RoR: Forum

Post 0

Monday, September 8 - 8:15pm

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This is a great one-liner. But, of course, the purpose of such "nationalizations" is different. Chavez's is simply outright theft. He is like a thief who takes advantage of a burning building to snatch abandonned jewelry. Our government is acting out of perceived "responsibility" however misguided. Its actions are like those of a firefighter who runs into a burning building to save a pet cat. Or better yet - like a police chief who sends in Tom to save Dick and Harry's cat. The result of such "responsibility" is described here

Post 1

Monday, September 8 - 9:35pm

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Ted, we definitely agree that Chavez is just a thief hiding running around in a silly do-gooder costume. But you are too generous by far with our politicians - they are shoveling money out of our bank accounts and the bank account of generations to come to pay to have raging fires put out. And they aren't doing it out of concern for the burning buildings, anyone in the buldings or the building owners, but out of fear we will find out if was the politicians that lit the fires. They are "nationalizing" their mistakes to cover them up.

Post 2

Tuesday, September 9 - 4:58am

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They are "nationalizing" their mistakes to cover them up.
Well put.

Post 3

Tuesday, September 9 - 9:23am

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Of course I am not happy with Fannie or Freddie's existence, nor with the bailout. But you are making an error in moral judgment by saying that "they" are hiding "their" mistakes. "They" and "their" refer to two different sets of people. The current nationalizers are not the original charterers. If you want to talk collectively of the evil of politicians feel free. But it is naive (unsophisticated) feel good "Us-versus-Them"-ism, not carfeful thought.

Post 4

Tuesday, September 9 - 10:52am

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Ted,

I'm not clear on your criticism in the previous post of whom I'm attacking.
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Fannie mae was created by congress with a bill signed into law by the president at the time (FDR) - those are politicians. Don't I get to bitch that a politically created financial monster was pushed out into the economy, with special monopoly privileges granted by law, monitored by government (obviously not very well), subject to hearings, modified again and again by laws, and now we can't say that the politicians are trying to cover up there mistakes? (p.s., I know that FDR is dead - but I earnestly believe that if he were to rise from the grave today, he would join right in with the living in covering up his part in this mess.)

Fannie mae was moved off the federal budget in 1968 to pretend that it was in no way a federal liability (surprise it really is) and to make a false statement about the federal budget. It was henceforth to be called a private corporation (keep that word 'private' in mind as you read on). The Emergency Home Finance Act of 1970 created Freddie Mac.

Just to keep our time-line coherent here are some of the players:

Biden arrives in the senate in 1972. John McCain was elected in 1982. Ron Paul has been has held Congressal office 1976�1977, 1979�1985, and 1997 to the present. Guess how they voted and what their respective positions are issues of monetary policy and government in the mortgage business in what follows.

And, there are others who have been there long enough to be accountable for personal blame: Robert Byrd since 1959, Patrick Leahy since 1975, Orrin Hatch since 1977, Pete Domenici since 1973, Max Baucus siince 1978, Richard Lugar since 1977, Daniel Inouye since 1963, Ted Stevens since 1968 - and those are just from the Senate.

The Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA") of 1989 revised and standardized the regulatory mechanisms for both Fannie Mae and Freddie Mac. Oversite is supposed to be provided by HUD who is supposedly overseen by congress (I'll write a bit about HUD in a few paragraphs).

Fannie mae has been under investigation by congress and the administration since 2000 for slimey accounting practices. Hearings on the real estate boom brought information to light on dangerous credit practices which included those in the secondary mortage market - congress didn't act.

Greenspan repeatedly criticized Fannie mae and Freddy Mac and the lack of oversight. HUD itself has been citicized for corruption all through the 1980s and found itself before congress going back as far as 2000 for accounting problems.

Remembering who was in office at the time take a look at some of the laws relating to HUD that contributed to the problem:
- 1974 - Housing and Urban Development Act, Pub.L. 93-383
- 1976 - Housing and Urban Development Act, Pub.L. 94-375
- 1986 - Tax Reform Act, Pub.L. 99-514
- 1986 - Low-Income Housing Tax Credit
- 1987 - Housing and Urban Development Act, Pub.L. 100-242
- 1987 - McKinney Homeless Assistance Act, Pub.L. 100-77
- 1989 - Department of Housing and Urban Development Reform Act of 1989
- 1990 - National Affordable Housing Act, Pub.L. 101-625
- 1992 - Federal Housing Enterprises Financial Safety and Soundness Act, Pub.L. 102-550

Freddy Mac and Fannie Mae drove much the credit frenzy with their willingness to buy weak mortgages - period. Not until about a year and half ago did they start to crack down on subprime adjustable loan criteria that allowed insolvent idiots to buy mansions with adjustable rate, interest only mortgages with next to nothing down and the fantasy of prices that only go up.

In 2007 Congress passed HR 1427 (Federal Housing Finance Reform Act of 2007) to consolidate oversight for Freddie, Fannie, and the Federal Home Loan Banks into a single regulator.
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Ted, I don't understand why this would constitute what you called, "naive (unsophisticated) feel good "Us-versus-Them"-ism, not carfeful thought."

Post 5

Tuesday, September 9 - 12:29pm

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Lord, man, the point couldn't be more simple. You criticize "them" for burying "their" mistakes. But "them" and "their" refer to two different sets of people. They who bury are current administration members, Bush & Paulson. Their mistakes are the mistakes of those lawmakers and those presidents who instituted Fannie & Freddie in the first place - you list laws from 1974 to 1992. Bush and Paulson were not the creating lawmakers. Hence they are burying someone else's mistakes - not thier own. Reread the last sentence of post #4, and tell me if that sentence is not equivocal.

You have to stop taking criticism so poorly. Sit back and take a deep breath. My point was very narrow, and if you understand it, I can't see why you would dispute it.

Post 6

Tuesday, September 9 - 2:26pm

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Ted,

I almost always enjoy your criticism. And I don't find your 'attacks' to be in least bit ugly or name calling. You maintain civility, style and humor.

But I should be permitted the audacity (where did that word come from?) of asserting a difference. I admitted that FDR is dead. I know that lots of administrators have come and gone. But the burying isn't being done BY Bush and Paulsen, but by Congress (a bill on July 30, 2008 gave regulatory authority over Fannie Mae and Freddie Mac to the Treasury for this exact purpose).

Just curious, why is it I am alleged to be taking criticism poorly but you aren't?

Congress holds the primary oversight responsibilities and they have passed lots of laws effecting Fannie Mae and Freddy Mac and have spent lots of camera time in public hearings on wrong doing involving these organizations and they have been warned publicly by people, including Greenspan.... but they did nothing to fix the problem. And when I say "they" you will note that I took the time to document that the very people running for office today were there for most of the bills and hearings.

If Joe Biden kept voting for these atrocities, shouldn't he be chided for his failure to understand free market prinicples or for not raising a voice when warnings were clear? Does it make any sense to say, "Oh well, FDR is dead - anything he created is an agent of its own now and no one is to blame if it harms us." Freddy Mac and Fannie Mae did not become orphans when FDR died, or when this or that administrator left office, they have been in the custody of the our legislative branch.

What about this little tid-bit (plucked from Wikipedia): "On April 18, 2006 home loan giant Freddie Mac was fined $3.8 million, by far the largest amount ever assessed by the Federal Election Commission, as a result of illegal campaign contributions. Much of the illegal fund raising benefited members of the House Financial Services Committee, a panel whose decisions can affect Freddie Mac. Notably, Freddie Mac held more than 40 fundraisers for House Financial Services Chairman Michael Oxley [a Congressman from 1981 to 2007], R-Ohio."

Remember: No Statute of limitations.
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We are both on the same side in the entire issue - neither of likes either of the agencies, neither of us approve of HUD, current or past monetary policy, or the effects on the economy that we will suffer - but I'm supposedly not thinking carefully and don't take criticism well? :-) I don't think soooooo.