Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Fannie Mae

Impact of Fed’s Plan to Do a “QE Unwind”

This article appeared online at TheNewAmerican.com on Tuesday, September 19, 2017: 

English: Official picture of Janet Yellen from...

Janet Yellen

What makes tomorrow’s [today’s – Wednesday, September 20] meeting at the Federal Reserve so interesting to market watchers and bond investors is the likelihood that Fed Chair Janet Yellen will provide more details on her plans to begin unwinding the Fed’s balance sheet: how much, how fast, how soon, and what does it all mean? In addition, she is hoping to placate conservatives in Congress who remain unhappy over the Fed’s intervention in the markets in the aftermath of the real estate collapse that triggered the Great Recession.

In June, Yellen outlined some possible scenarios, which included letting some of the bonds on the central bank’s enormous $4.2 trillion balance sheet simply mature without reinvesting the funds in new issues. She suggested the Fed would also start selling off some $10 billion a month of existing securities, and then raise that amount every quarter until it reaches $50 billion a month. This way, by expanding on her plans, and by slowly — very slowly — shrinking the Fed massive balance sheet, she hopes to avoid another “taper tantrum” that bond investors experienced back in 2013 when then-chairman Ben Bernanke first said the Fed should start reducing some of its holdings of U.S. Treasuries and mortgage-backed securities.

If she provides sufficient clarity, and sufficient caution, Yellen might not only start the process without disrupting the market, but also avoid further criticism from congressional critics who think the Fed stepped way out of bounds in starting the whole “quantitative easing” (QE) program in the first place. In that way — again, if she is successful — she will not only cement into place the Fed as a necessary element in the American economy, but show that further “QE” expansions to meet future recessions are a legitimate tool.

Whether she can pull it off is an open question. Keynesian economist Austan Goolsbee, who headed Obama’s Council of Economic Advisors in 2010 and 2011, said, “The final exam, with the grade yet to be determined, is: can the Fed actually get out of this stuff?”

The Fed has been essentially flying blind for years, moving outside not only its mandate (to maximize labor force participation while keeping inflation under control) but its past experience. Said David Blanchflower, a Dartmouth College economist (read: Keynesian) who was on the monetary policy committee of the Bank of England from 2006 to 2009, expressed it perfectly: “We had no idea what we should buy, how much, for how long … [and] there is no idea on the way going out.”

It was all a grand experiment: expand the money supply to keep interest rates so far below market rates that people seeking income would take higher risks — i.e., dividend-paying stocks, real estate ventures, etc. — and home owners would find it easier to buy houses. This was the Keynesian antidote to the economic collapse. Rather than let the economy right itself by itself (see America’s recession and recovery in 1920-1921), Keynesians suffer the hubris to think they know better than the market, and intervened, resulting in the longest, slowest recovery from a recession in American history.

Once the Fed began to embark on its plan to bail out banks and other financial institutions in the wake of the real estate collapse, there was no going back. When the federal government took over Fannie Mae and Freddie Mac — mortgage insurers that were approaching bankruptcy — it found that it needed to buy up billions of their failing mortgages. That explains why $1.7 billion of the Fed’s balance sheet consists of mortgages and mortgage-backed securities.

But when that didn’t work the Fed adopted the strategy of “quantitative easing” (QE) — creating money to spur spending across the economy — which some observers thought would never end.

But it did end, in 2014, and the Fed has been sitting on its massive pile of government and mortgage debt, waiting for the economy to revive enough so it could be offloaded without major economic disruptions.

The Fed won’t be unwinding its entire portfolio. Instead it expects to reduce it by between $800 billion and $1 trillion over the next few years, leaving in place a balance sheet of between $2.5 and $3.2 trillion. This means that the Fed will never again see days when its balance sheet shrinks all the way back to the $900 billion it had prior to the Great Recession.

Its plan should have little impact on short-term rates. Using the 10-year Treasury as the standard, when Yellen’s plan (assuming it begins in October) kicks in, it might boost its yield by perhaps a quarter of a percentage point. This would be the natural result of increasing supply in a market with a fixed demand. When more is supplied, prices will go down. In the bond market that translates into a mini-interest rate hike.

But demand from abroad for U.S. bonds continues to be strong. Yields on 10-year bonds issued by foreign governments such as Japan’s and Germany’s remain far below U.S. 10-year bonds and so any increase in rates here will only make them more attractive to foreign buyers.

In fact, once Yellen has filled in the details, as she is expected to do on Wednesday, investors and market watchers are likely to express a sigh of relief, and continue the Fed-fueled rally in stocks that began in 2009 and that shows little sign of stopping. Diane Swonk, chief economist at DS Economics, agrees: “The start to reducing the Fed’s balance sheet is an action the markets are ready for. The Fed has laid out a roadmap and there is really a sense of relief to finally get it started.”

Donald Trump Officially Names Ben Carson as Head of HUD

This article appeared online at TheNewAmerican.com on Monday, December 5, 2016:  

As expected, on Monday President-elect Donald Trump nominated retired neurosurgeon Ben Carson to head the U.S. Department of Housing and Urban Development (HUD, shown), stating:

I am thrilled to nominate Dr. Ben Carson as our next Secretary of the U.S. Department of Housing and Urban Development. Ben Carson has a brilliant mind and is passionate about strengthening communities and families within those communities.

Armstrong Williams, a Carson confidant, said the nomination is a perfect fit for the nominee: “HUD is a place that has an impact on something that Dr. Carson cares tremendously about: the inner city and urban America. Dr. Carson really has a passion for those issues where [he] could really make a difference.”

Others weren’t so “thrilled” with the nomination.

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Trump’s Treasury Secretary Nominee Wants to Sell Fannie Mae, Freddie Mac

This article appeared online at TheNewAmerican.com on Thursday, December 1, 2016:  

English: The Colonial Revival headquarters of ...

The Colonial Revival headquarters of Fannie Mae

In an interview on FOX Business Network’s Mornings With Maria on Wednesday, Donald Trump’s nominee for treasury secretary, Steve Mnuchin, said one of Trump’s “top 10” priorities was to sell government-sponsored mortgage giants Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC). Referred to colloquially as Fannie Mae and Freddie Mac respectively, Mnuchin told Maria:

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Trump Meets With Former Banker Who Wants to End the Fed

This article appeared online at TheNewAmerican.com on Tuesday, November 29, 2016: 

John Allison BB&T

John Allison

Donald Trump met with former banker John Allison on Monday in a meeting that was largely ignored by the mainstream media. It remains unclear whether Allison was being interviewed for the job of secretary of the Treasury or was just giving Trump some advice from a free market perspective.

Either way, it’s a breath of fresh air in an era where statism and excessive hubris (the idea that mere politicians and economists can guide, even stimulate a $20-trillion-dollar economy with monetary policy) has reigned for decades.

Right after graduating Phi Beta Kappa from the University of North Carolina in 1971,

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Whistleblowers Share Over $170M in Bank of America Settlement

This article first appeared online at TheNewAmerican.com on Monday, December 22, 2014: 

Whistleblower (TV series)

Whistleblower (TV series)

Under the Whistleblower Act — also known as the False Claims Act, or FCA — the details behind 16 lawsuits involving the Bank of America, and that bank’s settlement for nearly $17 billion in August of this year, were kept secret, until Thursday, December 18, when they were “unsealed.” Whistleblowers involved in exposing the frauds by the bank and its Countrywide Financial subsidiary will share more than $170 million, dwarfing other whistleblowers’ payouts, and setting a record for the largest one against a single defendant.

Three individuals and a small New Jersey mortgage company (Mortgage Now) will share the spoils. Mortgage Now will receive $8.5 million for its part in exposing the fraud of issuing high-risk mortgages and calling them safe. Robert Madsen, a former employee with a property appraisal company owned by Bank of America, will get

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Whistleblowers Get Paid, Countrywide Chairman Gets Off

This article first appeared at The McAlvany Intelligence Advisor on Monday, December 22, 2014: 

Last August, Bank of America agreed to pay out nearly $17 billion to settle sixteen lawsuits over making and marketing fraudulent mortgages leading up to the start of the Great Recession, setting a record in the process. But the details, under the False Claims Act, remained sealed until last week. The big news, according to the Wall Street Journal, was just how much four whistleblowers were getting: $170 million plus.

Even after the IRS and lawyers get their share, those four will enjoy a more comfortable lifestyle for a long time. Three individuals and a small New Jersey mortgage company, Mortgage Now, will share the spoils. Mortgage Now will receive

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Fed Transcripts from 2008 Reveal Experts to be Clueless and Confused

English: President Barack Obama confers with F...

President Barack Obama confers with Federal Reserve Chairman Ben Bernanke following their meeting at the White House. (Photo credit: Wikipedia)

Followers of the Fed have carefully analyzed the 1,865 pages of transcripts it released in February of its eight regularly scheduled meetings and six emergency meetings in 2008 and have concluded that these experts were clueless and unaware of the opening economic abyss yawning before them. Even the New York Times was forced to admit, following its review of the documents, that

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Senator Tom Coburn’s “Holier-than-Thou” release of his 2013 “Wastebook”

In Tuesday’s press release Senator Tom Coburn (R-Okla.) announced the publication of his annual “Wastebook” which highlights Congress’ “most egregious spending” while at the same time distancing himself from the big spenders and earmarkers in Congress who provided fodder for his book:

While politicians in Washington spent much of 2013 complaining about sequestration’s impact on domestic programs and our national defense, we still managed to provide benefits to the Fort Hood shooter, study romance novels, help the State Department buy Facebook fans and even help NASA study Congress…

What’s lacking is the common sense and courage in Washington to make those choices – and passage of fiscally-responsible bills – possible.

Coburn then provided some teasers out of the 100 examples in his Wastebook:

The Popular Romance Project has received nearly $1 million from the National Endowment of the Humanities (NEH) since 2010 to “explore the fascinating, often contradictory origins and influences of popular romance as told in novels, films, comics, advice books, songs and internet fan fiction…

The military has destroyed more than 170 million pounds worth of useable vehicles and other military equipment [in Afghanistan] … rather than sell it or ship it back home…

In January, 2013, Congress passed a bill to provide $60.4 billion for [victims of] Hurricane Sandy. However, instead of rushing aid to the people who need it most, state-level officials … spent [$65 million of it] on tourism-related TV ads…

Since NASA is no longer conducting space flights, they have plenty of time and money to fund … the “Green Ninja” in which a man dressed in a Green Ninja costume teaches children about global warming.

While promoting his book recently on CBS News, Coburn tried to distance himself from any responsibility for such “egregious spending” by asking rhetorically: “Where was the adult in the room when this was going on?” Interviewer Nancy Cordes then asked if any of his previous editions of Wastebook had made any impact or had reduced or eliminated any of the more outrageous examples of waste:

Cordes: Have you ever gotten any traction in Congress, where members say “We’re actually going to get rid of this?”

Coburn: No. They don’t pay attention to it. It’s hard work to get rid of junk, it’s hard work to do oversight, it’s hard word to hold agencies accountable. And so what they would rather do is look good at home, get re-elected, and continue to spend money, and that’s Republican and Democrat alike.

What Cordes failed to ask at that moment would have been the perfect follow-on question:

How does your effort, then, and your voting record, separate you from them? Doesn’t this Wastebook of yours cost a lot of taxpayer money? Isn’t this part of your attempt to look good at home while providing cover for your own votes for some of these projects? Isn’t this part of your attempt to continue to get reelected?

Unfortunately there is no record of Cordes asking, or of Coburn’s response. But in July 2007 when Coburn criticized pork-barrel spending by Nebraska Senator Ben Nelson that would benefit Nelson’s son’s employer with millions of dollars of taxpayer money, newspapers in both Nebraska and Oklahoma noted that Coburn himself failed to criticize similar earmarks that he voted for that benefited his own state of Oklahoma.

In May, 2012 Coburn voted for H.R. 2072, to reauthorize the Export-Import Bank with increased lending limits backed by taxpayer monies from $100 billion to $140 billion. According to analysts assessing his vote, the federal government has no constitutional authority to risk taxpayers’ money “to provide loans the private sector considers too risky to provide.” Those analysts added:

Indeed, U.S. government-backed export financing is a form of corporate welfare, and if the Ex-Im Bank goes bust (as happened to Freddie Mac and Fannie Mae), the taxpayers will get stuck holding the bag.

Perhaps Coburn can be forgiven for not knowing that such wasteful spending is part of a plan to reduce America’s influence in the world, first clearly laid out when Coburn was just 10 years old, in 1958 in Indianapolis, Indiana. At a meeting in December, candy maker Robert Welch spoke for three days to some friends about the direction the country was headed, claiming it was part of a plan to “surrender American sovereignty, piece-by-piece and step-by-step, to various international organizations…”. Part one of that plan was:

Greatly expanded government spending for every conceivable means of getting rid of ever larger sums of American money as wastefully as possible.

Other parts included:

Higher and then much higher taxes…

An increasingly unbalanced budget despite the higher taxes…

Greatly increased socialistic controls over every operation of our economy and every activity of our daily lives. This is to be accompanied naturally and automatically by a correspondingly huge increase in the size of our bureaucracy and in both the cost and reach of our domestic government.

Coburn’s report illustrates the success of that plan to which he himself is contributing. The man has feet of clay. He not only is the author of Wastebook but a contributor to it as well.

 

 

 

 

 

JP Morgan Buying its Way Out of Legal Troubles

The announcement that a tentative agreement had been reached between the Department of Justice and JPMorgan (JPM) was surprising only in the size of the penalty the country’s largest bank (and second largest in the world) agreed to pay:

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University of California Study: The National Debt is really $70 Trillion

Professor James Hamilton, economics professor at the University of California, San Diego, just published his best estimate of the federal government’s “off-balance-sheet” liabilities and concludes that the real national debt, popularly estimated to be $16.9 trillion, is in fact more than four times larger: $70.086 trillion. This is because of decisions to

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Home Ownership Rates Continue to Fall; New Plans to Reflate Underway

When the Census Bureau announced on Tuesday that the rate of homeownership in the US continued its nearly 9-year decline, pundits were quick to lay the blame on higher lending requirements, bankers reluctant to make loans, increasing interest rates and a weak economy with slow job growth. In addition, young people are living at home longer due to student loan debt and poor job prospects. As a result, according to the Census Bureau, rental rates are climbing as families needing a place to live have few other options.

Having fallen from the peak of 69 percent reached in 2004, current home ownership has dropped to 65 percent, back to where it was in 1995. Robert Schiller, economics professor at Yale, thinks the rate will continue to fall further.

Home prices are increasing not because of demand by new buyers but because of investors seeing the opportunities in buying distressed properties and turning them into rentals. In some places in the country one out of every two home purchases are paid for in cash.

But something else is afoot: fewer citizens are buying into the notion that home ownership makes economic sense and is equivalent to a savings plan that can be turned into income in later years. As Emily Badger noted at The Atlantic Cities, “We have traditionally considered homeownership to be a sign of the health of the economy. But some of these people who would have been homeowners 10 years ago … have concluded that they would rather rent [today]…”

Some have no doubt been so badly mauled financially in the recession that they have few options. Others have long memories and remember the pain and suffering they endured as a result of deliberate government policies instituted to make homeownership possible to millions of unqualified buyers.

One of those with long memories is Henry Cisneros, a key player in developing the “National Homeownership Strategy” while he was Secretary of Housing and Urban Development (HUD) under Bill Clinton. Unanimously confirmed by the Senate, Cisneros took over at HUD in January, 1993 and by 1997 had boosted the US homeownership rate from 63.7 percent to 65.7 percent. Even after leaving office, his strategies continued blowing up the real estate bubble so that by the time Clinton left office in 2001 home ownership was at 67.5 percent on its way to peaking during the summer and fall of 2004.

In a remarkably candid and forthright article about Cisneros’ role in creating the real estate bubble, The New York Times told the story of a compassionate government bureaucrat with big dreams of providing home ownership to people who couldn’t afford them under current rules. So he changed the rules and invited bankers, realtors and homebuilders to participate in the party guaranteed by taxpayers. In 2008 as he contemplated the damage he had wrought while head of HUD, Cisneros claimed that his intentions were honorable, at least in the beginning, but that his plans to provide low-interest loans and much weaker underwriting requirements through Fannie Mae and Freddie Mac were hijacked by “unscrupulous participants – bankers, brokers, secondary market people. The country is paying for that, and families are hurt because we … did not draw line.” He expressed regret that his efforts had not only lured people into homes they couldn’t afford, but that his policies ultimately ejected them from those homes as a result. He said, “I’ve been waiting for someone to put all the blame on my doorstep.”

His strategy was to lower underwriting standards by allowing Fannie Mae and Freddie Mac to require less documentation and approve higher debt to income levels than normal. He reduced down payment requirements from 20 percent to 10 percent, and then to 5 percent, then down to 3 percent and ultimately to 0 percent. His strategy allowed these unqualified buyers to cover their closing costs with another loan, putting them into a home with truly nothing out of the own pockets. Lenders were happy with the new rules as the US taxpayer stood behind the loans bought by Fannie Mae and Freddie Mac.

Cisneros created a monster.

Once the ball got rolling, it was impossible to stop or even slow down. Said Cisneros:

You think you have a finely tuned instrument that you can use to say: Stop! We’re at 69 percent homeownership. We should go no further. There are people who should remain renters.

But you really are given a sledgehammer and an ax. They are blunt tools.

I’m not sure you can regulate when we’re talking about an entire nation of 300 million people and this behavior becomes viral.

Cisneros drank his own Kool-Aid. He joined with a major homebuilder to develop a housing project in San Antonio, Texas which made him wealthy but which turned sour during the collapse.

Those lessons are about to be learned again as there are new efforts to reflate the ownership bubble. Under the Dodd-Frank Act there’s something called the Qualified Mortgage Rule (QMR) which requires lenders to keep part of the loans they make in their own portfolios – they must have “skin in the game” to reduce the chances of another bubble. But more than 50 organizations tied to the real estate industry are advocating a softening of that rule, putting more government money into the market, with less risk to the lenders. One of those supporting such softening is Sarah Rosen Wartell, president of the Urban Institute, who sounds an awful lot like Cisneros:

I’m not suggesting indiscriminate access to home ownership, but there are many borrowers who are capable of demonstrating the capacity to pay…

[They include] those who had a job loss or foreclosure, in many cases through no fault of their own [and a result are] being shut out of a rising market.

Gary Thomas, the president of the National Association of Homebuilders, expressed his delight at the softening of the rules:

If what we’re heard about the [weakening of] the proposed QMR rule is true, the we are very pleased that the agencies are moving towards a broad definition that will benefit the American people by ensuring access to safe, affordable options for buying a home.

And then of course there’s the inevitable college professor who hasn’t learned from history, or from Cisneros. Christopher Mayer, professor of real estate at Columbia Business School, exulted:

Having a path that people can become a homeowner is an important path. And it’s really important for middle to lower-income folks who have a hard time saving…

At present efforts to reflate the real estate bubble through relaxing underwriting requirements and low-interest loans don’t appear to be working very well. But Washington has a mission where past experience and lessons and pain and hardship don’t matter. The Cisneros mentality remains alive and well in Foggy Bottom.

 

 

 

3 percent down payment mortgages are back

You probably saw it on the news last night: Fannie Mae turned a profit last quarter, the first profit since the real estate bubble burst in 2007. Yahoo explains why:

Lenders are increasingly approving

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An informed Canadian’s perspective on our Great Recession

Once in a while it takes a foreign perspective – a view from abroad (or at least across the border) – to explain how things happened. Pierre Poilievre is a Canadian politician who spoke to his colleagues about what happened in the US and how to avoid doing the same thing there.

First

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Mark Zandi’s Credibility is Seriously Damaged

Mark Zandi

Mark Zandi (Photo credit: New America Foundation)

Mark Zandi is an establishment economist who is highly regarded and often quoted with reverence by others in the media. I’ve been known to quote him from time to time when he has something worthwhile to say. He’s a co-founder of Moody’s Economy.com, which is part of Moody’s Analytics, which in turn is owned by the credit rating company, Moody’s Corporation.

But his latest book reveals a fatal flaw. He made an error so glaring that it not only exposed his statist worldview but damaged his credibility significantly because of it.

Garett Jones reviewed his Paying the Price, over which people like Alice Rivlin of the Brookings Institution positively gushed. Wrote Rivlin:

One of our most insightful economists examines the extraordinary actions the Federal Reserve, the Treasury, and other authorities took to cope with the economic catastrophe that followed the financial crash of 2008. A readable, balanced account of what they did, why they did it, and how well it worked out–so far.

Jones wasn’t as impressed:

There are plenty of areas where Zandi tells only part of the story; it’s his book and he’s welcome to his angle. But his dismissal of Fannie’s and Freddie’s role in the housing bubble cries out for exposure.

Zandi uses incomplete data and then draws the wrong conclusion from it:

His discussion of the government-sponsored enterprises features a graph showing that the “nongovernment” share of subprime “mortgage originations” rose during the bubble years. From this he concludes that the private sector, not Fannie and Freddie, deserves the blame for the subprime bubble.

It’s that nasty, private capitalist, laissez-faire greedy runaway system that caused the Great Recession. This is the statist’s primary meme in

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Mortgage Re-Defaults Soaring

Mortgage

(Photo credit: 401(K) 2012)

This headline makes nothing but sense: “Modified-Mortgage Defaults Soar 24%…”. Of course they will default…again. What has changed? You loan a deadbeat more money, that’s more money you’re not going to get back.

That’s not to characterize everyone who defaults on a mortgage as a deadbeat. I’m referring to those who received loans to buy homes that they never should have purchased in the first place because their previous credit was so bad. But in Clinton’s rush to put everyone into a home, even if they couldn’t afford it, he (with help from his friends) created a bubble.

That bubble burst in 2007, and the Fed has been trying to reinflate that bubble ever since. One of the ways is by forcing its banks to re-finance those deadbeats in order to get the bad loans off their books. It now is obvious that such an effort failed miserably. And it is likely to

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Another Obama Lie: “Trickle Down” Caused the Great Recession

Jonah Goldberg

Jonah Goldberg (Photo credit: Gage Skidmore)

Jonah Goldberg does a pretty good job in neutralizing Obama’s claim that tax cuts and the free market caused the Great Recession. Obama refers to it incessantly:

“Now Gov. Romney believes that with even bigger tax cuts for the wealthy, and fewer regulations on Wall Street, all of us will prosper. In other words, he’d double down on the same trickle-down policies that led to the crisis in the first place.” — President Obama, in an ad released Sept. 27.

As Goldberg notes, Obama uses it because it “resonates” with the voters – the ignoranti, I call them – who have not clue what he’s talking about, except that someone in the Romney camp is to blame.

Goldberg tries to explain why it’s a lie:

[Glenn Kessler, the “fact checker” at the Washington Post]  found that the Obama campaign has virtually no citations to back up the claim. The supporting material for the ad quoted above cites a single column by the Post’s liberal blogger, Ezra Klein, who told Kessler: “I am absolutely not saying the Bush tax cuts led to the financial crisis. To my knowledge, there’s no evidence of that.”

So, surprise, surprise, the Obama campaign is telling a lie over and over again, because it “resonates,” not because

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A Former Fed Official Goes Rogue

CATO – The Fed’s New Round of Quantitative Easing

By introducing another program to buy MBSs [mortgage-backed securities], to the tune of $40 billion per month, the FOMC [Federal Open Market Committee, headed by Fed Chairman Bernanke] is supporting the long-standing federal policy of special aid to housing, real estate and mortgage interests.

These federal policies were the largest single contributor to the financial crisis. Why would the Federal Reserve want to encourage continuation of these federal policies?

Modern-day meeting of the Federal Open Market ...

Modern-day meeting of the Federal Open Market Committee at the Eccles Building, Washington, D.C. (Photo credit: Wikipedia)

My, my, the landscape does look a little different from the outside, doesn’t it, Mr. Poole?

He is about my age. He attended Swarthmore (I attended Cornell) and received a BA degree in 1959 (I got mine in 1963). He got his MBA from the University of Chicago in 1963 (I got mine in 1964, also from Cornell), and then went on to get his PhD in economics at the University of Chicago. (I didn’t. I went to work in the private sector.)

He started his career in government by working for the Federal Reserve’s Board of Governors from 1964 to 1974. Then he joined the faculty at Brown University, chairing the economics department there.

Fast forward: in 1998 he served as CEO of the Federal Reserve Bank of St. Louis, and left in 2008, and now is a Senior Fellow at Cato(!).

Somewhere along the way he got religion. I have great respect for Cato and they wouldn’t hire a fool. Nor would they bring in a Keynesian to undermine their efforts to expose that fraud unless he was an escapee from the reservation.

But listen to what Poole said:

The Federal Reserve says that it is apolitical but this decision is directly supportive of continuation of the current status of Fannie Mae and Freddie Mac. This action is not monetary policy but fiscal policy, extending credit to a favored industry. This policy is crony capitalism, whether practiced by the federal government or by the Federal Reserve.

This is perfect: “crony capitalism” – “extending credit to a favored industry” – “not monetary policy but fiscal policy.” Amazing!

My questions for Mr. Poole: how long did it take you to overcome your Keynesian mindset and enter the real world? Are you a “recovering Keynesian?” Are you just an opportunist? When and how did you see the light? Is there hope for others still on the reservation?

I’d sure like to know.

How Congressman Edolphus Towns Gamed the System

Ed towns

Ed towns (Photo credit: Wikipedia)

When Chairman Darrell Issa’s House Committee on Oversight and Government Reform was finally able to wade through some 120,000 pages of documents pertaining to Countrywide Mortgage’s special VIP loan program, it came up with some surprising results: the former chairman of that same committee, Representative Edolphus Towns, (D-N.Y.) was on the list of those receiving special treatment. That may have explained why the committee had so much trouble in obtaining those documents in the first place: Towns stalled in issuing the initial subpoena.

In the report, Issa noted that the subpoena was issued only “after several months of resistance” from Towns, adding in a statement to the Associated Press on August 22 that “it was a long fight to expose how Countrywide used its VIP program to advance its business and policy goals.”

Investigative journalist Larry Margasak, who has been following the investigation from the beginning, explained that Towns not only had little interest in exposing his own “hand in the till,” he also wanted to keep his own committee from

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PBGC, Another Government Agency, is Under Water

Logo of the United States Pension Benefit Guar...

When the Pension Benefit Guaranty Corporation (PBGC)’s president, Josh Gotbaum, announced that the bankruptcy of AMR (the parent company of American Airlines) wouldn’t impose additional demands on PBGC’s already flimsy financial statement, his relief was nearly audible:

It is great progress and good news that American recognizes that can reorganize successfully and preserve its employees’ pension plans.

We’re also glad the company is willing to work with us to preserve their pilots’ plan too.

Flimsy doesn’t describe adequately the condition of PBGC’s financial statement. According to its annual report for 2011 it already has more than it can handle. Designed as a backstop for failing pension plans back in 1974, SBGC now has promised more than 1.5 million retired and soon-to-be-retired pensioners $107 billion as a result of pension plans that were underfunded or were the residue of company bankruptcies. Unfortunately SBGC only has $81 billion in the bank, leaving the agency with its worst deficit in 37 years: $26 billion. If the AMR bankruptcy had required PBGC to step to the plate to rescue its plans, CBGC’s deficit would have

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Eric Fehrnstrom is Behind Romney Campaign’s Tactics

Romney

Eric Fehrnstrom joined Republican presidential candidate Mitt Romney’s campaign in 2002 when he was running for governor of Massachusetts. Today he is not only the most experienced member of Romney’s current staff, he is also the one closest to the candidate.

Fehrnstrom is usually referred to as a “Romney spokesman” or “strategist” while Romney himself refers to him as his “communications director,” but those close to the campaign call him Romney’s “consigliere”—an intimate counselor or advisor—whose job is not only to give advice and counsel to his patron, but to shield him from attacks and present him as something different than what he is: a mild-mannered patient man with little experience or interest in street fighting. That’s where Fehrnstrom comes in.

Before getting the call from Romney in 2002 Fehrnstrom was a reporter working the police beat for the yellow journal paper owned by Rupert Murdoch, the Boston Herald. When he showed some talent for going for the jugular in local politics, he moved into political reporting where, as his mentor at the paper Howie Car put it: “The Herald was like the schoolyard bully. We were all about finding people and kicking them when they were down. And then we’d laugh about it.”

Ben Coes, Romney’s campaign manager in 2002 said: 

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann