Thursday, June 18, 2009


President Obama’s financial regulation proposals have some areas of merit but mostly miss the point.
He continues to misidentify a key component of the causes of the situation. Obama blamed the financial crisis on "a culture of irresponsibility" from Wall Street… exotic mortgages that hide exploding costs… (confusing) home mortgage disclosures… and complex financial instruments

The missing piece is that all of these things had their source in Congressional action.

The basis of the problem was a complete disregard of prudent lending practices. That was a result of the desire of Congress to see that everyone owned their own home. Since that was impossible under the historic lending rules, Congress, through Fannie Mae, changed the rules. Income, down payment and credit history requirements were abolished and the government guaranteed the loans. So Banks made them. When that wasn’t enough, the same Agencies began to guarantee Adjustable rate and Balloon mortgages that postponed the true payments needed. And Banks made them with the encouragement of the government agencies.

Second, those confusing disclosures are all based upon Congressional requirements. Some Congressional staffer thought up the APR calculation and all the other fine print that is an entrench part of the process. Does anyone really think that the financial institutions would want to do all that stuff if it wasn't required by Congress?

And all of those complex financial instruments were developed based upon federal guaranteed loans. In hindsight, a bad idea but they were guaranteed loans. Where was the guarantee when it was needed?

The thing that the President is missing is that the entity that needs regulation is Congress

Monday, June 15, 2009

Tax Promises

One of the key campaign issues was President Obama’s pledge not to raise taxes on anyone making less than $250,000 a year. We are now finding out the small print. He is sponsoring legislation to tax health benefits as income; he is forcing energy prices higher through cap and trade and alternative energy schemes; he has raised the price of cars through additional environmental requirements; he want "well off" senior citizens to pay more for Medicare and a means test for Social Security is sure to follow; he supports the proposed additional tax on cell phones and there is no apparent end to it. He claims that there were no earmarks; theysimply renamed $750 billion dollars of them. All of it was needed stimulus stuff like the Edward M. Kennedy Senate Institute - which was obviously not an earmark.

Friday, June 5, 2009

Judge not

Judge Sotomayor’s nomination has created several questions that deserve serious review.

Her supports have tried to spin her comment about a wise Latina woman doing a better job than a white guy in any way but what it actually means. The President has even said that he presumes she would restate it. The people who have called it a racist statement have not been contradicted. The statement is indefensible. Her supporters simplify vilified anyone who says the statement is what it is. They have no answer to what would happen to anyone who said that a "wise" Republican white guy would be a better judge than a Latina.

Another statement she has made is in connection to the vetting process prior to her nomination. Apparently, the White House didn’t review her decisions or anything related to her judicial career. They were more concerned with her heritage and racial background. Her admission of this has nothing to do with her qualification. It reflects directly on the White House. Clear instances of racial discrimination are approved of the victims are not members of a class.

The worst but most predictable thing about the whole situation is the position of the media. They are clearly the Administration’s cheerleaders. There are no questions about her comments or her admittedly racially based vetting process - just euphoria. Reporting is dead. Sad.