converted to Judaism sometime in the 8th or 9th centuries. Vasilyev said the limited number of Jewish religious artifacts such as mezuzas and Stars of David found at other Khazar sites prove that ordinary Khazars preferred traditional beliefs such as shamanism, or newly introduced religions including Islam.
Yevgeny Satanovsky, director of the Middle Eastern Institute in Moscow, said he believes the Khazar elite chose Judaism out of political expediency — to remain independent of neighboring Muslim and Christian states. "They embraced Judaism because they wanted to remain neutral, like Switzerland these days," he said.
In particular, he said, the Khazars opposed the Arab advance into the Caucasus Mountains and were instrumental in containing a Muslim push toward eastern Europe. He compared their role in eastern Europe to that of the French knights who defeated Arab forces at the Battle of Tours in France in 732.
The Khazars succeeded in holding off the Arabs, but a young, expanding Russian state vanquished the Khazar empire in the late 10th century. Medieval Russian epic poems mention Russian warriors fighting the "Jewish Giant."
"In many ways, Russia is a successor of the Khazar state," Vasilyev said.  More.... 
and More.... 

Saturday, September 27, 2008

Democrat Party Should Be Indicted For Criminal Activity

'Lynching' Franklin Raines and How Fannie Mae Isn't 'Broke'

Classical Values published this incredible video showing how the Republicans in Congress desperately attempted to increase regulation on Fannie Mae and how the Democrats fought even any suggestion that there was a problem with the agency, even using the race-card by referring to criticism of foremer chairman Raines as a "lynching".

The video is about 9 minutes. If you would like more details on how we got into this mortgage meltdown mess may I suggest The Best Congress Fannie Could Buy.  This is a stunning explanation of the "money trail" linking the Democrat politicians - including Sen. Obama, and their fund raisers, to the Mafia-like racket that has ravaged the world's financial markets.  

1St Presidential Debate

Two Bracelets, Two Stories - Obama's "Watch" Moment

Last night's debate presented an opportunity for a clear insight into both Sen. McCain and Sen. Obama.

At one point Sen. McCain elevated his wrist and said:

"I had a town hall meeting in Wolfeboro, New Hampshire, and a woman stood up and she said, "Senator McCain, I want you to do me the honor of wearing a bracelet with my son's name on it."
He was 22 years old and he was killed in combat outside of Baghdad, Matthew Stanley, before Christmas last year. This was last August, a year ago. And I said, "I will -- I will wear his bracelet with honor."
And this was August, a year ago. And then she said, "But, Senator McCain, I want you to do everything -- promise me one thing, that you'll do everything in your power to make sure that my son's death was not in vain."

He didn't have to look at the bracelet to read the name.  It flowed as if he's said it countless times, and sounded as if he thought of Mathew Stanley often.

Sen. Obama interjected shortly after with:
"Jim, let me just make a point. I've got a bracelet, too, from Sergeant - from the mother of Sergeant Ryan David Jopeck, sure another mother is not going through what I'm going through."
It seemed as if he had been outfitted with a prop.  He seemed uncomfortable with the statement, stumbled in attempting to remember the name, and appeared to look at the bracelet in order to read it.  A poseur.  A moment that may follow him as did Bush's 'watch' moment in his debate with Clinton.

Charles Hunt from the NY Post noticed that exchange as well.  Here's what he read into it:

"One of last night's most telling moments came when McCain revealed a wristband that had belonged to a soldier killed in Iraq given to him by the soldier's mother. Do everything in your power, the mother told McCain, to make sure "my son's death was not in vain."
"I've got a bracelet, too," Obama said - given to him by the mother of a dead soldier who asked Obama to "make sure that another mother's not going through what I'm going through."
Here lies the difference between these two men:
Obama will accept defeat if continuing on hurts too much. For McCain, any mission where defeat is an option is a mission not worth fighting in the first place."

Obama Can't Backtrack

Last night, Barack Obama said that he never opposed funding for troops in Iraq and Afghanistan, and that his vote in opposition only intended to force a timetable for withdrawal in Iraq.  Today, the McCain campaign responds with a new ad, “Promise”, that they will run nationally:

ANNCR: In the midst of war, Senator Obama voted to cut off funding for our troops. What did Biden say?
JOE BIDEN: “They said they voted against the money to make a political point.”
ANNCR: He added…
JOE BIDEN: “This is cutting off support that will save the lives of thousands of American troops.”
ANNCR: Barack Obama. Playing politics. Risking lives. Not ready to lead.
Here was Obama’s response during the debate:
OBAMA: Jim, there are a whole bunch of things we have got to answer. First of all, let’s talk about this troop funding issue because John always brings this up. Senator McCain cut — Senator McCain opposed funding for troops in legislation that had a timetable, because he didn’t believe in a timetable.
I opposed funding a mission that had no timetable, and was open- ended, giving a blank check to George Bush. We had a difference on the timetable. We didn’t have a difference on whether or not we were going to be funding troops.
Not according to his running mate. According to Joe Biden, the move to defund the troops was deliberate — an attempt to interfere with the surge strategy that wound up winning the war. Biden, Obama, and the rest of the Democrats who voted against the funding wanted to force the administration into a precipitous withdrawal that would have left Iraq a failed state. And it also would have defunded Afghanistan, which Obama has called the central front on the war on terror.

(Hat Tip - Hot Air )

Wall Street: A Blow to U.S. Prestige?

Not really.
Compared to any other country, we're a marvel at response and action.


The boulevards of Paris are a pretty reliable place to troll for anti-American sentiment. And sure enough, self-described anarchist Bernard Barbry is happy to weigh in with his opinion of the U.S. financial system. "The banks have brought this on themselves, and they deserve what they get," says Barbry, out for a stroll on a busy street in southwestern Paris. Surprisingly, though, the retired journalist isn't predicting America's downfall. The U.S., he believes, will remain powerful, and the crisis on Wall Street won't affect Washington's influence on world affairs. "I like Americans," he says.

In some areas, Wall Street's comeuppance is a plus: It vindicates Europe's less profitable—but less risky—banking practices. Either because they were more prudent or because regulators tied their hands, the likes of Germany's Deutsche Bank and Spain's Banco Santander look strong. But Deutsche CEO Josef Ackermann isn't writing off his American rivals. "I wouldn't bet against U.S. banks," he says in an e-mail. "It's still unclear who the winners of this crisis will be."....
It's important to remember that in much of the world, crises are met with parliamentary dithering at best, or at worst opaque decision-making by an unaccountable elite. So among foreign bankers and citizens alike there is admiration for the way Treasury Secretary Henry Paulson tossed out decades of Republican free-market dogma and pledged hundreds of billions of dollars to rescue the banking system. "The speed with which America has moved over the past 8 to 10 days is truly phenomenal," says Uday Kotak, vice-chairman at Mumbai's Kotak Mahindra Bank. "I don't think any other country could have done that."  MORE.... 

Friday, September 26, 2008

Puppet Government

Statler & Waldorf come down from their balcony to agree to disagree about why to watch the presidential debate.

See more.... 

Democrat Policy Caused Financial Crisis

What a difference ten years makes.
For those attempting to understand what is the cause of the current financial crisis, and who was to blame, here's the record of the sordid tale's genesis.
It's not due to Wall Street corruption, CEO's salaries, De-Regulation, or the Republicans.  The Democrats, in a ploy to use the power of government to grow their voter registration roles, structured the mortgage market to solidify their minority base.
Here's the historical record....starting in September, 1999.
(thanks to Jack Murray for this tip)

September 30, 1999

Fannie Mae Eases Credit To Aid Mortgage Lending

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
October 22, 1999

A Key Senator Again Blocks the Banking Bill

For the second consecutive year, as legislation to overhaul the nation's financial system looked as though it had a good chance of passing Congress, Senator Phil Gramm, the Texas Republican who heads the Senate Banking Committee, stood in its path and brought the bill to a standstill.
Yesterday's events are reminiscent of those last year when Mr. Gramm single-handedly sent the bill to a quiet death through clever parliamentary maneuvering just as it was poised to gain Senate approval and be enacted into law.
And with events of October 1999 repeating those of October 1998, the issue that caused Mr. Gramm to mount his opposition each time was the same -- his strident opposition to anything seen as remotely expanding the provisions of the Community Reinvestment Act, a law providing for greater bank lending to inner-city neighborhoods.
In taking this stand, Mr. Gramm put himself on a collision course with the White House and Congressional Democrats, who feel that protections are needed to eliminate discrimination in bank lending. And his opposition has caused consternation among many bank lobbyists, who would have rather seen the overall measure passed than to have it hung up over a form of lending they have learned to live with.
''Gramm has been the driving force in this process,'' said Kenneth Guenther, lobbyist for the Independent Bankers Association. ''And the Community Reinvestment Act issue has been almost a quasi-religious issue for him.''
Why Mr. Gramm has such make-it-or-break-it power over such a historic piece of legislation can be explained simply: In a Congress and a city of tough negotiators, he is tougher, more tenacious and, some say, meaner than most. He is willing to hold up an important piece of legislation -- one that he says he supports in principle -- because it does not conform to his conservative world view.
''Phil Gramm is a very, very tough negotiator,'' said Ed Yingling, a lobbyist for the American Bankers Association. ''He tries to maintain as much of his position as long as he can and makes sure he gets maximum leverage at every stage of the process. It's a negotiating tactic that gets mixed reviews, depending on which end you are on. He does not give way easily.''
Others are more blunt about Mr. Gramm's well-demonstrated ability to draw a line in the sand and never retreat: ''Frankly, people are afraid of him,'' another banking lobbyist said.
In mounting this battle, Mr. Gramm is not representing any constituency but himself. Banks, securities firms and insurance companies have long ago ironed out their differences and say it is necessary to back a measure that would allow them to enter each other's businesses and, they say, become more competitive.
And, in principle, Mr. Gramm says he supports this notion -- he just does not like the measure's provisions as it relates to the inner-city lending. For over a year, Mr. Gramm has said that he wants to see a bill passed that would replace the historic Glass-Steagall Act with what would have been called the Gramm-Leach Act, after him and the chairman of the House Banking Committee, Jim Leach, a Republican from Iowa.
In Congress, Mr. Gramm is given high marks for his dedication to promoting the broad concepts of the bill, for his dogged tenacity in negotiating its finer points and for his keen understanding of the most arcane matters of finance. Where many other legislators leave much of the detail work to their staffs, Mr. Gramm is a hands-on, detail-oriented committee chairman.
''He didn't pass anything off to his staff,'' said Mr. Yingling, the banking lobbyist. ''He just worked the bill really hard.''
Mr. Gramm's opposition to mandated inner-city bank lending is both philosophical and personal. He sees Government as being too intrusive in people's lives, and the Community Reinvestment Act as an example of that. And he dislikes the tactics of many advocacy groups -- one group held a demonstration this year on the lawn of his suburban Washington house, trampling on his flower beds and ripping up his tulips. In public hearings, he has called these groups ''extortionists'' and likened the reinvestment act to ''slavery.''
Mr. Gramm, of course, does not see this year's events as an end to financial services overhaul legislation -- just a beginning. A strong supporter of Gov. George W. Bush of Texas, Mr. Gramm said yesterday that he thought that a measure might pass next year. ''We'll have a new bill in 15 months,'' he said, adding that ''I know who the President will be'' then.
He also said, ''I think we could have a great bill with a new administration.''
Perhaps. But in the next Congress many Democratic liberals like Maxine Waters of California and Barney Frank of Massachusetts could rise to greater positions of power on the House Banking Committee, making it tougher for him to prevail.
Even so, no one is counting Mr. Gramm out. Mr. Leach, the House banking committee chairman who has tangled with Mr. Gramm in many closed-door sessions, has a delicately worded description of him. ''A major element of Phil Gramm is that he has philosophical convictions combined with extreme tenacity,'' Mr. Leach said in an interview. ''And those traits have done him well.'' 
Long Insulated, Fannie Mae Feels Political Heat

Published: October 6, 2004

WASHINGTON, Oct. 5 - Like the cherry blossoms in the spring, and loyalty to the Redskins, the power and influence of Fannie Mae are among those aspects of Washington that never seem to change - until now.
With its army of high-powered lobbyists, its board and executive ranks stacked with Washington power brokers of all political stripes, a portfolio of $1 trillion and an apple pie core mission of helping people afford to buy housing, the mortgage giant has long been considered untouchable.

But two weeks ago, an interim report by its regulator that sharply criticized Fannie Mae's accounting practices and the news of inquiries by the Justice Department and the Securities and Exchange Commission have provided its adversaries - and those of Freddie Mac - an opportunity that they have long dreamed of, but doubted would ever come to pass.
"The historical perspective is that Fannie and Freddie were 800-pound gorillas and nobody could take them on," said Wright Andrews, a lobbyist who once worked for FM Policy Focus, a group of Fannie Mae competitors. "With this new issue of Fannie, people are saying, 'Wait a minute, maybe the emperor has no clothes and we need to take a much closer look.' "
On Wednesday, critics on Capitol Hill will have their first opportunity to quiz Fannie Mae's leadership since the Office of Federal Housing Enterprise Oversight released its scathing report on the company. Franklin D. Raines, chief executive and chairman, and J. Timothy Howard, the chief financial officer, will appear before a House Financial Services subcommittee.
"The current situation provides an opportunity for Congress to fix" regulation of Fannie Mae and Freddie Mac, said Ed Rothschild, a lobbyist hired by FM Policy Focus, in an e-mail message to a Democratic Congressional staff member. The message, which Mr. Rothschild confirmed as his, argues that the two companies "have been hiding behind their special privileges, such as exemption from full registration with the S.E.C., while simultaneously manipulating their accounting to maximize profits and reward senior executives."
But others in Washington note that while Fannie Mae may be wounded, its influence should not be underestimated. And Fannie Mae has never been slow when it comes to protecting its domain and striking out at its enemies.
"You can never lose sight that Fannie Mae and Freddie Mac have a greater incentive than any player in Washington to maintain their political influence," said Jonathan Kopell, an assistant professor of politics at the Yale School of Management. "Everything about their business model is subject to change if Congress chooses to change it."
The company derives much of its influence by collecting an A list of Washington's influence peddlers. Its top Congressional lobbyist, Duane Duncan, is a former chief of staff for Representative Richard Baker - the Louisiana Republican and Fannie Mae critic who will preside over Wednesday's hearing. Michele Davis, the company's vice president for regulatory policy, worked in the Treasury Department under Paul H. O'Neill.
Mr. Raines served as budget director under President Clinton; his predecessor, James A. Johnson, is a prominent Democrat who was an adviser to Vice President Walter Mondale and now to the Kerry campaign.
Other former and current officials with the company include Frederic V. Malek, who along with President Bush was part owner of the Texas Rangers baseball team; Robert B. Zoellick, currently the United States trade representative; Jamie Gorelick, a deputy attorney general in the Clinton administration and a member of the 9/11 Commission; and Lawrence M. Small, the secretary of the Smithsonian Institution.
The political heavyweights affiliated with Fannie Mae have not made the company slow footed, however. Once, during the Clinton administration, an official from the Office of Management and Budget mentioned to a senior Treasury Department official that the White House was considering removing an exemption from Fannie Mae and Freddie Mac and asked him not to mention that to anyone.
"Within 15 minutes of the person leaving the office, the phone was ringing off the hook," with callers expressing concern, said the O.M.B. official who, fearing retaliation from Fannie Mae, spoke on condition of anonymity.
At a Christmas party in 1998, a Fannie Mae executive heard a tip that the Clinton administration was thinking of pushing a proposal to end the company's longstanding exemption from paying fees to the S.E.C. when it registers its securities. The company mobilized, recalling executives from Christmas vacations. It also galvanized dozens of mayors, lobbyists from the housing industry and lawmakers, including members of the Congressional Black Caucus, to interrupt their holidays to call the White House and express dismay at the proposal and its effect on low- and middle-income homeowners.
The White House quietly shelved the proposal before it was made public.
Fannie Mae has not been afraid to use its deep pocketbook to undermine competitors and critics. When Charlie Leonard, was helping organize FM Policy Focus in 1999, he recalled getting a phone call from a Fannie Mae executive offering him double the money if he would instead come to work for Fannie Mae.
"It was a very telling experience about how readily they were willing to spend money to prevent any organized opposition," said Mr. Leonard, a partner at Chlopak, Leonard Schechter, a public relations firm that does work with financial backers of FM Policy Focus. Mr. Leonard also recalled that within 48 hours of the group's interviewing two lobbying firms to do work for FM Policy Focus, he received telephone calls informing him that Fannie Mae had hired both.
Besides its own staff of 10 or so lobbyists, Fannie Mae spent $1.2 million for the services of 60 Washington lobbyists at 16 different firms through July, according to Senate filings. Fannie Mae's strengths extend beyond the Beltway.
It maintains a broad base of support in local communities and the political structure that has been groomed through the Fannie Mae Foundation, a private nonprofit organization financed entirely by the mortgage giant, and a network of satellite and 55 partnership offices.
Charities ranging from the Alvin Ailey Dance Company and the Arena Stage in Washington to housing organizations like the Kansas City Neighborhood Alliance and the Los Angeles Housing Services have found themselves showered with largess from the company's philanthropic outlet. The company's lobbyists, Congressional staffers say, can give just about any member of Congress a map of the member's district showing how much Fannie has contributed through the company and the foundation.
Even if Fannie Mae's influence has been weakened by the recent accusations over its accounting, its opponents may not be in a position to capitalize on the company's stumble. Some Capitol Hill staff members say that Fannie Mae's most vocal critics lack the political organization and the coherent message to challenge a company that has always vigorously defended itself.
Indeed, some of Fannie Mae's opponents are hoping that the two most influential critics of the company - Alan Greenspan, chairman of the Federal Reserve, and Treasury Secretary John W. Snow, would help lead the charge. But both men have remained largely silent.
Still, as it faces its new challenges, some of Fannie Mae's most stalwart allies and advocates are distancing themselves from a company tarnished by investigations. The National Association of Home Builders, a $100 million lobbying group that has often aligned its grass-roots membership of 215,000 with Fannie Mae, may be pulling back.
"We're re-evaluating our position on the regulation of Fannie Mae and Freddie Mac," said Jerry Howard, the chief executive of the association, one of the few groups to defeat Fannie Mae in legislative battle. In 1998, it successfully lobbied Congress to increase the limit for the values of the houses that can be insured by the Federal Housing Administration, a change that Fannie Mae opposed.
Representative Barney Frank, the senior Democrat on the House Financial Services Committee who has defended Fannie Mae's mission on low- and middle-income housing, voted to give his committee chairman the power to subpoena the company's records on its accounting practices. The questioning on Wednesday by Mr. Frank, considered one of the most knowledgeable committee members, will be a barometer of the company's political future.
People who have worked with the company say Fannie Mae will inevitably get ahead of the pace of political change, especially if new regulation seems inevitable in the next Congressional session.
"They'll embrace the process, but they'll work behind the scenes," said Michael Basham, a deputy assistant secretary of the Treasury in the first Bush administration, who oversaw the 1992 legislation that regulated Fannie Mae. "It's the classic, 'Don't pay attention to that man behind the screen.' "

Political Memo; For Schumer, A War Chest That Reflects Wall Street

Published: September 8, 2003
New York's senior senator, Charles E. Schumer, was playing up his blue-collar roots the other morning when he surrounded himself in the Capitol with union leaders representing Teamsters, pipe fitters, painters and other workers.
''My cousin is in that union!'' Mr. Schumer, a Democrat from Brooklyn who goes by Chuck, chimed in at one point during the news conference when someone mentioned the communications workers' union.
But when it comes to campaign fund-raising, the senator turns to a decidedly different set of supporters, the kind that would make any Republican swoon: people on Wall Street and other players in the securities and banking industry.
As he prepares to seek re-election next year, Mr. Schumer has amassed a staggering campaign war chest of nearly $17 million, and his top donors include people from firms like Goldman Sachs ($266,340), Morgan Stanley ($181,500), Citigroup Inc. ($169,800) and Bear Stearns ($125,400), just to name a few.
In all, Mr. Schumer took in roughly $6 million from people in Wall Street investment houses, major New York law firms and banks and real estate companies from 1999, the year he took office, to June 30 of this year, according to an analysis by the Center for Responsive Politics, a nonpartisan group that tracks campaign financing.
The money has kept pouring in despite the fact that Mr. Schumer has no Republican challenger and that top New York Republicans have all but abandoned any plans to mount serious opposition next year given his politically dominant position.
Republicans and Democrats say that Mr. Schumer's fund-raising success reflects his aggressive cultivation of donors since arriving in the Senate, where he sits on a powerful committee that shapes legislation affecting New York's financial industry.

The committee member to get the second-highest amount of money from the securities and investment industry in that same period, according to the center, was Senator Jon S. Corzine, a Democrat from New Jersey and a former chairman of Goldman, Sachs & Company, with $963,054. The committee member to receive the third-highest amount from that industry was Senator Christopher J. Dodd, a Democrat from Connecticut, with $806,502.


October 24, 1999

Deal on Bank Bill Was Helped Along By Midnight Talks

At a fund-raiser at Senator Edward M. Kennedy's home here shortly after 6 o'clock on Thursday evening, President Clinton asked one of his closest friends in the Senate, Christopher J. Dodd of Connecticut, how the talks were going with Republicans over the most important financial legislation since the Great Depression.
Mr. Dodd was not optimistic about the bill, which had reached the point of do or die. After four days of bitter polemic between Senator Phil Gramm, the Texas Republican who is chairman of the Senate Banking Committee, and Administration officials, the two sides were stuck over highly symbolic and racially tinged community lending rules that threatened to rip the legislation apart.
The discussions had become so poisoned by Thursday night that Mr. Gramm threatened both the top White House economic adviser, Gene Sperling, and the head of the nation's largest financial services company, Citigroup, that he would pull the plug on the bill, something neither the Administration nor Wall Street wanted.
But Mr. Dodd returned to the Capitol and, with a handful of other Democrats from the Banking Committee, slowly managed to turn Mr. Gramm around in an emotional confrontation in a tiny back office crammed with three dozen lawmakers and aides and Administration officials. There, they agreed to split a critical difference -- giving Mr. Gramm a provision he wanted that would make community lending advocates more accountable, and giving the White House what it wanted by making sure banks provided credit in poor communities before entering new lines of business.....
This account of the roller-coaster ride of the Financial Services Act of 1999 is based on interviews with leading Democratic and Republican lawmakers, senior officials at the White House, the Federal Reserve and the Treasury Department, and industry executives and lobbyists.
Their horse-trading involved several deals. One, over a new regulatory system that may wind up governing the nation's banks for much of the next century, was reached two weeks ago between Mr. Summers and Alan Greenspan, the chairman of the Federal Reserve, after months of debate about their visions of the marketplace. The agreement between Mr. Summers and Mr. Greenspan to share regulatory powers is a centerpiece of the legislation to repeal the Glass-Steagall Act.
In the early morning hours of Oct. 14, Mr. Greenspan and Mr. Summers brokered a complex arrangement. Their agencies would share authority under a regime in which new financial conglomerates would not be able to take broad advantage of the economic subsidies that are provided to federally insured banks.
That resolved a fundamental difference between the House and Senate versions of the legislation and propelled the measure into high gear. Still, by the beginning of last week, there were a few remaining barriers to a deal between Mr. Gramm and the White House.
When President Clinton returned on Monday night from New Jersey, he was informed that there had been no significant progress between Mr. Gramm and the Administration over the Community Reinvestment Act.
''It's going to be a long night of baseball and C.R.A.,'' he told aides.
Detested by Mr. Gramm, the Community Reinvestment Act of 1977 was intended to eradicate discrimination in lending. Mr. Gramm vowed that his bill would never expand the application of the act, and insisted that the new measure should exempt thousands of smaller institutions from its provisions. At the urging of civil rights groups, the Administration insisted that the new law could do nothing to roll back the 1977 act.
In particular, the Administration insisted that any bank interested in expanding into new lines of business must have and maintain a satisfactory record of community lending. For his part, Mr. Gramm was also insisting that community groups be forced to disclose any agreements that they reached with banks to increase their lending to minorities and the disadvantaged.......
The group closeted itself in the tiny office of the House Banking Committee's staff director with top officials from the Treasury and the Fed.
At several points, Mr. Gramm and Representative John J. LaFalce of New York, the ranking Democrat on the House Banking Committee, threatened to walk out. They were cajoled to stay by Representative Jim Leach, the Iowa Republican who headed the conference committee, and Mr. Dodd and Mr. Schumer.
Still, tempers had begun to fray.
When Mr. Schumer got animated, Mr. Gramm pointedly observed, ''I'm an old man, but I still have my hearing.'' That prompted Mr. Dodd to observe: ''He's from Brooklyn. That's how they talk there.''
Finally, they whittled away their differences, ending with an agreement on the last remaining issue, a relatively minor provision that would require community groups to make some public disclosures about financial arrangements they had with the banks they had pressed to make more loans to the underserved.
The final agreement gave Mr. Gramm what he had ultimately sought -- a statement in the legislation that the community groups would have to be more accountable by requiring that they had to disclose their arrangements with banks. Earlier, Mr. Gramm had acquiesced to the Administration's request that no banks with bad community lending records be allowed to enter into the securities or insurance businesses. The two sides also agreed to split the difference on exempting small banks from the Community Reinvestment Act. Small banks with the best lending records would get fewer reviews for compliance with the act by Federal auditors.
Shortly after 2 in the morning, the business of many years was done.
The rest is history, and now here we are on a Friday afternoon with the Senate, House, and President attempting to solve a world-wide financial crisis fathered by Rep. Frank, Sen. Schumer, and Sen. Dodd.  And, having acknowledged no role in the creation of the crisis, they are continuing to insist on the same toxic virus of sub-prime home loan capabilities in the 'bail-out' bill being negotiated.  Where is the Main Street Media reporting this story?

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