Haste makes waste. Any time 535 people reach an agreement this quickly, you know most of them did not even read it before signing off. That, sports fans, is how we got into this mess to begin with.
This is to say, some members of a Congress — including people like Christopher Dodd, Barney Frank and the Congressional Black Caucus — deliberately snookered other, more sincere folks who were just distracted (or dumb) enough to go along with their scheme to “liberalize” mortgage lending to the point where, over time, it did the Humpty-Dumpty. Watch the video, then read on for comments on how all the King’s horses and all the King’s men are trying to put him back together.
Oh, one more thing. This crisis has little or nothing to do with Gramm-Leach-Bliley. Democrats, looking for a fig leaf to cover themselves, have begun blaming GLB. Their leaf is transparent. Note: In the video, you’ll hear reference to “GSEs”. This is government jargon for Fannie Mae and Freddie Mac, both government-sponsored enterprises or GSEs.
From a starting point of three pages, what appears to be the agreed bank bailout legislation now runs to 109 pages of text that will generate millions if not billions in legal fees over the next five or ten years. For some technical observations, read on:
1. The bill does nothing to address the primary cause of the current mortgage crisis: the deliberate relaxation of lending and disclosure standards superimposed by the Clinton administration on the Community Reinvestment Act, back in 1992. Their widely advertised aim was to make it easier for otherwise non-credit worthy borrowers to “buy” homes anyway. This means that the same cycle of irresponsibility that began in 1992 is merely reset for another round. That is, unless, by some miracle, auditors and accountants can somehow expose the junk before too many people, especially taxpayers, buy.
2. Sections 109 and 110, which seem redundant, will most likely result in a massive transfer of wealth from taxpayers to banks and, indirectly, to financially distressed “homeowner” mortgagors who are incapable of paying off their mortgages as they were originally negotiated and signed. This should make Barney Frank and Maxine Waters happy since this is what they had in mind, back in 2004, when they loudly protested that Franklin Raines was doing a marvelous job running Fannie Mae.
3. The judicial review defects in the original proposal — which granted the Treasury Secretary an unreviewable right to do whatever he chose — appears to be remedied in this draft in only a very limited fashion. Section 119(a)(2)(A) precludes any injunctive relief against actions proposed by the Treasury Secretary under Sections 101, 102, 106 and 109 — the substantive core of the legislation — except where the Secretary’s action violates the U.S. Constitution. That’s bound to be a miniscule target.
Further, for any plaintiff so incredibly fortunate to get an injunction against the Secretary, the injunction is automatically stayed for three days by Section 115(c). The stay is then lifted unless the Secretary seeks a stay from a higher court during those three days.
In other words, the Secretary can escape the impact of an injunction merely by filing for the stay with an appeals court. Practically speaking, this means that there is no way to prevent the Secretary for doing whatever the Secretary chooses to do. Ergo, the judicial review promised in this draft, like so many of the underlying mortgages, is a sham.
4. Section 107 of the bill perpetuates discriminatory minority set asides in the guts of the bailout program. Arguably, the subprime mess itself was created by a huge financial minority set aside requiring banks to issue mortgages on the basis of skin color rather than financial ability to repay mortgages. In this sense, the bill is just more of the same.
5. The executive pay-limitation provisions are baloney. This kind of thing has been tried before, using tax law as the lever and it didn’t work. There’s no indication that this legislation will be any more effective in curtailing greed in the executive suite.
6. For those who believe that the Constitution actually means anything, the bill suffers from significant constitutional defects in relation to congressional delegation of power and the commerce clause. Congress should not, under the Constitution, be able to delegate such sweeping powers to a cabinet officer like the Treasury Secretary. Nor should the federal government be empowered to renegotiate individual mortgage terms as this bill purports to do.
Developing . . .
{ 9 comments… read them below or add one }
I’m getting dizzy watching Meeks dance around while he talks.
Like the clip of Bill Clinton acknowledging that democrats are guilty of resisting the efforts of the Republicans to prevent this mess. Good video…worth watching to the end, despite the dancing of Meeks. ; - )
http://www.infowars.com Has opened my eyes in the last few weeks. Martial Law was declared Saturday in Congress..video on site. Only a few are doing the bill..the debate is only “talking points to the American people to sell them on the bill.”
It failed in the House!!
Call all your Congressmen/women and plead with them to continue. Let them know that if they do stand their ground, that “insider trading” as Alex Jones reported will crash the stocks to force them to vote. Tell them to stand firm, stand firm. If they know what will come, it won’t shock them. We have to weather this storm now, than delay it for a worse death blow to come. Americans are use to escaping suffering. Let us suffer now to preserve ourselves. Our running from hard times will be our undoing.
I dont think the government should bail these people out! If government bails them out, Its OUR money they use. Investment Bankers screwed up! You think the Big GUYS in Washington Mutual, Wacovvia, etc, will lose a dime? NO!
They Loaned Big MONEY to people they knew couldnt pay it back. People need to learn to live without Credit cards, and Loans, etc. If you have the cash, buy it, if you dont, you dont need it.
We are getting a preview of what WILL come with Obama’s election. This is EXACTLY what he means by “Change.” It is income redistribution, big-time.
Welcome to socialist public policy. I. E., All Cubans are equal, meaning equally hungry, equally poor, and equally lacking in freedom. Fidel endorses Obama; wonder why? Wonder what follows the election of someone a lot like Fidel? Ask any Cuban.
Franklin Raines, a Clinton Appointee, was forced to leave his position as CEO of Fannie Mae in 2005 because of fraudulent practices, but with about 90 million dollars in salary and bonuses in hand and in spite of cover given him by Barney Frank and other democrats in the House. He now serves as a key economic advisor to Barrack Obama and is probably in line for a key position in an Obama administration.
The newly published book, “The Case Against Barack Obama,” by David Freddoso paints a grim picture of what an Obama Adminstration might be like based on a detailed and well documented history of his entering politics on Chicago’s South Side. With the patronage and assistance of such people as terrorist William Ayers, convicted developer Tony Rezko, and Illinois State Senate President Emil Jones and the influence and friendship of his racist twenty-year pastor Reverend Jeremiah Wright, there are a lot of sinister individuals with hooks in Barack Obama.
I was fascinated to see Maxine Waters explain how Fannie Mae and Freddie Mac were doing “just fine” because, ta-da! they were dishing out 100% financing. No interest on her part in financial responsibility, either on the part of the agency or on the part of the borrowers. No curiosity shown, by any of these Democrat shysters, as to where that money was coming from.
I can hardly wait to see what Franklin Raines will do, say, as Secretary of the Treasury. Think of the opportunities he’ll have. As one familiar with the politics of Chicago’s south side — it staggers the imagination to think we can expect.