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Live Analysis of President Obama’s Health Care Speech to Congress

September 9, 2009

I know it’s been a while since I’ve done a blog post (other than the one I did yesterday), but I figured this was an important issue to talk about, and I’ll probably be writing a column on health care sometime this week, so this will help me get some ideas down a little early.

President Obama is about to give  a speech to a joint session of Congress, and I’ll be giving my live analysis of his speech.  And this is live, so excuse any typos – I’m not always great at typing quickly.

Speaker of the House Nancy Pelosi has just gaveled the session into order, so we’ll begin in about 10 minutes here.

The President’s speech is expected to last about 45 minutes (not including applause), so I’m guessing that it will run close to an hour (maybe a little over) when it’s all done.

Speaker Pelosi has now called the session to order – Vice President Joe Biden by her side.

The Escort Committee is now leaving to follow behind President Obama when he enters the chamber.

Michelle Obama is now arriving.  The Cabinet is now coming into the chamber.

President Obama is now coming into the chamber – and he’s getting a lot of applause (as every President does during these joint sessions).

He’s now up to the podium – Speaker Pelosi is trying to bring the chamber to order.  She is now introducing President Obama.

He’s talking about the last time he spoke here – that it was during the worst economic situation we’ve faced since the Great Depression.  “We are by no means out of the woods … a full recovery is still months away.”  He’s saying that he won’t let up until “those who seek jobs can find them.”

Wow – Hillary Clinton looks out-of-place – she’s wearing this red suit and she’s surrounded by men in black suits.

President Obama is thanking Congress for their help and support in trying to fix America’s economy.  He’s talking about building a future for America, and that health care is central to that future.

“I am not the first President to take up that cause, but I am determined to be the last.”  It’s a nice quote, but there’s always going to have to be reform – things change – nothing will ever be perfect.

He’s talking about Teddy Roosevelt talking about health care reform, and Representative John Dingell (D-MI) introducing a bill every session to reform health care.

Talking about the hardships facing those who are uninsured – not those on welfare, but mostly the middle class.  He’s talking about people being denied insurance because of previous conditions.  “We are the only democracy … the only wealthy nation who allows such hardship for its people.”  But we’re also the democracy who other countries turn to for certain health care needs (such as Canadians needing some quick emergency treatments).

Talking about insurance companies dropping patients in the middle of treatment for bogus reasons such as having acne and not claiming it – and I’ll agree with him here – that’s a problem that SHOULD be addressed.

Talking about insurance premiums going up, and leading to businesses not being able to open/survive because of health care costs.

It’s “placing an unsustainable burden on taxpayers. … We will eventually be spending more on Medicare and Medicaid than every other program combined.”  Again – he’s right here – Medicare/Medicaid costs are getting out of control – it’s just the solution where I disagree with him.

Talking about a single payer system like Canada’s or a plan that individuals should buy their own health care, but both of these are radical shifts that would disrupt the health care system.  He’s saying we should use what works as a template and fix the problems in our current system, rather than switch to a Canadian-style system or a completely individual style system.

He’s now talking about the 5 committees coming up with health care bills in Congress – an amount of reform that has been unprecedented in history – and again – this is a good thing – if we have multiple ideas, we have more to choose from and more discussion going around.

Now he’s talking about opponents to reform using scare tactics and just trying to score political points.  “The time for bickering is over.  The time for games has passed.”  Games and bickering are part of the American political system – it’s a sad fact, but it’s true.  And both parties do it, but getting into a “Well the other party did __________” kind of mentality is bad for America.

“If you already have insurance … nothing in this plan will require you to change what you have. … What this plan will do is make this insurance that you have work better for you.”  It’ll make it illegal for insurance companies to deny you based on a preexisting condition.  And that got a LOT of applause.  It will be illegal for them to drop you when you get sick.

“No one should go broke because they get sick. … Insurance companies will be required … to cover routine check ups … and preventative care. … It saves money and it saves lives.”  And that was all for people who already have insurance.

For those who don’t, this plan will give you an opportunity to get quality insurance.  “We’ll do this by creating a new business exchange.”  Insurance companies will want this because it gives them more customers.

And for those who still can’t afford insurance, tax credits will be provided.  The exchange will take effect in 4 years.

He’s talking about immediate relief for those who get sick before then, citing a plan that Senator McCain proposed during the plan during the 2008 campaign – and Senator McCain just got a huge grin on his face.

He’s saying that some people may not want to pay for insurance, but when they get sick, we wind up paying for their health care when they wind up in the hospital.  “Under my plan, people will be required to carry basic health insurance” just like states require people to have basic auto insurance.

And this is where I disagree with the President.  Personally, I don’t think we should be forcing people to buy insurance; however, I also don’t think that we should then be paying for their hospital visits.  If someone decides not to get insurance, and they get sick, then we shouldn’t be footing the bill – they should just have to pay for treatment themselves or not get it.

Now, moving on to “key controversies that are still out there:”

  • Saying that there won’t be plans to try to kill off the elderly who are sick.
  • No money will go toward illegal immigrants. – and somebody just shouted “Lie!” and Speaker Pelosi gave him a stare of death – whoever it was, that was pretty unprofessional and immature.
  • No money will go toward funding abortions.
  • This will not be a takeover of the entire health care system.

These are all good points, and I’d encourage EVERYBODY to read the bill that finally gets introduced instead of just listening to either the Democrats’ talking points or the Republicans’ talking points.

“Consumers do better when there’s choice and competition.”  And he’s absolutely right about that – but instead of setting up a government program to do this, we should open insurance markets to cross state lines, so that companies can compete nationwide, adding more competition all over the nation.

He’s saying that he doesn’t want to drive insurance companies out of business, just hold them accountable.

He’s saying that he would like a non-profit public option (which that surprised me that he still pushed for that – I figured that he wasn’t going to try to push that tonight).  It would be an option for those who don’t have insurance, and people wouldn’t be forced to chose it.  He estimates that less than 5% of Americans would sign up.  He’s saying that this public option wouldn’t be funded by the government, but would have to be self sufficient.

But what would happen if it stopped being self sufficient?  Would it essentially turn into a Fannie Mae or Freddie Mac?

He’s saying that some are suggesting that the public option only go into effect where insurance companies aren’t competing well, or that we have a private co-op instead.  Saying that he won’t back down from giving a choice to people who can’t afford health care.

And the screen just panned over to the Republican section and they really do not look happy about this.

“Now he’s talking about how we’ll pay for the plan – “I will not sign a plan that adds one dime to our deficit – either now, or in the future. … Period.”  He’s saying that in his plan, there will be a section that will require spending cuts if the means of saving money aren’t there.  He’s now talking about the past administration making a mistake in passing tax cuts that we couldn’t afford as well as the Iraq War.

And while he does have an excellent point with the Iraq War part (which is a whole separate issue), I don’t think that that jab at the Bush Administration is going to help win any Republicans over – and with Senator Kennedy gone, they’re going to need an additional Republican vote in the Senate.  That was a bad strategic move on the President’s part.

Talking about ensuring that Medicare will be there for future generations.  Saying that seniors pay too much out-of-pocket for prescription drugs.  Saying not to pay attention to “scary stories that your benefits will be cut.”  GOP members don’t look happy.  “I will protect Medicare.”

“Making [Medicare] more efficient will [help make] the entire system more efficient.”  Saying that if we reduce waste in Medicare and Medicaid, that will pay for his plan.  Well why don’t we just reduce waste in Medicare and Medicaid anyway!  Why do you need to add one “good” thing to get rid of one bad thing?  Why not just cut waste out of M&M whether or not the other health care reforms pass or not.

Talking about malpractice reform bringing down costs of health care – and all the GOP members stood up and started cheering – even Biden stood up for that one.  Saying that we need to put safety first and let doctors focus on practicing medicine.  Saying that the Bush Administration wanted to test some of these ideas in individual states, and he likes that plan too.  So now he’s playing to the Republican side a bit – which is good because he’s going to need to do that if he wants this to pass the Senate.

Now talking about it’ll cost $900 billion over the next 10 years, but that’s less than the Iraq War…and I think he said something about the Bush tax cuts – I didn’t catch it.  Whatever it was, the Dems liked it, but the Repubs looked pretty pissed off – Rep. Thad McCotter (R-MI) really didn’t like whatever was said.

Saying he won’t stand by as the special interest groups fight to keep things the way they are.  “I will not accept the status quo as the solution.”  And he’s right – we DO need reform – I just disagree with him on the type of reform we need.

Talking about reforms leading to saving lives.

“We cannot fail … there are too many Americans counting on us to succeed.”

Talking about the late Senator Kennedy (D-MA) on his death bed talking about this year being the year that health care reform will be passed.

Health care reform has been a source of “rigorous and intense debate”.

Obama’s talking about Senators Hatch (R-UT) and McCain (R-AZ) and Grassley (R-IA) working with Senator Kennedy.  That his p”assion was born out of his own experience … having 2 children stricken with cancer.”  He’s saying that “concern for others … is not a partisan” issue.  “We are all in this together, and when fortune turns against us, others are there to give us a helping hand. … Sometimes government has to step in.”

Saying that Republicans and Democrats joined together in 1965 when they created Medicare.

“When any efforts to help people in need are attacked as unAmerican … and we can no longer engage in a civil conversation” … I missed that last part.  Whatever his point was (I’m sure it was something about engaging in civil debate) – I agree here – we need to discuss it, not try to drown one side out.

“I still believe we can act when it’s hard.”  Saying we need to have “civility” and not gridlock the process but make progress.

“I still believe we can do great things, and that here and now we will meet history’s test.  Because that is who we are.  That is our calling.  That is our character.  Thank you, God Bless You, and may God Bless the United States of America.”

Now the Republican response by Representative Charles Boustany (R-LA):

Republicans are ready for reform.  We’ve lost jobs since February.  “Americans want health care reform … [They're saying] it’s time to start over with a … bipartisan plan.”

He’s saying that Obama’s plan will cost Americans more – that even the Congressional Budget Office agrees – it’ll create 53 new bureaus and raise the deficit.  It won’t make the program better for seniors.

“The President [could have] taken government run health care off the table, but he didn’t.”

Americans should be able to get insurance with preexisting conditions.  We should give incentives for healthy choices and preventative care.

“We’re grateful that the President mentioned medical liability reform.”  “Junk lawsuits drive up the cost of medical care.”

We should establish a plan that would enable people to buy insurance across state lines – and that was one of McCain’s big pushes during the ’08 campaign that I really agreed with.

“This Congress can pass meaningful reform soon … working together in a bipartisan way, we can lower the cost of health care.”

Alright – I wasn’t able to catch that much of the response because there weren’t any pauses in that speech, but it was basically the same thing that McCain said during his Presidential campaign.

Overall, I think the President did a moderately good job.  I wish he would’ve gone into detail a little more than he did, and there are some things that I definitely disagree with, but there were some good points:

Malpractice/tort reform is a huge part of the plan that will help lower costs of health care.  Eliminating waste in Medicaid and Medicare is another great thing that we need to do.  Ensuring a way that people can keep their coverage even when they get sick is another necessity that almost everybody agrees with.

I disagree with the public option, and I disagree with forcing people to have some sort of insurance plan.

I wish that he would consider adopting the plan to allow people to cross state borders to purchase health care plans.

Overall, it was a good speech, but I think he took a couple too many jabs at Republicans and the Bush administration (he’s going to need some Republicans’ votes, and that wasn’t a way to win them over).  I also wish he would’ve had more details of his plan, but with only having 45 minutes, that’s hard to do.

I’m not sold on the President’s plan, but I do think there are some good parts of the plan that I’d like to see develop.

We’ll see what’s introduced and what Congress does with the bill(s).

Done Analyzing,

Ranting Republican

Live Analysis of the Final Presidential Debate

October 15, 2008

Alright, we’re moments away from the beginning of the debate.  As always, I’ll be watching CNN, who will have a focus group (undecided voters in Ohio) with a tracking rating of how people like what they’re hearing (broken up by men and women).  WordPress just added an option to add polls, so I’ll see if I can get that working after the debate is over and post a poll about who won.

Tonight’s debate will be moderated by Bob Schieffer (CBS’s Face the Nation).

We’re about 2 minutes away.

Schieffer: Why is your plan better than your opponents?

McCain: Thanks to everybody, my prayers go out to Nancy Reagan.  “Americans are hurting and angry.”  They’re innocent victims of greed.  “They have every reason to be angry.”  We have to have a short term fix and long term fixes.  Short term fix: Fannie and Freddie cause the sub-prime lending situation, that caused the housing market to collapse.  We need to reverse the decline in home ownership.  People need to know that they can stay in there homes.  Let’s take $300 billion of the $750 billion and buy mortgages so that people can stay in their homes.  What about people who could already afford to stay in their homes?  It’ll drive home value down if there are abandoned houses.  I didn’t like the answer (because I’m staunchly against any of the bailout), but it’ll go over well with voters, and the focus group liked it.

Obama: I think this’ll take some time to work itself out.  We need an economic package for the middle class.  The fundamentals of the economy were weak before this crisis (it depends what you’re defining fundamentals of the economy as).  Tax cut for people making less than $200,000.  Buying mortgages could be a bailout to banks, so I disagree with McCain there, but we do need to help homeowners.  Need to fix energy and health care.

McCain: Obama had an encounter with a plumber, Joe (somebody) Wurzelbacher.  Joe wants to buy the business that he’s worked in, and  he looked at Obama’s plan, and he saw that he’d be put in a higher tax bracket, and that’d cause him to not be able to employ people.  Joe, I’ll not only help you buy that business and keep your taxes low, and provide a way for you to provide health care to your employees.  You want to increase people’s taxes, like Joe the plumber’s.  And he’s right there – he’ll kill small businesses if he raises taxes.  The  focus group liked that.

Obama: McCain wants to give tax breaks to some of the wealthiest companies, including oil companies.  I want to give tax cuts to 95% of Americans.  Income tax, capital gains tax.  THAT’S A LIE ABOUT CAPITAL GAINS!!!  He wants to take capital gains taxes back to levels before Clinton lowered them!  I want to give small businesses tax breaks.  He lies here – 11.5% of Americans don’t even PAY income taxes, because they don’t make enough money!

McCain: Obama says, “We need to spread the wealth around.”  “I want Joe the plumber to spread the wealth around.”  Why would you want to raise taxes?

Obama: I want to cut taxes for 95% of Americans.  Not true!  I want to cut taxes for Joe the plumber before he was able to make $250,000.  I want to give families with kids going to college a break.  I’d prefer that nobody pay taxes, but we have to pay for the core of the economy to remain strong.

McCain: Companies will go overseas if we raise our business tax rates.  “Of all times in America, we need to cut taxes and encourage business, not spread the wealth around.”  Great answer – McCain actually did better with the focus group there than McCain, and that surprised me.

Schieffer: Talking about reducing the budget deficit.  Won’t some of the programs you’re proposing have to be trimmed or eliminated?

Obama: If the $750 billion works as it’s supposed to, taxpayers will get their money back.  I have been a strong proponent of pay-as-you-go.  Some of the cuts we’ll need are subsidies to insurance companies.  “It’s just a giveaway.”  I’ll go through the federal budget line-by-line, and eliminate what’s unnecessary.  We need to invest in the American people.  We need to prevent diseases when they’re young, so they won’t spend as much Medicare money.  The same with college – they’ll drive up the economy.  He’s getting very high ratings right now – he’s appealing to the average American people.

McCain: Back to home-ownership.  During the depression, we bought homes and home values went back up.  This was a plan that Senator Clinton proposed.  We need to become energy independent.  I need an across-the-board spending freeze.  I oppose subsidies for ethanol.  Sorry – got interrupted there.  I will veto earmarks.  Senator Obama put in an earmark for a projector in a planetarium in his hometown.

Obama: An across-the-board spending freeze is a hatchet, and we need a scalpel.  Senator McCain talks about earmarks, but they account for 0.5% of the federal budget.  Eliminating them will help, but it won’t solve the problem.  When President Bush came into office, we had a budget surplus, and now we have a deficit.  Pursuing Bush-esque budgets will worsen the situation, and McCain voted for Bush’s budgets, 4 out of 5 times.

McCain: I will give a new direction to this economy.  I’m not President Bush.  If he wanted to oppose him, he should’ve run 4 years ago.  Mayor Bloomberg just put in a spending freeze in New York, so it can be done.  I’ll eliminate spending.  Obama voted for the last 2 budgets that Bush proposed (the only 2 that came up since he’s been in office!).  I have fought against spending and special interest.  When have you stood up to your party?  He’s getting good ratings, and I really think that he’s appealing to American people.

Obama: The first major bill I voted on was against tort reform.  I support charter schools.  I support clean coal technology.  I have a history of reaching across the aisle.  If I mistaken your policies for President Bush’s policies, it’s because on the core economic issues, taxes, spending, etc…, you’ve been a supporter of President Bush.  You’re been against him on stuff like torture, and I commend that, but for the majority, you want 8 more years of the same thing.

McCain: It’s been clear that I’ve disagreed with Bush and my party: climate change, opposition to earmarks, torture, conduct of the War in Iraq, Medicare prescription drugs, HMO patients’ bill of rights.  I have stood up to my party’s leadership.

Schieffer: Both of you promised to take the high road, but both campaigns have turned nasty.

McCain: This has been a very tough campaign.  If Obama had responded to my request to do town hall meetings, like he originally said, the tone of this campaign could’ve been better.  The tone of this campaign has taken a nasty turn.  I apologize for some of the negativity that has come out of my campaign.  I hope OBama will repudiate the remarks made by Congressman John Lewis.  Obama didn’t keep his word about taking public financing.  He’s getting high ratings from men here, but average ratings from women.

Obama: 2/3 of the American people think McCain’s running a negative campaign, versus 1/3 of the American people thinking that of mine.  100% of your ads have been negative (BULL CRAP!).  There’s nothing wrong with having a vigorous debate like we’re having now, but not having town hall meetings doesn’t justify the ads that have come out from your campaign and 527s.  I don’t mind being attacked for 3 weeks, but we can’t afford 4 more years of failed economic policies.  He’s actually getting negative ratings from women, and average from men here.  He’s really attacking McCain during a question about negativity in campaigns, and I think he’s really making himself look bad here.

McCain: If you turn on the television, every other ad was an attack ad on my health care policy, saying that I oppose federal funding for stem cells.  I don’t.  Obama is spending unprecedented amounts of money in negative attack ads on me.  Of course we’re talking about Joe the plumber and restoring jobs to America.  That’s what my campaign is all about.  Again, I didn’t hear a repudiation of Congressman Lewis.

Obama: Lewis, made a statement with what he was troubled with hearing some of the rallies that your running mate was holding.  People were yelling “terrorist” and “kill him,” and your running mate didn’t stop them.  I do think that he gave a good comparison between what’s happening now and the civil right’s movement.  What the Americans want is for us to focus on the challenges that we have now.  We have serious differences on health care.  When people bring up me being with terrorists, that’s not the issues.

McCain: Whenever you have big rallies, you’ll have fringe people, and that’s not appropriate.  But for the majority of people, they’re not saying anything negative.  These people are the most patriotic people in this nation (veterans and wives of veterans).  There’ve been thingsat your rallies that I’m not happy with either.  I have always repudiated out of line statements, and I will continue to do that, but we cannot stand for the things that have been going on.  I haven’t.

Schieffer: Do you take issue with that?

Obama: What I think is most important is that we recognize that in order to solve 2 wars, a financial crisis, creating jobs, then we all need to be able to work together.  “We need to disagree without being disagreeable.  What we can’t do is try to characterize each other as bad people.”

McCain: We need to know the full extent of Obama’s relationships with Ayers and ACORN.  If there’s nothing there, I don’t care about it, but we need to know what all went on there.

Obama: Mr. Ayers has become the centerpiece of McCain’s campaign.  Bill Ayers is a professor in Chicago.  40 years ago, he engaged in despicable acts.  “I have … condemned those acts.”  I served on a school board with him 10 years ago.  “Mr. Ayers is not involved in my campaign … and he will not advise me in the White House.”  ACORN: Apparently, they were paying people to get people registered to vote.  The only thing I did with them was represent them with some thing in Illinois – I didn’t catch it all.  I associate with Warren Buffet on economics.  On foreign policy, it’s Joe Biden or Dick Lugar, or General Jim Jones.  “Those are the people who have shaped my ideas and will be surrounding me in the White House.”

McCain: While you and Ayers were on that board, you gave money to ACORN, and you launched your campaign from Ayers living room.  In 2001, he said he’d wished he’d have bombed more.  We need to know all the details here.  And my (not McCain) view is that with Ayers – it’s no big deal if Obama’s honest.  With ACORN, there are some serious problems there – ACORN has supported Obama, and Obama has supported ACORN, and ACORN has shown to have some serious legal problems.

Schieffer: Why is your running mate better than his?

Obama: He’s been there a while – he knows what he’s doing, especially when it comes to foreign policy.  Biden has never forgotten where he came from.  He fights for the little guy.  He has always been fighting for working families.  “After 8 years of failed policies [we] will have to reprioritize … give tax cuts to small businesses … and individuals who are struggling.”  We need to become energy independent, and make sure that our kids afford can go to college.  Biden has always been on the right side of the issues.

McCain: Palin is a reformer.  She took on the old governor, who was part of her party.  She’s given money back to taxpayers and cut the size of the government.  “She is a reformer through and through, and it’s time that we have that breath of fresh air and sweep out” the old politics of Washington.  “She understand special needs families, and understands that autism is on the rise.”  She has united people all over America, and I’m proud of her.

Schieffer: Is she qualified to be President?

Obama: That’ll be up to the American people to decide.  Her work on special needs kids has been commendable.  He didn’t answer the question!  If we have an across-the-board spending freeze, special needs kids will suffer.

McCain (on Biden): Biden is experienced, but he’s had some bad foreign policy ideas, such as dividing Iraq into different countries, and we’ve seen Iraq become united as one country.  Every time Obama says we need to spend more.  Why can’t we have transparency of these government organizations.

Schieffer: Energy and climate control.  Presidents have said that we need to reduce our dependency on foreign oil.  Give us a number of how much you believe we can reduce foreign oil during your first term.

McCain: We can eliminate our dependence on Middle East countries and Venezuela.  Canadian oil is fine.  We need nuclear power plants, and that’ll be how we eliminate those 2 sources of foreign oil.  We need wind, tide, solar, gas, clean coal.  He’s getting huge ratings, and for good reason – it’s a good energy plan.  Especially the nuclear part!!!!

Obama: In 10 years, we can reduce our dependence so we don’t have to import oil from the Middle East or Venezuela.  “Nothing is more important than us borrowing … money from China and sending it to Venezuela.”  We need to expand domestic production, by telling oil companies, “Use them or lose them” in terms of oil fields being leased here in the U.S.  We need to drill offshore, but that won’t solve the problem.  We need wind, solar, biofuel.  We need efficient cars built here in America, not in Japan.  And he’s got good ideas too, but I WISH he would’ve said he wants nuclear power - nuclear power is safe (we use it on subs) and VERY efficient.  NAFTA didn’t have enforceable environmental agreements, and we should’ve included those.  When it comes to South Korea, we have an agreement with them, and they’re sending more cars here than we are to them.  That’s not free trade.

McCain: “Obama said, ‘We will look at offshore drilling.’  Did you catch that?  ‘Look at.’”  We need to do more than look at it, we need to do it.  AGREED!  Our businesses are paying money into Columbia, but because of previous agreements, they’re getting their goods into here for free.  We need a free trade agreement with Columbia, which Obama has opposed.  Obama hasn’t even travelled down there, and he doesn’t understand Columbia.

Obama: I understand it.  Labor leaders have been persecuted, and we need to stand for human rights.  Workers who are trying to organize for rights shouldn’t be persecuted, and that’s why I supported a free trade agreement with Peru.  When I talked about automakers, they’re getting hammered right now, not only because of gas prices, but with the financial crisis.  People can’t get car loans, so we need to get loan guarantees.  We need more efficient cars and cars of the future.  That’ll help create new jobs.  He’s getting VERY high ratings – he’s maxed out with women, and men are rating him high too.

McCain: Obama doesn’t want a free trade agreement with our best ally in the region, but wants to sit down with Hugo Chavez without preconditions.  Jobs and businesses will be created if we open up those markets.  Obama wants to restrict trade and raise taxes, and the last President who did that was Hoover.  We went from a deep recession to a depression.  I won’t let that happen.

Schieffer: Would you first lower health care costs, instead of providing more health care?

Obama: We need to do both.  My plan will allow you to keep your plan if you have health insurance.  We will lower costs so that cost savings are brought back to you.  If you don’t have insurance, you can buy into the same kind of federal pool that federal employees enjoy.  Insurance companies won’t be able to discriminate against people with preconditions.  Drugs will be lower, and we need to look at preventative care.  This will require more money up front, but will lower costs in the long run.  VERY high ratings at the end there.

McCain: Premiums and copays are going up, and health care costs are going up and inflicting pain on Americans.  We need walk in clinics and community health care centers.  We need nutrition and physical fitness programs in schools to keep kids healthy.  I want to give all American families a $5,000 tax credit.  Under Obama’s plan, if you have employees and they have kids, if you don’t have a health care plan, Obama will fine you.  I still haven’t heard what that fine will be.

Obama: Your fine will be $0.  I exempt small businesses for the requirement that large businesses have to provide health care.  Well, Senator Obama, what do you consider a small business???  The average family is paying higher premiums because of the uninsured.  I’ll give small businesses a 50% credit so they can afford it.  If not, you can buy into the plan I have.  McCain will give you the tax credit, but what will happen to older folks who can’t afford the health care plan?  McCain will tax the health care benefits you have from your employer, the first time in history this has ever happened.  Insurers right now are restricted statewide.  Those rules would be stripped away, and you’d see companies excluding people.

McCain: People like Joe are rich, because Obama said about him that we need to “spread the wealth,” so he’s rich enough that he would be fined.  Under my plan, people will be able to go across the country, giving them the chance to choose their futures.  “Senator Government–Senator Obama wants government to do the job.”  Senator Obama and the Democrats have been in charge the last 2 years, and things have gotten worse.

Obama: Under McCain’s plan, there’s a strong risk that you will lose your health care from your employer.  All I want to do is lower costs.

Schieffer: Could either of you nominate a Supreme Court Justice who disagrees with your view on Roe v. Wade.

McCain: I have never had a litmus test.  I think the Court decided incorrectly there, but I’m a Federalist – it should be left up to the states.  We need to nominate people based on qualifications, not if I agree with their ideology.  There should be no litmus test.  These nominees should be picked based on qualifications, who adhere to the Constitution, not people who legislate from the bench.  (But people who stick to the Constitution would oppose Roe v. Wade).  I’ll have no litmus test.

Obama: I’d agree that we shouldn’t have a litmus test.  Fairness and justice should be given to the American people.  It’s very likely that one of us will be making 1 or more appointments, and Roe v. Wade hangs in the balance.  I support the decision in Roe v. Wade.  I believe that women are in the best position to make this decision.  The Constitution has privacy built into it that shouldn’t be subject to state referendum or popular vote.  “I will look for those judges who have an outstanding record … intellect.”  McCain and I disagreed when the S.C. made it harder for some woman to bring suit for equal pay for women.  The Court said that she waited too long.  If a woman is being treated unfairly, the Court needs to stand up if nobody will.

McCain: You can’t waive the statute of limitation 20 to 30 years.  Senator Obama, as a member of the Illinois State Senate voted in the Judiciary Committee against a law that would provide medical attention to babies who were not successfully aborted (essentially passive infanticide).  Then he voted present on the floor.  He did the same with partial birth abortion.  Men are liking this, but women not so much.

Obama: That’s not true.  There was a bill put forward that said that you need life saving treatment that would undermine Roe v. Wade, but there was a law alreay on the books.  On partial birth abortion: I’m supportive of a ban on late term abortions as long as there’s an exception for the safety of the woman’s life.    Both men and women are rating him a bit above average now.  Surely there is some common ground, when both sides can come together and prevent unintended pregnancies.  Communicate that sex shouldn’t be engaged in carelessly.  Adoption choices should be out there.  Those things are now in the Democratic platform, for the first time ever.

McCain: “Health of the mother” has been stretched to mean almost anything (such as mental health in some cases).  Cindy and I are adoptive parents.  We need to promote adoption and protect the rights of the unborn.

Schieffer: A question about education and national security - I missed what all it was.

Obama: No nation has had a bad economy and a good military.  Education is a huge part of this.  We need better pay for teachers.  We need college to be more affordable.  We’ll offer an exchange of community/military service with money for college.  We can’t do this just in schools.  Parents need to show responsibility too – encourage thirst for knowledge.  And he’s absolutely right here.  It starts at home.  People rated him as high as they could.

McCain: Choice and competition among schools are some of the key elements – New York and New Orleans – where we find bad teachers another line of work.  We need to give parents a choice in sending kids to good schools.  Charter schools are one option.

Schieffer: Should the federal government play a larger role?

Obama: The states need to be in control, but the federal government needs to step in and help struggling local school districts.  Bush did this with No Child Left Behind, “but unfortunately, he left the money behind.”  That was a good line.  McCain and I agree on charter schools.  I think we need to encourage competition between schools.  Bad teachers need to be replaced.  “Our kids need to have the best future.”  We disagree on vouchers, and we disagree on college accessibility.  McCain doesn’t have programs that help college groups.  (That’s because he’ll simplify the tax code to make finding tax credits for college easier to find).

McCain: Vouchers need to be provided, because parents WANT vouchers.  They wanted to chose the schools where their children go (this was in Washington, D.C.).  As far as NCLB, it had its flaws and problems, but it’s the first time we looked at this from the national perspective.  Head Start is a great program.  It’s not doing what it should do, so we need to reform it and fund it.  We can’t just give more money, we need to reform it too.  We need transparency, rewards, and funding.  We’ll find and spend money to find the cause of autism, but to have a situation that the most expensive education is in America means that we also need reform.  We can’t throw money at a problem without reform.  Vouchers work.

Obama: On vouchers in D.C.  The D.C. school system is in terrible shape.  The superintendent there is doing a great job (McCain interjected that she supports vouchers).  There’s not proof that vouchers solve the problem.  We need a President who will tackle this head on.

McCain: Obama said that because there’s not enough vouchers, we shouldn’t have any.  That’s wrong.

Schieffer: Closing statements.

McCain: Thank you.  We need a new direction.  “We cannot be satisfied with what we’ve been doing for the last 8 years.”  I’ve been a reformer.  I’ve opposed my party.  I’ve been a good steward of your tax dollars.  We need to make health care and education affordable to all.  We need to stop this wild spending.  All of these promises made tonight will be made based on whether you trust us or not.  I ask you to examine both my record as well as my proposals for this country.  I’ve put my country first.  “It’s been a great honor of my life, and I’ve been proud to serve, and I hope you’ll give me the opportunity to serve again.  I’ll be honored, and humbled.”

Obama: Washington has been unwilling to address the problems.  We cannot adopt the policies of the last 8 years.  We need change.  You’ve invited me into your homes.  “Our brighter days are still ahead, but we have to invest in the American people.”  College needs to be more affordable.  Wages need to be higher, and we need to grow the middle class.  “It’s not gonna be easy.  It’s not gonna be quick.”  Republicans and Democrats will have to come together.  “If you give me the … honor of being President, I will work tireously and  honorably to ensure the future of our children.”

Bob Schieffer: As my mother would say: “Go vote now.  It’ll make you feel big and strong.”

McCain/Obama: Thank you (to each other).

Alright, overall, I think this was BY FAR the best debate we had.  I commend Bob Schieffer.  He was by far the best moderator we had.

Overall, I think McCain won this won.  This is the first time I’ve called a debate (other than the VP debate, where I called Biden the winner), and I think McCain won.  He was VERY strong toward the beginning.  I think Obama was weak at the beginning, but picked it up toward the end, but overall, I think that McCain was the winner.

Again, I think McCain was definitely stronger here.  I think Obama was too weak.  This was definitely the debate McCain needed, but I’m not sure that it’ll be enough for him to recover.

Done Analyzing,

Ranting Republican
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Live Analysis of the October 7th Presidential Debate

October 7, 2008

Alright, we’re about 3 minutes away from tonight’s Presidential debate.  This one will be held in Belmont University in Nashville, TN.  Tonight, I’ll again be watching CNN and  the focus group will be undecided voters in Ohio (this time it’ll be broken up by men and women).  Tonight’s moderator will be NBC’s Tom Brokaw.

Alright, we’re now starting.

Allen Shaffer: “What’s the fastest solution to bail out” citizens, from economic turmoil?

Obama: We’re in the worst economic crisis since the Great Depression, and many of you are worried.  This is the final burden on the failed economic policies of the last 8 years.  McCain agreed with Bush, and stripped regulations, and now we’re paying for it.  Step 1: Make sure last week’s rescue package succeeds.  Come on Obama, it won’t – the package sucked!  The focus group is liking this.  Step 2: Tax cuts for citizens.  Help people stay in their homes.  Help states create jobs.  Health care.  Have politicians thinking about middle class.  Women really loved him, and men were pretty high up there too.

McCain: Americans are angry and upset and fearful.  I have a plan to fix this problem: energy independence.  Don’t send money to countries who don’t like us.  “Let’s not raise taxes on anybody–today.”  What was that – what was that “today” – that sounded bad.  “We’re gonna have to do something about home values.”  People can’t afford mortgage payments (well, that’s mainly their fault).  Have government buy up bad mortgages so people can pay them off – come on McCain – that plan sucks.  People had been liking him a lot there (more men than women), but it dropped down a bit toward the end.

Brokaw: Who would you appoint to Treasury Secretary?

McCain: Not you Tom.

Brokaw: With good reason.

McCain: Somebody who people can connect with.  Meg Whitman – CEO of some company – oh – Ebay.

Obama: Warren Buffett would be a good person, but there are others as well.  McCain said, “The fundamentals of the economy are sound.”  That’s because they are.  The principles of our economy, and the American work ethic is sound.

Oliver Clark: How will the bailout bill help people?

McCain: “You described bailout, I believe it’s rescue.”  I left my campaign to go back to Washington to make sure that there were protections for the taxpayer – oversight and a way to pay back taxpayers.  Fannie Mae and Freddie Mac are what lit this thing on fire, and many hadn’t heard of them before this crisis.  Democrats in Congress defended what Fannie and Freddie did while they got money from the two.  Obamagot the second highest amount of money from Fannie and Freddie.  Fannie and Freddie started this forest fire.  And he’s not doing to well with the focus group during that, although it came up toward the end.

Obama: Right now, the credit markets are frozen, so small businesses can’t get loans, and can’t make payroll, so they may have to lay people off.  “That’s why we had to take action.”  The biggest problem in this whole thing was the deregulation of the financial system.  I argued for more regulation, but nothing happened.  I never promotedFannie, but McCain’s somebody on his campaign–was something with Fannie Mae (I didn’t catch the whole statement).  The President has to make sure that the homeowners are protected.  He got pretty good ratings there.

Brokaw: Are you saying it’ll get worse before it gets better?

Obama: No, I am confident in the American economy.  Isn’t that what McCain said when he said the fundamentals are strong?  HYPOCRITE!  He got great ratings there.

McCain: It depends on what we do.  If we stabilize it and buy up bad loans, and get rid of special interests in Washington, we can fix our economy.  Our workers are the best in the world.  They’re the fundamental aspect of our economy.  “We gotta give them a chance to do their best. … They’re the innocent bystanders of” this crisis.

Teresa Finch: “How can we trust either of you with our money when both parties got us into this global economic crisis?”

Obama: I understand your crisis and cynicism.  “You’re right, there is a lot of blame to go around. … But remember, when George Bush came into office, we had a surplus … now we have a deficit.”  We’ve almost doubled our deficit.  Nobody is completely innocent.  I’m going to spend money on key issues that we have to work on, health care and energy.  Ratings are really high here.  Invest in college affordability.  “I’m cutting more than I’m spending.”  And men just plummeted in their ratings there.  And what exactly is he planning on cutting?

McCain: “The system in Washington is broken.”  I’ve been a reformer and crossed the aisle, working with Senator Feingold on campaign finance reform.  “The situation today cries out for bipartisanship. … Let’s look at our records as well as our rhetoric.”  Obama is proposing 860 billion dollars of new spending, and voted for every increase of spending that came across the floor.  He voted for nearly a billion dollars in pork barrel spending, including a projector for a planetarium in Illinois.  We need to get Americans working again, and get more jobs for Americans.  We need nuclear power.  We need to stop depending on foreign oil.  Ratings were pretty bad there, but came up at the end.  McCain was right – Obama’s earmarks are just atrocious.

Brokaw: Health care, energy, and entitlement reform – order of priorities?

McCain: Do all 3 at once.  We won’t be able to provide same benefits for future retirees as we are able to today.  I’ve worked across the aisle.  We can work on nuclear power plants, create new jobs.  We need alternative fuels, wind, tide, solar, natural gas, clean coal.  Health care – everyone is struggling to make sure they can afford their premiums.  We can do these all at once, and we have to do them all at once.

Obama: Your list of priorities.  Energy, we have to deal with today.  Gas is expensive, and it may go up.  Some countries like Russia, Venezuela, and Iran are gaining from high oil prices.  In 10 years, we need to be free of foreign oil.  Just like Kennedy said we can go to the moon in 10 years, this can be done.  That was a great analogy!  I missed what he just said.  I want to go line-by-line and eliminate programs in the federal government, and eliminate programs that don’t work, and make others cheaper.  Women are rating him really high now.  Money given to big oil companies, which McCain wants, takes money out of the system.  Don’t mislead, Obama, he wants to give tax cuts to ALL companies, but that doesn’t exclude oil companies.

Brokaw: What are you gonna ask Americans to sacrifice to get out of the depression?

McCain: Talking about defense contracts that were done corruptly.  Get rid of earmarks, and some of those are “good” projects, but they have to be eliminated still.  Except for Defense, Veterans Affairs, and other crucial programs, we will have to have a spending freeze.  Keep everything transparent.  Don’t allow for the government to hide earmarks.

Obama: After September 11, everybody came together, and President Bush did some smart things at the outset.  We need leadership to focus on problems inside and outside of government.  We need to think about how we use energy – we need to tell oil companies to start drilling and invest in clean coal technology.  We need to think of ways that we can conserve energy, and provide incentives to buy American cars that are fuel efficient.  The young people of America want to serve, and we need to increase the Peace Corps.  Ratings were really high there, especially among women.

Brokaw: President Bush last summer said Wall Street got drunk.  Now many think that both Washington and consumers also got drunk.  How do you get people to reduce easy credit and overspending?

Obama: We have to cut spending and increase revenue.  There are $18 billion in earmarks, but McCain wants to give tax cuts to CEOs, and that’s not sharing the burden.  Actually, it IS sharing the burden – it’s sharing it equally.  All of us need to contribute and make sacrifices.  We don’t need an across-the-board freeze.  That way, we only help those who need it.

McCain: Obama wants to raise taxes.  The last President who raised taxes during hard times was Herbert Hoover.  We’ve lost 700,000 jobs in America, but300,000 jobs have been created by small businesses.  Obama’s tax increases will increase taxes on over 50% of small businesses, meaning that jobs will have to be cut.  Obama said he’d fore go his tax increases if the economy was bad.  The economy is bad.  I don’t want to increase tax cuts.  I want to leave tax cuts alone, but give tax credits to people, and give credits for health care.  Let’s get our economy going again.

Obama just tried to keep going and Brokaw shut him up!  YEAH!

Brokaw: Would you tell Congress to do something about Social Security and Medicare within 2 years?

Obama: We won’t solve Social Security and Medicare without solving tax problems.  I want to provide a tax cut for 95% of Americans.  THAT’S A LIE!  ONLY 90% of Americans even make enough money to PAY taxes!  We provide a 50% tax credit to small businesses to buy healthcare.  And the ratings are really high here, again, especially with women.  McCain wants to give tax cuts to large corporations and the rest going to CEOs.  “That is not fair, and it doesn’t work.”  If we reverse the policies of the last 8 years, then we can deal with Social Security and Medicare, because we’ll have a health care plan that works for you.

McCain: “Hey, I’ll answer the question.”  It’s not that tough to fix social security – we have to sit down and fix this together.  Reagan and Tip O’Neill sat down and worked together.  Have a commission come together withrecommendations.  Then have Congress vote up or down, and not fool with it.  Obama has voted to increase taxes and voted against tax cuts.  I have fought to reform government.  “We’ll get our economy going again, and our best days are ahead of us.”

Ingrid Jackson: Congress moved pretty fast with the economic crisis.  How would you make sure they move fast with environmental issues?

McCain: “When we have an issue that we may hand our children a damaged planet–I have disagreed strongly with the Bush Administration.”  We brought this issue to the Senate.  We need nuclear power.  Nuclear power is safe and clean, and creates hundreds of thousands of jobs.  My liberal roommate’s getting mad that the focus group doesn’t like this: “These voters suck.”  And the ratings went up a bit at the end there.

Obama: “It is absolutely critical.”  We need to create a new energy economy.  We need to understand that this is a national security issue.  I favor nuclear power as one component.  OK, the focus group does suck.  They’re now rating him high, and he’s saying basically what McCain said.  The focus group seems kinda biased.  McCain’s problem withenergy is that he hasn’t done anything with alternative fuels.  It’s easy to talk about this stuff, but McCain hasn’t done anything.  McCain talks about drilling, and that’s important, but there’s not enough here at home to “drill our way out of the problem.”

Brokaw: Do we need a Manhattan-like project to deal with the energy crisis?

McCain: We need government involvement initially, and then once it’s started, release it to the private sector.  Obama (this is where he said “that one”) voted for a bill that Bush/Cheney backed with lots of money for oil companies, and I voted against it.

Lindsey Trella: Health care has become a profitable industry.  Should health care be treated as a commodity?

Obama: Health care is a very important issue.  Premiums have doubled over the last 8 years, and co-pays have increased as well.  We have a moral and economic imperative to do something about this.  Here’s what I would do: you can keep your plan if you like it, and we’ll work with your employer to lower your premiums.  We’ll work on making forms electronic, instead of on paper.  You’ll be able to have the same health care plan that Congress gets.  McCain has a different approach.  He’ll give you a $5,000 tax credit, but then tax your employer health care benefits.  He’ll then take out regulations that states have that make sure that you get certain things covered under your insurance.

McCain: You’ve identified one of the major challenges that America faces (directed to the audience member).  We need to impose efficiencies.  There’s a fundamental difference between me and Obama.  Obama will pose mandates.  If you’re a small business owner or parent, and you can’t afford health care for your employees or children, Obama will fine you.  How does that help the situation?  He’s ABSOLUTELY RIGHT!  How will that help you if you can’t afford health care already?  95% of Americans will have increased funds to get health care under my plan, except the really rich people.

Brokaw: Is health care a privilege, right, or responsibility?

McCain: Responsibility.  The government shouldn’t mandate that health care must be provided to all.  There shouldn’t be fines for these companies or parents, and Obama hasn’t said how much the fine is yet.

Obama: Right, for every American.  Talking about his mother dying at 53, and arguing with insurance companies.  He’s really rating high right now.  If you have a plan that you like, you can keep it, I’ll just help lower the premium.  Small businesses won’t have a mandate, they’ll get a 50% tax credit.  We don’t want kids going to ERs for treatable illnesses like asthma.  McCain voted against (something dealing with children and health care).  Crack down on insurance companies cheating their companies.  The problem with going across state lines is that companies will go to states that have laxed laws and cheat their customers, like banks do in Delaware.  DID HE JUST USE HIS RUNNING MATE’S STATE AS A BAD EXAMPLE!!!

Phil Elliot: How will our economic distress affect our position in the standing of the world militarily?

McCain: Much of the criticism of our foreign policy is justified.  We are peace makers and keepers.  We need to know when to go in and when not.  That question can only be answered by someone who understands these things.  We need to prevent the spread of genocide.  He’s rating really high here.  My opposition to sending Marines to Lebanon, and my stance on Bosnia, Russia, and others show that I understand these things.  Obama has been on the wrong side of some of these issues.

Obama: I don’t understand how we invaded Iraq when bin Laden is still free.  McCain said that Iraq would be quick and easy.  We’re spending money in Iraq when Iraq has a surplus.  We need that money more than them, and they have a surplus.  We are the greatest nation in the world, but we can’t maintain our military superiority if our economy continues to decline.  He is right about that.  We need to fundamentally change our foreign policy.

Brokaw: Let’s establish doctrines for using force when national security isn’t at stake, but in humanitarian issues?

Obama: Would’ve stopped Rwanda and the Holocaust.  When we stand idly by as genocide occurs, that diminishes us.  We should intervene when possible, but we can’t be everywhere all the time.  We need to work in concert with our allies, such as in Darfur.  We need to lead the international community.

McCain: If we had withdrawn from Iraq when Obama wanted to, it would have been a travesty.  Genocide is terrible, and we never want it to happen again.  We need a person who understands the limits of our capabilities.  We went into Somalia being peace makers, but had to withdraw in humiliation.  I stood up against Reagan with Lebanon.  We have to be able to beneficially affect the situation, realizing that we’re sending Americans into harm’s way.  I won’t make these decisions lightly.  We can’t have another Holocaust or Rwanda, but we can’t make the situation worse.

Katie Hamm: Should we respect Pakistani sovereignty and allow terrorists to stay there or invade like we did with Cambodia during Vietnam?

Obama: We got distracted from Afghanistan and Al Qaeda, and went to Iraq.  They’re now stronger now than any time since 2001.  They’re plotting to kill Americans right now.  We need to end the war in Iraq, put troops into Afghanistan, eliminate drug trafficking, and change policies with Pakistan.  We need to encourage democracy, and if we have bin Laden in our sights, and Pakistan won’t or can’t take him out, we will take him out.  That’s our number 1 national security priority.

McCain: Obamawants to announce when we’re going to attack Pakistan.  It’ll turn public opinion against us.  We drove Russians out of Afghanistan with Afghani freedom fighters, and that led to bin Laden coming to power.  General Petraeushad a strategy of getting the support of the Pakistani people, and working with them to get Al Qaeda.  Don’t threaten to attack them, but talk with them.

Obama: Nobody called for the invasion of Pakistan, but to strike inside of Pakistan if bin Laden is available to be taken out.  And I agree with Obama here on this one.  McCain IS twisting his words, and not taking bin Laden out when Clinton happened is one of the things that led to September 11th.  Pakistan was not promoting democracy, and it undermined our fight on the war on terrorism.

McCain: I have supported efforts that the U.S. had to go in militarily, but opposed it when it wasn’t necessary.  I was joking with a veteran about Iran (Obama used McCains “Bomb bomb bomb, bomb bomb Iran” quote).  I will act responsibly as I have through my military career.

Brokaw: In Afghanistan, the senior British Commander has said that we’re failing in Afghanistan.  The Afghans need to take over.  We need an acceptable dictator.  What’s your opinion?

Obama: We need to withdraw from Iraq responsibly, and make the Iraqis take control so that we can put more troops into Afghanistan.

McCain: The same overall strategies between Afghansitan and Iraq are the same.  We need more troops, like Obama is saying.  Obama still won’t admit that the surge worked, and that’s the same strategy that we will need in Afghanistan.  Once they feel secure, they can lead normal lives, the same thing that’s happening in Iraq today.  And he’s absolutely right here.

Brokaw: How can we get Russia to behave better without starting another Cold War?

McCain: We won’t have another Cold War.  I warned about Vladimir Putin a long time ago – I saw a “K,” a “G,” and a “B.”  He was wrong with Georgia.  Ukraine is in Russia’s sights now (it’s in the sights of the Somalians too – that whole pirate thing is just weird).  We need to talk, such as in the G8 summits.  Russia must realize that this is not acceptable, and we need economic and diplomatic means to show that that this is not acceptable.  Really high ratings there, and he’s absolutely right.

Obama: Russia will be an issue that we’ll have to deal within the next 4 years.  I agree with Senator McCain on most of that.  We can’t just have diplomacy.  We need to support, financially, former U.S.S.R. countries, such as Georgia, Estonia, Latvia, etc.  Georgia is suffering, and that’s probably what Putin wanted to happen.  Russia was trying to obtain territories, and this is unacceptable.  We need to be proactive, not reactive.  He is right here - we have to be a step or 2 ahead of Russia.  Energy will be key in dealing with Russia, that’s one of the things that happened in Georgia’s situation.

Brokaw: Is Russia under Putin an evil empire?

Obama: No, but their actions are sometimes.

McCain: If I say yes, it reignites the Cold War.  If I say no, it seems like I’m ignoring it.  Energy is a key issue.  My liberal roommate just said that both want to say yes, but it’d be political suicide to do so.

Terry Shirey: If McCain attacks Israel, would you send troops or wait for UN Security Council approval?

McCain: We wouldn’t wait, because Russia and China would pose obstacles to sending troops.  Iran with nukes is a threat to the stability of the Middle East – other countries would acquire nukes.  Obama would meet with them without preconditions.  I would impose tough sanctions, and we can abridge their behavior, and hopefully they’ll abandon this quest for nukes.  We can never allow a second Holocaust to take place.

Obama: We cannot a nuclear Iran.  “It would be a game changer in the region.”  It would threaten Israel – one of our strongest allies.  As well, it would lead to nukes in the hands of terrorists.  I will never take military action off the table.  If we can work more effectively with more other countries to tighten sanctions, we should.  He’s getting rated higher, but said the same things as McCain – the focus group is biased folks.  Neither of them answered the question about if Iran ATTACKED Israel.  When we stopped talkingwith Iran, their nuclear pursuance increased, as did North Korea’s when we stopped talking.

Brokaw: What don’t you know, and how will you learn it?

Obama: It’s the challenges that we don’t expect that consume most of our time.  I wouldn’t be standing here if my country hadn’t given me great opportunity.  The question in this election is will we pass on this same American dream?  That dream has diminished – people are losing health care and going bankrupt.  Kids can’t afford college.  We can’t keep doing the same for the next 8 years.  We need fundamental change.  Really good ratings there!

McCain: I think what I don’t know is what’s gonna happen both here at home and overseas.  What I don’t know is what the expected will be.  I know what it’s like in dark times.  I know what it’s like to fight and hope through dark times.  “I know what it’s like to have your comrades and neighbors reach out to you and put you back in the fight.  That’s what America’s all about.”  It’s been my privilege to serve this country, and I’m asking for an opportunity to serve you more.  I’ve always put my country first.  Good ratings at the end, but not as good as Obama’s.

Brokaw, thank you… “You’re in the way of my script.”  Thank you, and goodnight from Nashville.

Alright, overall, I thnk that both candidates performed pretty poorly.  Overall, I can’t really pick a winner.  I hate doing this again, like I did after the last debate, but I’m going to have to call this one a tie.  McCain wasn’t as strong on foreign policy as he could’ve been (and that’s his strong point).  On economic issues, he had some good plans but he didn’t seem to appeal to the average Joe citizens.  The media has been commenting on McCain calling Obama “That one” when he was talking about Obama voting for money given to oil companies (and I’ve put it in italics in the text above).  Apparently it caught some people as awkward.  The consensus on CNN was that it was intended as “that one” versus “this one” (meaning “me” from McCain’s stand point).  Sure it was maybe bad wording, but I don’t think it was anything to get worked up about (and again, my liberal roommate agrees here).  Look, politicians use poor choices of words all the time.  I’m not saying McCain should’ve said it, but it’s nothing that people need to complain about.

Also, Obama seemed to get a little overconfident at the end, and he was stuttery at times.

Both candidates wanted to violate the rules of the debate, and just keep talking.  I think Brokaw needed to do a better job of moderating.  Instead of just saying, “You didn’t stop when the red light turned on,” he should’ve said, “Your time is up.”

At some points, some of McCain’s humor was just sucky (kinda like my fathers at times – he’ll tell these lame jokes when he’s doing announcements at church that he’s got this reputation, and people just kinda laugh to humor him, and the fact that he’s tried to tell a joke becomes the joke – it’s not always a bad thing, but it was with McCain).

Again, I do think that this was a tie, and this was one that McCain could not afford to lose.  McCain is going to need a couple small miracles to actually come back from where he’s at now.  I’m not giving up hope, but it’s definitely Obama’s race to lose at this point.

CNN just released a poll – Obama gained favoribility and lost unfavorability, but McCain stayed the same on both.  Overall, those polled thought Obama won (56%-30%).

Done Analyzing,

Ranting Republican
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Analysis of the House Voting Down Yesterday’s Bailout Bill

September 30, 2008

I had hoped to do a post on this yesterday, but I wanted to actually see the bill before I did anything on it.  It took them a while to get the bill language up, and I found out that it was about 110 pages long (it is available here if you’re interested).  Also, here’s the bill that the Senate didn’t vote to pass (it needed 60% to pass).

As I’m sure all of you know, the House voted down yesterday’s bill, H.R. 3997, the “Emergency Economic Stabilization Act of 2008″ 205 (140D/65R) – 228 (95D/133R), with 1 not voting (R).

The following is the summary of the act, courtesy of the Financial Services Committee of the House:

SUMMARY OF THE “EMERGENCY ECONOMIC STABILIZATION ACT OF 2008″

I. Stabilizing the Economy

The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions and making it difficult for working families, small businesses, and other companies to access credit, which is vital to a strong and stable economy. EESA also establishes a program that would allow companies to insure their troubled assets.

Alright, this basically explains the principle that the Representatives who were for the bill were advocating: This is an investment, not a bailout (similar to the Chrysler government loan guarantees of the 1970s and 1980s, where we co-signed on a $1.5 billion loan).  They argue that we will make our money back, and even possibly make a profit (like we did with Chrysler).  Here’s the problem with that thinking: many American people who are in crisis right now are NOT helping the situation.  I gave an example of a woman who simply left her old home and mortgage in the middle of the night and bought a house in the Carolinas (I don’t remember which off the top of my head) the next day, before the credit caught up to her.  There have been stories of people tearing apart houses right before the bank repossesses them, “because the bank is the bad guy” when in actuality, it’s both the bank’s fault for giving a loan to somebody who never should have been able to get one as well as the homeowner’s fault for trying to buy a house that he/she simply couldn’t afford.  It’s a lack of basic family budgeting and spending principles that helped get us into this situation.  Then mortgage companies gave out Adjustable Rate Mortgages to people who NEVER should’ve been able to get one, and people looking to buy homes ignored the first basic principle of fiscal responsibility: don’t buy something you can’t afford!  So, we’re going to buy these mortgages, but that’s not going to stop people from not being able to pay the mortgages.  Instead of banks losing money, it’ll be the government.

Now, on the other hand, it IS unfair for responsible buyers who happened to get a mortgage from the wrong company to have to suffer, and it is THESE instances that I am more willing to accept government intervention, but how the government is to analyze and weed out the good from the bad is quite a problem, considering the massiveness of banks and mortgage companies that have failed or are looking like they will fail.

II. Homeownership Preservation

EESA requires the Treasury to modify troubled loans – many the result of predatory lending practices – wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes.

Now, that last sentence is where the government could lose a lot of money.  When you expand eligibility and increase tools for helping people stay in their homes, you’re saying that these people are getting help to stay in homes that they can’t afford, which means that the government is footing the bill, and that’s money that the government will not see back in its hands a good chunk of the time.

III. Taxpayer Protection

Taxpayers should not be expected to pay for Wall Street’s mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies may experience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program from financial institutions.

This is again, where the “investment” principle comes into the bill.  And this could be good for the government, like the bailout of Chrysler was profitable to the government in the 1980s and 1990s.  The part that confuses me is that last sentence – why the President is the one to draft legislation to cover taxpayer losses seems to confuse me, unless that’s their way of knowing that the President will approve of the measure, since he himself drafted it.  I’ll have to look into that a little more to understand what all that would do.

IV. No Windfalls for Executives

Executives who made bad decisions should not be allowed to dump their bad assets on the government, and then walk away with millions of dollars in bonuses. In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits “golden parachutes” and requires that unearned bonuses be returned.

If these executives cared about their companies, most of them just would stop taking pay.  I guarantee you that if I were the CEO of AIG, and if I were set for life, I wouldn’t take another pay check until the company was back on track.

V. Strong Oversight

Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250 billion immediately, then requires the President to certify that additional funds are needed ($100 billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the use of the funds and the progress in addressing the crisis. EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special inspector general to protect against waste, fraud and abuse [sic]

Good.  Frankly, I don’t trust the Treasury Department after they advocated the Fannie and Freddie bailouts.  I want to know where this money is going, and I want Congressional approval of it (even though I don’t support the Democrats in Congress, the more people that have to approve where the money goes, the better).

So, that’s the summary, and here’s the section-by-section analysis of the bill, basically the summary with details, also courtesy of the Financial Services Committee:

 SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short Title.

“Emergency Economic Stabilization Act of 2008.”

Section 2. Purposes.

Provides authority to the Treasury Secretary to restore liquidity and stability to the U.S. financial system and to ensure the economic well-being of Americans.

Section 3. Definitions.

Contains various definitions used under this Act.

Title I. Troubled Assets Relief Program.

Section 101. Purchases of Troubled Assets.

Authorizes the Secretary to establish a Troubled Asset Relief Program (“TARP”) to purchase troubled assets from financial institutions. Establishes an Office of Financial Stability within the Treasury Department to implement the TARP in consultation with the Board of Governors of the Federal Reserve System, the FDIC, the Comptroller of the Currency, the Director of the Office of Thrift Supervision and the Secretary of Housing and Urban Development.

Requires the Treasury Secretary to establish guidelines and policies to carry out the purposes of this Act.

Includes provisions to prevent unjust enrichment by participants of the program.

Like I said above.  The government has to be careful that this really is an investment, because if more companies say, “We can take risks, because we’re too big, so the government will HAVE to bail us out,” then it becomes purely a bailout and a terrible investment that will cost taxpayers billions (if not ultimately trillions, since this bill alone would authorize up to $700 billion).  Personally, I really don’t think the government should be doing this at all, but since some bailout bill will eventually pass, I’d want it filled with as many fiscal conservative principles as possible.

Section 102. Insurance of Troubled Assets.

If the Secretary establishes the TARP program, the Secretary is required to establish a program to guarantee troubled assets of financial institutions.

The Secretary is required to establish risk-based premiums for such guarantees sufficient to cover anticipated claims. The Secretary must report to Congress on the establishment of the guarantee program.

Again – I like the whole reporting to Congress idea.

Section 103. Considerations.

In using authority under this Act, the Treasury Secretary is required to take a number of considerations into account, including the interests of taxpayers, minimizing the impact on the national debt, providing stability to the financial markets, preserving homeownership, the needs of all financial institutions regardless of size or other characteristics, and the needs of local communities. Requires the Secretary to examine the long-term viability of an institution in determining whether to directly purchase assets under the TARP.

Section 104. Financial Stability Oversight Board.

This section establishes the Financial Stability Oversight Board to review and make recommendations regarding the exercise of authority under this Act. In addition, the Board must ensure that the policies implemented by the Secretary protect taxpayers, are in the economic interests of the United States, and are in accordance with this Act.

The Board is comprised of the Chairman of the Board of Governors of the Federal Reserve System, the Secretary of the Treasury, the Director of the Federal Home Finance Agency, the Chairman of the Securities and Exchange Commission and the Secretary of the Department of Housing and Urban Development.

Section 105. Reports.

Monthly Reports: Within 60 days of the first exercise of authority under this Act and every month thereafter, the Secretary is required to report to Congress its activities under TARP, including detailed financial statements.

Tranche Reports: For every $50 billion in assets purchased, the Secretary is required to report to Congress a detailed description of all transactions, a description of the pricing mechanisms used, and justifications for the financial terms of such transactions.

Regulatory Modernization Report: Prior to April 30, 2009, the Secretary is required to submit a report to Congress on the current state of the financial markets, the effectiveness of the financial regulatory system, and to provide any recommendations.

Section 106. Rights; Management; Sale of Troubled Assets; Revenues and Sale Proceeds.

Establishes the right of the Secretary to exercise authorities under this Act at any time. Provides the Secretary with the authority to manage troubled assets, including the ability to determine the terms and conditions associated with the disposition of troubled assets. Requires profits from the sale of troubled assets to be used to pay down the national debt.

Section 107. Contracting Procedures.

Allows the Secretary to waive provisions of the Federal Acquisition Regulation where compelling circumstances make compliance contrary to the public interest. Such waivers must be reported to Congress within 7 days. If provisions related to minority contracting are waived, the Secretary must develop alternate procedures to ensure the inclusion of minority contractors.

Allows the FDIC to be selected as an asset manager for residential mortgage loans and mortgage-backed securities.

Section 108. Conflicts of Interest.

The Secretary is required to issue regulations or guidelines to manage or prohibit conflicts of interest in the administration of the program.

Section 109. Foreclosure Mitigation Efforts.

For mortgages and mortgage-backed securities acquired through TARP, the Secretary must implement a plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs. Allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Requires the Secretary to coordinate with other federal entities that hold troubled assets in order to identify opportunities to modify loans, considering net present value to the taxpayer.

This is the section that is most helpful directly to taxpayers, but will also award people for bad fiscal principles.  If you can’t afford a loan that you took out, it’s not the government’s job to use loan guarantees (essentially co-sign on the loan).  If you lose your house, that’s your own fault.  It’s harsh, but it’s fair.

Section 110. Assistance to Homeowners.

Requires federal entities that hold mortgages and mortgage-backed securities, including the Federal Housing Finance Agency, the FDIC, and the Federal Reserve to develop plans to minimize foreclosures. Requires federal entities to work with servicers to encourage loan modifications, considering net present value to the taxpayer.

Again, the government will lose a lot of money here, and so will banks.  If they’re letting people stay in houses when they can’t afford them, somebody is going to lose money, and it will be both banks and other lending agencies as well as the government.

Section 111. Executive Compensation and Corporate Governance.

Provides that Treasury will promulgate executive compensation rules governing financial institutions that sell it troubled assets. Where Treasury buys assets directly, the institution must observe standards limiting incentives, allowing clawback and prohibiting golden parachutes. When Treasury buys assets at auction, an institution that has sold more than $300 million in assets is subject to additional taxes, including a 20% excise tax on golden parachute payments triggered by events other than retirement, and tax deduction limits for compensation limits above $500,000.

Section 112. Coordination With Foreign Authorities and Central Banks.

Requires the Secretary to coordinate with foreign authorities and central banks to establish programs similar to TARP.

Section 113. Minimization of Long-Term Costs and Maximization of Benefits for Taxpayers.

In order to cover losses and administrative costs, as well as to allow taxpayers to share in equity appreciation, requires that the Treasury receive non-voting warrants from participating financial institutions.

Section 114. Market Transparency.

48-hour Reporting Requirement: The Secretary is required, within 2 business days of exercising authority under this Act, to publicly disclose the details of any transaction.

Good, if we’re going to screw our economy up more, I at least want to understand exactly how it happened.

Section 115. Graduated Authorization to Purchase.

Authorizes the full $700 billion as requested by the Treasury Secretary for implementation of TARP. Allows the Secretary to immediately use up to $250 billion in authority under this Act. Upon a Presidential certification of need, the Secretary may access an additional $100 billion. The final $350 billion may be accessed if the President transmits a written report to Congress requesting such authority. The Secretary may use this additional authority unless within 15 days Congress passes a joint resolution of disapproval which may be considered on an expedited basis.

Again, good – it at least gives us the hope that we won’t use all $700 billion, at least on this bailout.

Section 116. Oversight and Audits.

Requires the Comptroller General of the United States to conduct ongoing oversight of the activities and performance of TARP, and to report every 60 days to Congress. The Comptroller General is required to conduct an annual audit of TARP. In addition, TARP is required to establish and maintain an effective system of internal controls.

Section 117. Study and Report on Margin Authority.

Directs the Comptroller General to conduct a study and report back to Congress on the role in which leverage and sudden deleveraging of financial institutions was a factor behind the current financial crisis.

Section 118. Funding.

Provides for the authorization and appropriation of funds consistent with Section 115.

Section 119. Judicial Review and Related Matters.

Provides standards for judicial review, including injunctive and other relief, to ensure that the actions of the Secretary are not arbitrary, capricious, or not in accordance with law.

Section 120. Termination of Authority.

Provides that the authorities to purchase and guarantee assets terminate on December 31, 2009. The Secretary may extend the authority for an additional year upon certification of need to Congress.

Section 121. Special Inspector General for the Troubled Asset Relief Program.

Establishes the Office of the Special Inspector General for the Troubled Asset Relief Program to conduct, supervise, and coordinate audits and investigations of the actions undertaken by the Secretary under this Act. The Special Inspector General is required to submit a quarterly report to Congress summarizing its activities and the activities of the Secretary under this Act.

Section 122. Increase in the Statutory Limit on the Public Debt.

Raises the debt ceiling from $10.6 trillion to $11.3 trillion.

Section 123. Credit Reform.

Details the manner in which the legislation will be treated for budgetary purposes under the Federal Credit Reform Act.

Section 124. Hope for Homeowners Amendments.

Strengthens the Hope for Homeowners program to increase eligibility and improve the tools available to prevent foreclosures.

I’ve already voiced my opinions on this – this is gonna hurt us.

Section 125. Congressional Oversight Panel.

Establishes a Congressional Oversight Panel to review the state of the financial markets, the regulatory system, and the use of authority under TARP. The panel is required to report to Congress every 30 days and to submit a special report on regulatory reform

prior to January 20, 2009. The panel will consist of 5 outside experts appointed by the House and Senate Minority and Majority leadership.

Section 126. FDIC Enforcement Enhancement.

Prohibits the misuse of the FDIC logo and name to falsely represent that deposits are insured. Strengthens enforcement by appropriate federal banking agencies, and allows the FDIC to take enforcement action against any person or institution where the banking agency has not acted.

This wasn’t prohibited before?  I feel like that should’ve been outlawed back when the FDIC was FORMED!

Section 127. Cooperation With the FBI.

Requires any federal financial regulatory agency to cooperate with the FBI and other law enforcement agencies investigating fraud, misrepresentation, and malfeasance with respect to development, advertising, and sale of financial products.

Again, this needed to be in a bill?

Section 128. Acceleration of Effective Date.

Provides the Federal Reserve with the ability to pay interest on reserves.

Section 129. Disclosures on Exercise of Loan Authority.

Requires the Federal Reserve to provide a detailed report to Congress, in an expedited manner, upon the use of its emergency lending authority under Section 13(3) of the Federal Reserve Act.

Again, if we’re going to kill our economy, at least we know how we did it so we don’t do it again.

Section 130. Technical Corrections.

Makes technical corrections to the Truth in Lending Act.

Section 131. Exchange Stabilization Fund Reimbursement.

Protects the Exchange Stabilization Fund from incurring any losses due to the temporary money market mutual fund guarantee by requiring the program created in this Act to reimburse the Fund. Prohibits any future use of the Fund for any guarantee program for the money market mutual fund industry.

Section 132. Authority to Suspend Mark-to-Market Accounting.

Restates the Securities and Exchange Commission’s authority to suspend the application of Statement Number 157 of the Financial Accounting Standards Board if the SEC determines that it is in the public interest and protects investors.

Section 133. Study on Mark-to-Market Accounting.

Requires the SEC, in consultation with the Federal Reserve and the Treasury, to conduct a study on mark-to-market accounting standards as provided in FAS 157, including its effects on balance sheets, impact on the quality of financial information, and other matters, and to report to Congress within 90 days on its findings.

Section 134. Recoupment.

Requires that in 5 years, the President submit to the Congress a proposal that recoups from the financial industry any projected losses to the taxpayer.

Again, why is the President writing this proposal?  And how do they honestly plan on recouping losses?  How do you get back billions of dollars from the financial industry?  I feel sorry for whoever has to write that proposal.

Section 135. Preservation of Authority.

Clarifies that nothing in this Act shall limit the authority of the Secretary or the Federal Reserve under any other provision of law.

Title II-Budget-Related Provisions

Section 201. Information for Congressional Support Agencies.

Requires that information used by the Treasury Secretary in connection with activities under this Act be made available to CBO and JCT.

Section 202. Reports by the Office of Management and Budget and the Congressional Budget Office.

Requires CBO and OMB to report cost estimates and related information to Congress and the President regarding the authorities that the Secretary of the Treasury has exercised under the Act.

Section 203. Analysis in President’s Budget.

Requires that the President include in his annual budget submission to the Congress certain analyses and estimates relating to costs incurred as a result of the Act; and

Section 204. Emergency Treatment.

Specifies scoring of the Act for purposes of budget enforcement.

Title III-Tax Provisions

Section 301. Gain or Loss From Sale or Exchange of Certain Preferred Stock.

Details certain changes in the tax treatment of losses on the preferred stock of certain GSEs for financial institutions.

Section 302. Special Rules for Tax Treatment of Executive Compensation of Employers Participating in the Troubled Assets Relief Program.

Applies limits on executive compensation and golden parachutes for certain executives of employers who participate in the auction program.

That I agree with.  If we’re bailing out these companies, lets at least waste the money solely on the companies.

Section 303. Extension of Exclusion of Income From Discharge of Qualified Principal Residence Indebtedness.

Extends current law tax forgiveness on the cancellation of mortgage debt.

Alright, so that was the full summary of the bill that FAILED the House yesterday.

I want give you a quote from Representative Ron Paul (R-TX), given during yesterday’s House session:

Mr. PAUL. Madam Speaker, I rise in strong opposition to this bill. This is only going to make the problem that much worse. The problem came about because we spent too much; we borrowed too much, and we printed too much money; we inflated too much, and we overregulated. This is all that this bill is about is more of the same.

So you can’t solve the problem. We are looking at a symptom. We are looking at the collapsing of a market that was unstable. It was unstable because of the way it came about. It came about because of a monopoly control of money and credit by the Federal Reserve System, and that is a natural consequence of what happens when a Federal Reserve System creates too much credit.

Now, there have been a fair number of free market economists around who have predicted this would happen. Yet do we look to them for advice? No. We totally exclude them. We don’t listen to them. We don’t look at them. We look to the people who created the problem, and then we perpetuate the problem.

The most serious mistake that could be made here today is to blame free market capitalism for this problem. This has nothing to do with free market capitalism. This has to do with a managed economy, with an inflationary system, with corporatism, and with a special interest system. It has nothing to do with the failure of free markets and capitalism. Yet we’re resorting now, once again, to promoting more and more government.

Long term, this is disastrous because of everything we’re doing here and because of everything we’ve done for 6 months. We’ve already pumped in $700 billion. Here is another $700 billion. This is going to destroy the dollar. That’s what you should be concerned about. Yes, Wall Street is in trouble. There are a lot of problems, and if we don’t vote for this, there are going to be problems. Believe me: If you destroy the dollar, you’re going to destroy a worldwide economy, and that’s what we’re
on the verge of doing, and it is inevitable, if we continue this, that that’s what’s going to happen. It’s [Page: H10370]
going to be a lot more serious than what we’re dealing with today.

We need to get our house in order. We need more oversight–that is a certainty–but we need oversight of the Federal Reserve System, of the Exchange Stabilization Fund and of the President’s Working Group on Financial Markets. Find out what they’re doing. How much have they been meddling in the market?

What we’re doing today is going to make things much worse.

Pure economic genius from Dr. Paul.

And here’s a quote from Representative Marilyn Musgrave (R-CO):

Mrs. MUSGRAVE. Madam Speaker, I am pleased that the strong opposition to the initial administration proposal has helped to force some very important changes such as the bipartisan oversight board, which is an online database that will allow greater oversight of the Secretary’s actions, but this is still a bailout for Wall Street that will cost the average Colorado household thousands.

I simply cannot stomach transferring that kind of money from the middle class families to a bunch of Wall Street bankers whose avarice and greed put us in this situation in the first place. It’s interesting that, when working families were being crushed by soaring energy prices this summer, Congress went on vacation. Yet, when Wall Street faced the consequences of its actions, we worked around the clock to help them. We should place the same priority on helping Main Street that we place on helping
Wall Street.

And there she expresses what most Americans are expressing: “Why use my money to bail out people and companies who acted irresponsibly?”

A full record of everything said at yesterday’s House session is available on C-Span’s website here (it’s actually pretty cool – I never knew they had that!).

So, again, I am glad that the House voted down this bill.  Hopefully I’ll be able to see the next bill BEFORE there’s a vote on it – I was very disappointed that there was no record of this until today, and even then, so many people were trying to access it that they were killing GovTrack.us and the House websites.

On a side note, here’s a copy of the roll call vote, and I’d like to note that I’m terribly disappointed in Representative Tancredo (R-CO) for voting Aye on this.

Done Ranting,

Ranting Republican
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Live Analysis of the September 26 Presidential Debate on Foreign Policy

September 26, 2008

**My apologies for any typos – I tried to catch all of them, but live blogging a debate is hard, and my keyboard acts up from time to time (especially the space bar), so if you see a typo, just leave a comment and I’ll fix it.**

We’re about a minute out, I’ll be live blogging the whole event.  Jim Lehrer (PBS) is the moderator.  I’ll be watching CNN (it would be FOX, but they weren’t ready on time).

The Ku Klux Klan is in the audience, we’ve heard, but not in robes and not protesting.

First question, “Where do you stand on the financial recovery plan?”

Obama: Thank you to everybody – the usual beginning.  “Worst financial crisis since the great depression. … We have to move swiftly and we have to move wisely.”  Talking about oversight, since it’s a lot of money.  Taxpayers need to be able to get the money back.  Shouldn’t be padding CEO bank accounts.  Talking about trickle down economics not working.  That’s not going to help him win over any Republicans.

McCain: Senator Kennedy is in the hospital.  Thank you to the sponsors, etc.  Talking about seeing Democrats and Republicans sitting down and working together, and the magnitude of the crisis.  Emphasizing that we have to work together, something that Obama didn’t mention – that was good from McCain.  Talking about having options for loans for businesses, not the government taking over those loans.  GOOD – not a pure bailout!  CNN has an audience  reaction, and McCain is getting a pretty good response from the Independents (must be some keypad rating system or something).  Talking about a lot of work to do if this will work.  Eliminate dependence on foreign oil – good.

Lehrer: Do you favor this plan?

Obama: I “haven’t seen the language yet.”  “How did we get in this situation in the first place?”  Talking about him warning 2 years ago that mortgage abuse would lead us down a trail we can’t afford to go down.  “Yes, we have to solve this problem short term, … but … look at how we shredded so many regulations … and that has … to do with an economic philosophy that says regulation is bad.”

Lehrer: “Will you vote for the plan?”

McCain: “Sure.”  Talking about warning about Freddie Mac and Fannie Mae.  Talking about getting flack for calling for resignation of Securities and Exchange Commission.  And the Independents’ rating has skyrocketed.  Republicans increased too.  It was good – him calling for the resignation, and people like that.

Obama: Talking about people struggling before this crisis.  It’s interesting – the Dems are rating Obama higher than the Indies, but the Indies rated McCain higher than the Reps.  Talking about holding ourselves accountable, all the time, talking about nurses and teachers, and politicians not paying attention to them.  Good – he’s appealing to the average Americans here, and that’s who he needs to win over.

McCain: “We have a long way to go.”  Need consolidation of regulatory agencies who failed and let us slip into this crisis.  Talking about the greatness of the American worker, and the Republicans like it, but it’s not that appealing to Independents, but it will appeal to a lot of average Joe Americans, as long as they believe he’s sincere (and the audience must not have).

Lehrer: How do we get out of the crisis?

McCain: Spending control.  And the Reps and Inds, liked it – and this is one of McCain biggest points, and now he’s talking about Senator Tom Coburn (R-OK), a huge anti-earmark politician.  Talking about the DNA testing of bears.  I LOVE McCain saying he’ll veto earmarked bills.  It’s one of his best stances.  He’s talking about Obama asking for earmark spending.  Talking about not being able to rein in spending with a plan like Obama’s.

Obama: The earmark process has been abused.  Lobbyists and special interests introduce these things, often times.  Contrasting the cost of earmarks against tax cuts (by allegedly McCain) for CEOs and big companies.  “Grow the economy for the bottom up.”  Tax cut for 95% of working families.  HOLD IT!  Only 90% of working families even PAY taxes!!!!  Come on Obama, don’t lie.

McCain: Obama suspended those earmarks after he started running for Congress.  YOU TELL ‘EM MCCAIN!  He’s saying that earmarks have tripled in 5 years, even though “it’s only $18 billion” (as pro-earmarkers say).  He was called the Sheriff.  That’s pretty sweet.  As I was saying before, we need to take Coburn’s example and STOP EARMARKS!

Obama: Interrupted McCain (must be kinda less formal).  Talking about priorities, and shipping, and I missed the rest.  Saying he’ll keep us from spending unwisely.  Earmarks alone won’t get us back on track.  The Democrats are loving this, but the Independents, aren’t really liking it.

McCain: Talking about the business tax, that we pay the 2nd highest in the world, 35%.  “I want to cut that business tax.  I want to cut it.”  “It’s a lot more than $18 billion in pork barrel spending.”  And he’s right, it’s SO much more than that, and it’s hidden in so many bills.  The Independents are liking this.  “I want every family to have a $5,000 refundable tax credit” for healthcare.  Double the dependent amount refund for children.

Obama: “Here’s what I can tell America 95% of you will get a tax cut.”  LIAR.  10% don’t even PAY taxes.  And another 5% make over $200,000, and he won’t give them a tax cut.  LIAR!  Saying McCain wants to add an additional tax cut over the loopholes.  Talking about McCain’s health care tax credit.  Saying McCain wants to tax health benefits.  That’s not true.

McCain: Talking about an energy bill with breaks for oil companies, and McCain voted against it, but Obama voted for it.”  Obama tried to interrupt – that just looks tacky when he keeps doing it.  Saying that Obama has shifted on a number of occasions.

Obama: Talking about Obama lying about the oil companies.  “I was opposed to those tax breaks … tried to strip them out.”

Lehrer: “As President … what are you going to have to give up … as a result of having to pay for the financial rescue plan?”

Obama: “Right now, it’s hard to anticipate what the budget is going to look like next year.”  He’s right about that.  “Energy independence.”  Talking about solar, wind, biodiesel here at home.  And the Independents REALLY loved that – highest rating I’ve seen all night.  Fix our healthcare system.  Compete in education – science and technology.  “Make sure our children are keeping pace in math and in science.”  Make college affordable for all.  That’s not even useful.  Not EVERYBODY needs college.  America needs plumbers and other basic labor workers too.

McCain: “No matter what, we have got to cut spending.”  Obama has most liberal rating.  “It’s hard to reach across the aisle from that far to the left.”  Do away with cost-plus contracts.  Talking about defense contracts and needing fixed-cost contracts.  And he’s absolutely right.  One of the big areas we need to save money is in defense contracts.  Talking about fixing a contract with Boeing, and people ending up in prison because of it, but hte Independents didn’t like that too much.

Lehrer: Neither of you are really going to have big changes?

Obama: “I want to make sure that we are investing in energy in order to [break off from] foreign oil.”  Right now, even the Democrats aren’t giving him a good audience reaction.  The Republicans are giving him a higher rating!  Saying that him being wildly liberal is just him opposing George Bush.  And that spiked the Dems’ rating.  Saying that he’s worked with Coburn so that taxpayers can see who’s promoting spending projects.

Lehrer: “How [will] this effect you in the approach you will take to the Presidency.”

McCain: Spending freeze on all but Veterans, defense, and I forget what else.

Obama: You’re using a hatchet where you need a scalpel.  But heck, that’d have to be a big scalpel.  But he does have a point here.

McCain: We’re sending money overseas, and some of that goes eventually to terrorists (through oil).  We need nuclear, solar, wind, offshore drilling, etc…  Get 70,000 (?) jobs by building nuclear plants throughout the country.  And Obama is against this.  And that’s one thing that really angers me about Obama – WE NEED NUCLEAR!

Obama: “There is not fact that it [economic crisis] will affect our budgets” even if we get the $700 billion back.  “If we’re lucky and do it right, that could potentially happen.”  “We can expect less tax revenue.”  And he’s really not getting a good audience response here.  Talking about not being able to leave out healthcare, and the Independents’ and Republicans’ approval just dropped.

McCain: Families should make decisions between themselves and doctors, not federal government.  “I have fought to cut spending.”  “Obama needs to cancel new spending programs.”  Talking about taking care of veterans.  Healthy economy, lowering, not raising taxes, with spending restraint.  And the independents liked that.  Talking about owing China money, and saying he’s fought against excessive spending.  And the ratings are skyrocketing – and again, I LOVE his stance on spending!

Obama: It’s been your President who presided over this spending.  But Bush and McCain aren’t the same.  Stop pretending they are.  That still got a good reply from the Independents.

McCain: I have opposed the President on spending, torture, Guantanamo, climate change.  Talking about being an Independent and Maverick, and having Sarah Palin as the same.  His ratings stunk right there.  He lost Dems, Reps, and Inds.

Lehrer: On to Iraq.

McCain: “Our initial military success … Baghdad, and everybody celebrated.”  Then the war was mishandled.  Came up with a new strategy.  It’s succeeding.  The Inds and Dems rating has fallen a lot, but hte Reps are rating him high.  Talking about the consequences of defeat being Iranian influence higher, more sectarian violence, and U.S. having to come back (referring to defeat before the surge).  And the Inds just started to rate him a lot better.  I think he did as good as he could back there.

Obama: I would’ve voted against it.  “We hadn’t finished the job in Afghanistan … caught bin Laden … and put Al Qaeda to rest.”  Talking about soon to be a trillion dollars spent, plus 4,000 lives lost.  Saying that Al Qaeda is stronger than ever.  “We took our eye off the ball.”  Talking about Iraq having a surplus while we’re losing money.  He’s bringing up a LOT of good points that I thought would appeal to people, but he’s not rating THAT great, although the Dems really like him.  Now it’s peaked a bit more.

McCain: President will have to decide how and when we leave and what we leave behind.  He’s absolutely right.  Obama saying surge worked, but he’d still oppose it.  And he lost a lot of Indy rating points just back there.  But he’s right.  Obama is simply sticking by what he said even though what he said was WRONG!

Obama: Talking about McCain being right about reduced violence.  Saying troops and Petraeus doing a good job.  But that made up for mismanagement before that.  War started in 2003, not 2007.  Saying McCain said it’d be quick and easy, but he was wrong.  Saying we’d be greeted as liberators, but we weren’t.  And he lost a lot of support from Inds, but he’s still doing better than McCain has on Iraq.

McCain: Saying Obama doesn’t have military experience, he’s got some better support form Inds and Reps now.  Saying that this strategy and general are winning, but Obama refuses to acknowledge this.  (Obama: “That’s not true.”)  Talking about elections and peace coming to Iraq, and the strategy will be employed in Afghanistan in a McCain administration, and the Inds went up a bit there.  Talking about Obama voting against troop funding.

Obama: McCain opposed funding for troops in a timetable bill.  Had a difference on timetables, not funding.  And Obama’s right.  It always looks bad on paper when you vote against funding, but if you don’t agree with the overall bill, don’t vote for it.  I have to side with Obama here, and the Inds liked that a lot, and even the Republicans aren’t that negatively rating him.  Reduce combat troops in Iraq.  “Capture and kill bin Laden.”  We don’t have enough troops to deal with Afghanistan.

McCain: Saying that military leaders saying that Obama’s plan would be bad for the troops.  Talking about Petraeus praising the progress we’ve made.  Saying that under Obama’s plan, we’d have been out before the surge could have even succeeded.  Saying that Obama’s plan will “snatch defeat from the jaws of victory.”

Lehrer: How many and when (if more troops in Afghanistan)?

Obama: As soon as possible.  Saying that this year has been the year for highest troop fatalities.  Can’t separate Afghanistan from Iraq.  And the Independents are rating him lower than the Repubs now – that’s surprising.  Saying that Al Qaeda is the greatest threat against us, and that we have to deal with them in Afghanistan and Pakistan, not Iraq.  Press the Afghan government to make sure that they’re working for their people.  And he’s absolutely right – we need to press the Afghani government.  Talking about needing to reduce the poppy trade over there.  And that’s another area we need to work on.

McCain: Talking about not being ready to threaten Pakistan, because that’d be dangerous.  We need to get support of the people of Pakistan.  And the Independents are rating him pretty high here.  Saying that Obama doesn’t understand that we need a new strategy.  Saying that Pakistani terrorists are married to Al Qaeda and Taliban.  Ratings are very high from Reps and Inds.  Although it’s dropped now.  Saying we need more troops in Afghanistan, but saying that we have put more in already.  Talking about Obama publicly saying he’d attack Pakistan.

Obama: Saying that if we have Al Qaeda in sights, and Pakistan won’t help us take them out, then we need to take them out.  Again, I have to side with Obama here.  Talking about McCain singing “Bomb Iran.”  And that was so stupid of McCain, and really makes him look like a hypocrite a bit here.  Although he lost a lot of ratings there surprisingly.  Talking about not going after Al Qaeda, and they’re more powerful than ever.

McCain: Talking about him being a new Congressman – Reagan wanting to send Marines into Lebanon, and McCain voting against it, because he didn’t think that 300 Marines could make a difference, and saying that he was right – many Marines were killed in the bombing.  Talking about voting for going into Bosnia, when it wasn’t popular.  Saying that we need more than a peace-keeping force in Somalia.  And he’s right.  We need to do what’s RIGHT, not what’s popular!  Saying that our mission NEEDS to succeed.  And he’s absolutely right.  We don’t want defeat, and we cannot afford defeat!  “We won’t come home in defeat and dishonor and probably have to go back if we fail.”

Obama: “No U.S. soldier ever dies in vain. … We honor the service they’ve provided. … Are we making good judgments” for keeping America safe, because sending troops is such a huge issue.  “We are having enormous problems in Afghanistan.”  Saying it’s not true that McCain has consistently cared about Afghanistan.  Saying McCain said we could “muddle through” Afghanistan.

McCain: “I’ve visited Afghanistan … and I know what our needs are.  We will prevail … and we need a new strategy.”  If we adopt Obama’s plan, we’ll fail in Iraq, and that will have a great effect on Afghanistan.  Obama fails to see that the 2 are connected.

Lehrer: “What is your reading from the threat from Iran?”

McCain: If Iran acquires nukes, it’s a threat to Israel and other countries.  Others will feel the need to get nukes.  “We can’t afford a second holocaust.”  Proposing a league of Democracies who would impose sanctions on Iranians, since the Russians won’t do it.  “The Iranians have a lousy government, so their economy is lousy, even though they have significant oil revenues.”  A nuclear Iran is a threat to the world.  They’re putting IEDs in Iraq.  They’re a sponsor of terror.  And he’s getting some pretty good ratings right now, from both Indeps and Repubs.

Obama: Talking about the thing that strengthened Iran was the War in Iraq.  Their involvement has grown.  They’ve tried harder to get nukes.  “We cannot tolerate a nuclear Iran.”  It would threaten Israel, and “create an environment [that would] set off an arms race in the Middle East.”  We can’t have sanctions without Russia and China.  Well Obama, you’re not going to get Russia OR China to side with you!  You’re dreaming if you think you will.  Saying we need to talk to leaders in Iran and North Korea, and he as President will.

McCain: Senator Obama twice said he’d sit down with Ahmadinejad, Chavez, and Castro.  Ahmadinejad is in New York now talking about extermination of Israel.  Saying that we can’t sit down without preconditions.  And he’s right.  NO President has ever sat down without preconditions (Reagan didn’t, JFK didn’t, and Nixon didn’t).  And now McCain is using examples that I just gave.  “I’ll sit down with anybody, but there’s gotta be preconditions.”  GOOD job McCain!  You’re absolutely right.

Obama: Ahmadinejad isn’t the most powerful person in Iran.  Saying as President, he can sit down with whoever he wants if it keeps America safe.  Saying that we CAN meet without preconditions, but not do with what we’ve been doing where we say you must do X or we won’t meet with you.  “Of course we need preparations.”  “It may not work.  Iran is a rogue regime.”  Obama is getting pretty much the same ratings now as McCain was getting a minute ago (about a third of the way between neutral and as positive as you can go).  “The Bush Administration and McCain’s advisors (Kissinger)” think we should meet without preconditions.  Saying McCain said we can’t meet with Spain, a NATO ally.

McCain: “Kissinger never said that the President could meet with Ahmadinejad.”  “Obama doesn’t understand that without precondition … you legitimize those comments [against Israel]. … It’s dangerous.”  Talking about North Koreans breaking everything they’ve ever said they’d do.

Obama: McCain keeps saying that I’ll meet with somebody without preparing – this isn’t true.  “We do not expect to solve every problem before we initiate talks.”  The Bush administration realized this doesn’t work.  “The notion that we’d meet with Ahmadinejad as he spews his comments is” wrong.

McCain: Kissinger would not say “that Presidential, top level” communications should be made without preconditions.

The two are going back and forth, and ratings are dropping a lot.

Lehrer: How do you see the relationship with Russia?

Obama: “Our entire Russian approach needs to be reevaluated. … Actions in Georgia were unacceptable and unwarranted.”  They need to get out of South Ossetia and Abkhazia.  The Democrats really aren’t liking what he’s saying here.  The Inds are rating him higher than Dems are.  We can’t go back to a Cold War status with Russia.  We need to deal with loose nuclear weapons when it comes to Russia.  “Deal with Russia based on [our] national security interests.”

McCain: Obama doesn’t understand that Russia committed aggression against Georgia when he said that both sides need to back down a bit.  He’s compared Putin to the KGB.  We can’t go back to the Cold War.  The Georgian War “had everything to do with energy.”  McCain’s rating a bit better than Obama, but neither are performing well right now with the audience.  “The Russians ought to understand that we’ll support … the inclusion of Georgia, and Ukraine … into inclusion of NATO.”  The Russians violated their cease fire agreement.  Saying that Russian intentions toward Georgia – just waiting to cease the opportunity.  Expecting Russians to behave as a country who will respect boundaries.  And he’s right – Russia can’t be left to keep doing what it’s been doing.  It HAS to respect the sovereignty of other countries.  McCain rating pretty decent now, compared to an average rating before.

Obama: McCain and I agree for the most part on these issues.  Says he disagrees with McCain a bit on Georgia.  I don’t think the Dems liked that – Obama is doing a decent amount worse than McCain was doing.  Talking about Russian peace keepers in Georgia not making sense and that we needed international peace keepers there, and that might have avoided the situation.  And Obama is right there.  Talking about energy.  We need to increase offshore drilling.  “We can’t drill our way out of the problem.”  Talking about needing wind, solar, and nuclear.  And now he’s rating higher than McCain was at the end of McCain’s last statement.  Saying McCain voted against alternative energy 23 times.

McCain: Saying that Obama is really against nuclear, and that offshore drilling would help more than Obama says it would.  McCain is getting pretty low ratings now, especially from Dems.

Obama: I have never said that I object to nuclear waste, but I’d store it safely.

McCain: I’ve always been for alternative energy.

Lehrer: What do you think the likelihood is of another 9/11 attack?

McCain: Much less than the day after 9/11, but we’re not safe yet.  Talking about working across the aisle to establish the investigation commission.  Saying we need interrogators who won’t use torture.  Saying that we are safer now.

Obama: We need to do more in terms of securing transit and ports.  Biggest issue is not missiles coming over skies, but from a suitcase.  Spending billions on missile defense, which we need because of Iran/Korea, but we need more for other areas as well.  Ratings are pretty high for him here.  We need more cooperation with allies.  “The way we are perceived in the world” will affect the cooperation we get.  He’s right here.  We have slipped in terms of how we’re viewed by the world.  McCain has a good stance on terror.  And the ratings right there are the highest they’ve been at any time during the debate, even Reps rated him decently high.

McCain: If we fail in Iraq, Al Qaeda will establish a base in Iraq.  McCain isn’t rating too good right now, especially with Inds and Dems.  We can’t have specific dates for withdrawal.  We’ve had great success, but it’s fragile.

Obama: Saying that this administration has been solely focused on Iraq, and we haven’t captured bin Laden.  Talking about borrowing from China, and they’ve been active around the world, while we’ve been focused on Iraq.  We’re spending so much money, we can’t invest in health care or science/technology.  “We’ve never seen a nation who has a failing economy but maintains military strength, so this is a national security issue.”  The next President has to have better strategy for all the challenges we face.  Pretty good ratings there

McCain: Saying he’s been around involved in challenges.  Saying Obama doesn’t have  experience, but he does.  Talking about Obama failing to admit the success of the surge.  McCain is right here.  Obama is just being stubborn.  Saying that he’ll take care of veterans, that he has right judgment to keep nation safe and secure.  “I don’t need any on the job training.  I’m ready to go right now.”

Obama: Talking about his father being from Kenya, and that there’s not nation like America, where you can become so successful.  “Part of what we need to do … is to send a message to the world that we’ll invest in issues like education … how ordinary people can live out there dreams.”

McCain: Talking about coming home from prison and seeing veterans treated poorly, and working on bipartisan bills to see our veterans treated better.  I know how to deal with our adversaries and how to deal with our friends.

Lehrer: We’re done.  “Thank you and good night.”

McCain/Obama: “Good job.”

And there you have it – the wives are coming out and kissing each other.  A little more than the 90 minutes scheduled, but that’s ok.

OK, so who won?  Both Obama and McCain had some pretty good moments, but I don’t think there was a clear cut winner here.  I think both performed pretty much on the same level.  I’m not saying that the two were identical in debating, but I don’t think one did better than the other.  I absolutely hate saying this, because I love objectivity and clear cut answers, but I really do think it was a tie.

I’d love to go on more and more, but my hands are just killing me right now (hey – it was a lot of typing), so I think I’ve said most all of what I wanted to say.

By the way – a big thanks to my roommate who helped with correcting quotes and what was said.  It’s hard to keep up with typing and trying to listen, so a huge thanks to him for helping me out with this!

Done Analyzing,

Ranting Republican
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Ron Paul on Bailouts: “We Are Headed for a Rough Ride”

September 24, 2008

The following is Representative Ron Paul’s (R-TX) statements regarding government bailouts of financial institutions, with my analysis sprinkled throughout his comments:

Many Americans today are asking themselves how the economy got to be in such a bad spot.

For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.

Unfortunately, the government’s preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.

And here’s the sad part – it’s been people like Paul, and his followers and others who believe like him that have predicted things like this would happen.  I’ve always been against government intervention into stuff like this, although, due to my age, haven’t had the opportunity to voice this as much as Dr. Paul.

Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.

Blame a lot of it on FDR – he’s the one who started all this crap TRYING to get us out of the Great Depression.  Emphasis on “trying.”  None of FDR’s plans really worked–what got us out was going to war.

Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.

Well, they were, after all, created by the federal government – the first mistake that was made here.

Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.

And even the Economic Stimulus Package did this.  It INCREASED loan limits for people using adjustable rate mortgages, and increased the amount of people getting loans–people who NEVER should’ve been able to get loans with their credit.

These governmental measures, combined with the Federal Reserve’s loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.

When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.

Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.

In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.

And this is evident in my home state of Michigan.  Where I live, there are some housing areas just recently built that are largely still up for sale.  Either that, or people will buy the new houses before selling their own houses, and then the original houses are left up for sale.  But not all of this is the government’s fault.  My mother was telling me other day that the sister of her friend was going to have the bank repossess her house, so she left in the middle of the night, went down to South Carolina, and bought a house the next day, before the credit caught up with her.  Not only is that dishonest and despicable, it’s detrimental to the economy!  Or you have people vandalizing their own houses right before banks repossess them.  IT’S NOT THE BANK’S fault that you can’t make your payments (it’s the bank’s fault if they gave an undeserving person a loan, but still, these actions are NOT helping!).

This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners — in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers — builders and other sectors connected to real estate that suffer setbacks.

The government doesn’t like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.

I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.

Additionally, the government’s actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

And that was the attitude that Freddie and Fannie executives had.  “The government will HAVE to bail us out” mentality HAS GOT TO STOP!

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.

The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.

Easier said than done.  Once you start bailouts, it’s hard to stop.  It’s similar to returning to the gold standard.  Our money is so inflated now that it would take national cooperation to return to the gold standard.  Prices for anything purchased as well as wages would have to significantly decrease, and Americans are too greedy to do this.  People wouldn’t want their wages cut, even though they’d still be able to afford everything that they can now, because “it would look bad on paper.”  Getting out of the Great Depression would’ve been simple, if everybody agreed to a plan, but if one greedy person doesn’t agree to the set plan, that throws off the whole rest of the plan.  Complete cooperation is necessary, but in today’s world, it will never happen (unles the government forces you, but then you’re dealing with extreme government involvement, which STILL doesn’t work as evidenced in the massive failures of communism).

It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.

But where will they get their money from if they lose their corporate backers!  How’s a politician supposed to live if he doesn’t have businesses feeding him money!

The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.

And unfortunately neither of our major Presidential candidates will do this.  I’d like to see what Senator Hagel (R-NE) would’ve done about the Fannie and Freddie situation, since he voted AGAINST the Economic Stimulus Package.

Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.

A very rough ride indeed, Dr. Paul.

And again, Paul shows just how smart he is when it comes to economic issues.  I disagree with him on a couple other issues (kinda a half disagreement on Iraq), but I honestly wouldn’t have been disappointed if he were the Republican nominee.

I just hope that people (especially McCain) start listening to him and realize that we can’t keep doing what we’ve been doing.

Done Ranting,

Ranting Republican
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Obama and McCain Respond to Takeover of Fannie Mae and Freddie Mac

September 7, 2008

Well, I already talked about the Federal takeover of Fannie and Freddie, and since then, I was able to find statements from the Presidential candidates.  We’ll start with Barack Obama:

Originally, this was all we had from Obama:

I have been and will continue to monitor this situation closely, and I’ll evaluate whatever plan is put forth by this administration with the following three benchmarks:

First, any action we take must be focused not on the whims of lobbyists and special interests worried about their bonuses and hourly fees, but on whether it will strengthen our economy and help struggling homeowners who are also being hit by lost jobs, stagnant wages and spiralling costs for everything from gas to groceries.

Second, we must protect taxpayers, not bail out the shareholders and management of Fannie Mae and Freddie Mac. This is a challenging situation, and there are some community and regional banks, including those serving low-income communities, that we need to carefully address. But we must not allow government intervention to protect investors and speculators who relied on the government to reap massive profits.

Finally, we must ensure that any plan clarifies the true public and private status of our housing policies. We need to make clear that in our market system, investors must not be allowed to believe that, unlike working families, they can simply invest in a “heads they win, tails they don’t lose” context.

Then Obama’s blog somebody posted a slightly different press release, which basically said the same thing with a few differences:

Today Senator Obama released the following statement on the U.S. Treasury Plan for Fannie Mae and Freddie Mac:

Given the substantial role that Fannie Mae and Freddie Mac play in our housing system, I believe that some form of intervention is necessary to prevent a larger and deeper crisis throughout our entire economy. I will be reviewing the details of the Treasury plan and monitoring its impact to determine whether it achieves the key benchmarks I believe are necessary to address this crisis.

First, this plan must not focus on the whims of lobbyists and special interests worried about their bonuses and hourly fees, but instead on strengthening our economy and helping struggling homeowners who are also being hit by lost jobs, stagnant wages and spiraling costs of everything from gas to groceries. Second, the plan must protect taxpayers, not bail out the shareholders and management of Fannie Mae and Freddie Mac. Third, once we ride out the current crisis, the plan must move toward clarifying the true public and private status of our housing policies. In our market system, investors must not be allowed to believe that they can invest in a “heads they win, tails they don’t lose” situation.

And then we have John McCain, who made this statement on CBS’s “Face the Nation” with Bob Schieffer:

SCHIEFFER: And thank you for saying that.

Let’s talk a little bit about the big news of the day.

Sen. McCAIN: Mm-hmm.

SCHIEFFER: Both the Post and The New York Times report that the administration is preparing to put Fannie Mae and Freddie Mac, the two guarantors of mortgages, in some sort of a conservorship***(as spoken). Basically what they’re going to do is dismiss the officers, the government will take over. There’s no way you can say this is not going to cost the taxpayers billions of dollars. Do you think this is a good idea, Senator McCain?

Sen. McCAIN: I think it has to be done, Bob. I think that we’ve got to keep people in their homes. There’s got to be restructuring, there’s got to be reorganization and there’s got to be some confidence that we’ve stopped this downward spiral. It’s hard, it’s tough, but it’s also the classic example of why we need change in Washington. It’s an example of cronyism, special interest, lobbyists, a quasi-governmental organization where the executives were making hundreds of–hundred and some million dollars a year while things were going downhill, going to hell in a handbasket. This is–this is the kind of cronyism and corruption that has made people so justifiably angered. I did have a long conversation with Secretary Paulson, a man I admire and respect, and he did say that when the housing market starts back up–and it will, it will in America–then the taxpayers are going to be the first to be paid off. They’re the ones that are going to be reimbursed when the values of the homes start–hit bottom and start back up and they start getting more money back in. And that has to be a vital part of it. And again, this is a system that cries out for reform.

SCHIEFFER: You’re talking about–they’re going to have some more regulation. Is that what you’re saying? More control?

Sen. McCAIN: More regulation, more oversight, more transparency, more of everything. And frankly, a dramatic reduction in what they do. You know, they are originally designed to provide a chance for middle income people to have an affordable home loan mortgage, and it grew into this sprawling, massive bureaucracy rife with corruption, cronyism, special interests, lobbyists and a relationship with Congress. Congress passed these laws that allowed these massive loopholes to be there. And so obviously, it’s got not only to be fixed, but it’s a system. It’s an example and a symptom of a system where we’re so close to the special interests that somehow–in Washington, we’re so close that somehow the average American is totally disregarded.

SCHIEFFER: All right. Let’s take a break here.

Sen. McCAIN: Sure.

OK, so who do I agree with more?  Neither really.  Obama seems to have formed less of an opinion than McCain, and McCain seems to have pretty much taken this from the takeover.  McCain talks about “a dramatic reduction in what [Fannie and Freddie] do,” which is pretty much what the takeover plan states.

Like I said before, I don’t think that the takeover was a good idea.  I don’t think that “reduc[ing] what they do” is a good idea either.  As of now, I want the government to do their plan with the company, and get out of the companies (since they obviously won’t take my idea of doing nothing with the companies).  I see no need for the government to start dictating how much these (now formerly) PRIVATE companies do.

So, I’m kinda disappointed in McCain, but I’m not really surprised.  This follows his stance on the Economic Stimulus Act of 2008, in that he wants bailouts to help the people (at least he’s not doing it to help the company), but that government involvement is only going to hurt more people more in the long run.

Done Analyzing,

Ranting Republican
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Federal Government Takes Over Fannie Mae and Freddie Mac

September 7, 2008

Well, as of this afternoon, it’s official: the 2 mortgage giants, Fannie Mae and Freddie Mac, will be placed in conservatorship under the supervision of the Federal Housing Finance Agency (FHFA).  Under this plan, the federal government will temporarily run Fannie and Freddie until the 2 companies become more stable.

Along with this temporary takeover, the CEOs of Freddie and Fannie, Richard Syron and Daniel Mudd will be ousted, but kept on during the transition  process.  Herb Allison, the former president TIAA-CREF and former vice-chairman of Merrill Lynch, will take over Fannie Mae, while David Moffett, the former vice-chairman and chief financial officer of U.S. Bancorp and senior adviser at the Carlyle Group, will take over Freddie Mac.

The move was announced at a press conference today where Treasury Secretary Henry Paulson and FHFA director James Lockhart announced the plan:

  • Change in CEOs, as stated above.
  • Dividends on common and preferred shares will be eliminated in order to save the companies about $2 billion dollars per year.
  • All of the firms’ lobbying and political activities will immediately cease.
  • All charitable activities will be immediately reviewed.
  • The 2 companies will be allowed to “modestly increase” their existing investment portfolios until 2009.
  • Begin to shrink their investment portfolios by 10% a year, starting in 2010.
  • The Treasury Department will provide as much money as the companies need in order to keep their capital reserves from falling below the levels that would force them into receivership.
  • The Treasury Department will also buy Fannie and Freddie mortgage securities on the open market.
  • The Treasury Department will also create a “Secured Lending Credit Facility,” which will be a source for Freddie and Fannie to borrow money if they can’t borrow enough money on the open market.

Some quotes from Secretary Paulson (I’ll have full press releases for you to read at the very bottom):

  • “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe.  This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement.  A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance.  And a failure would be harmful to economic growth and job creation.”
  • “We examined all options available, and determined that this comprehensive and complementary set of actions best meets our three objectives of market stability, mortgage availability and taxpayer protection.”
  • “Government support needs to be either explicit or non-existent, and structured to resolve the conflict between public and private purposes,” Mr. Paulson said. “We will make a grave error if we don’t use this time out to permanently address the structural issues presented by the GSE’s [Government sponsored enterprises.  Fannie and Freddie were created by Congress, but were made private back in1968 and 1970 {Freddie was directly made a private corporation from the beginning}, respectively].”

Personally, I think that Freddie and Fannie have done business assuming that the government would “have to bail them out,” and thus didn’t take necessary precautions to avoid this.  The assumption that the government would have to step in came from the fact that together, Fannie and Freddie guarantee around  70% of all new home mortgages.

I don’t think that the government should have stepped in here.  The more the government gets involved, the deeper they’ll continue to get involved, and the more it’s going to cost taxpayers.  We’ve seen government involvement with Bear Sterns cost taxpayers millions of dollars.  We had the Economic Stimulus package use taxpayer money to basically bail out citizens who made poor decisions.  It was people like Representative Ron Paul (R-TX) and Senator Chuck Hagel (R-NE) that stood up to that that are standing up to the takeover of Freddie and Fannie (I know that Paul is – I haven’t gotten a quote from Hagel yet, but based on past voting records, I’m going to guess that he’s against it).  This is going to cost the taxpayers BILLIONS of dollars.

And here are those press releases I promised you available on the Treasury Department’s website and the FHFA press release is available here):

September 7, 2008
hp-1129

Statement by Secretary Henry M. Paulson, Jr. on Treasury and Federal Housing Finance Agency Action to Protect Financial Markets and Taxpayers

Washington, DC–

Good morning. I’m joined here by Jim Lockhart, Director of the new independent regulator, the Federal Housing Finance Agency, FHFA.

In July, Congress granted the Treasury, the Federal Reserve and FHFA new authorities with respect to the GSEs, Fannie Mae and Freddie Mac. Since that time, we have closely monitored financial market and business conditions and have analyzed in great detail the current financial condition of the GSEs – including the ability of the GSEs to weather a variety of market conditions going forward. As a result of this work, we have determined that it is necessary to take action.

Since this difficult period for the GSEs began, I have clearly stated three critical objectives: providing stability to financial markets, supporting the availability of mortgage finance, and protecting taxpayers – both by minimizing the near term costs to the taxpayer and by setting policymakers on a course to resolve the systemic risk created by the inherent conflict in the GSE structure.

Based on what we have learned about these institutions over the last four weeks – including what we learned about their capital requirements – and given the condition of financial markets today, I concluded that it would not have been in the best interest of the taxpayers for Treasury to simply make an equity investment in these enterprises in their current form.

The four steps we are announcing today are the result of detailed and thorough collaboration between FHFA, the U.S. Treasury, and the Federal Reserve.

We examined all options available, and determined that this comprehensive and complementary set of actions best meets our three objectives of market stability, mortgage availability and taxpayer protection.

Throughout this process we have been in close communication with the GSEs themselves. I have also consulted with Members of Congress from both parties and I appreciate their support as FHFA, the Federal Reserve and the Treasury have moved to address this difficult issue.

 

Before I turn to Jim to discuss the action he is taking today, let me make clear that these two institutions are unique. They operate solely in the mortgage market and are therefore more exposed than other financial institutions to the housing correction. Their statutory capital requirements are thin and poorly defined as compared to other institutions. Nothing about our actions today in any way reflects a changed view of the housing correction or of the strength of other U.S. financial institutions.

***

I support the Director’s decision as necessary and appropriate and had advised him that conservatorship was the only form in which I would commit taxpayer money to the GSEs.

I appreciate the productive cooperation we have received from the boards and the management of both GSEs. I attribute the need for today’s action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction. GSE managements and their Boards are responsible for neither. New CEOs supported by new non-executive Chairmen have taken over management of the enterprises, and we hope and expect that the vast majority of key professionals will remain in their jobs. I am particularly pleased that the departing CEOs, Dan Mudd and Dick Syron, have agreed to stay on for a period to help with the transition.

I have long said that the housing correction poses the biggest risk to our economy. It is a drag on our economic growth, and at the heart of the turmoil and stress for our financial markets and financial institutions. Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner on housing. Therefore, the primary mission of these enterprises now will be to proactively work to increase the availability of mortgage finance, including by examining the guaranty fee structure with an eye toward mortgage affordability.

To promote stability in the secondary mortgage market and lower the cost of funding, the GSEs will modestly increase their MBS portfolios through the end of 2009. Then, to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10 percent per year, largely through natural run off, eventually stabilizing at a lower, less risky size.

Treasury has taken three additional steps to complement FHFA’s decision to place both enterprises in conservatorship. First, Treasury and FHFA have established Preferred Stock Purchase Agreements, contractual agreements between the Treasury and the conserved entities. Under these agreements, Treasury will ensure that each company maintains a positive net worth. These agreements support market stability by providing additional security and clarity to GSE debt holders – senior and subordinated – and support mortgage availability by providing additional confidence to investors in GSE mortgage backed securities. This commitment will eliminate any mandatory triggering of receivership and will ensure that the conserved entities have the ability to fulfill their financial obligations. It is more efficient than a one-time equity injection, because it will be used only as needed and on terms that Treasury has set. With this agreement, Treasury receives senior preferred equity shares and warrants that protect taxpayers. Additionally, under the terms of the agreement, common and preferred shareholders bear losses ahead of the new government senior preferred shares.

These Preferred Stock Purchase Agreements were made necessary by the ambiguities in the GSE Congressional charters, which have been perceived to indicate government support for agency debt and guaranteed MBS. Our nation has tolerated these ambiguities for too long, and as a result GSE debt and MBS are held by central banks and investors throughout the United States and around the world who believe them to be virtually risk-free. Because the U.S. Government created these ambiguities, we have a responsibility to both avert and ultimately address the systemic risk now posed by the scale and breadth of the holdings of GSE debt and MBS.

Market discipline is best served when shareholders bear both the risk and the reward of their investment. While conservatorship does not eliminate the common stock, it does place common shareholders last in terms of claims on the assets of the enterprise.

Similarly, conservatorship does not eliminate the outstanding preferred stock, but does place preferred shareholders second, after the common shareholders, in absorbing losses. The federal banking agencies are assessing the exposures of banks and thrifts to Fannie Mae and Freddie Mac. The agencies believe that, while many institutions hold common or preferred shares of these two GSEs, only a limited number of smaller institutions have holdings that are significant compared to their capital.

The agencies encourage depository institutions to contact their primary federal regulator if they believe that losses on their holdings of Fannie Mae or Freddie Mac common or preferred shares, whether realized or unrealized, are likely to reduce their regulatory capital below “well capitalized.” The banking agencies are prepared to work with the affected institutions to develop capital restoration plans consistent with the capital regulations.

Preferred stock investors should recognize that the GSEs are unlike any other financial institutions and consequently GSE preferred stocks are not a good proxy for financial institution preferred stock more broadly. By stabilizing the GSEs so they can better perform their mission, today’s action should accelerate stabilization in the housing market, ultimately benefiting financial institutions. The broader market for preferred stock issuance should continue to remain available for well-capitalized institutions.

The second step Treasury is taking today is the establishment of a new secured lending credit facility which will be available to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Given the combination of actions we are taking, including the Preferred Share Purchase Agreements, we expect the GSEs to be in a stronger position to fund their regular business activities in the capital markets. This facility is intended to serve as an ultimate liquidity backstop, in essence, implementing the temporary liquidity backstop authority granted by Congress in July, and will be available until those authorities expire in December 2009.

Finally, to further support the availability of mortgage financing for millions of Americans, Treasury is initiating a temporary program to purchase GSE MBS. During this ongoing housing correction, the GSE portfolios have been constrained, both by their own capital situation and by regulatory efforts to address systemic risk. As the GSEs have grappled with their difficulties, we’ve seen mortgage rate spreads to Treasuries widen, making mortgages less affordable for homebuyers. While the GSEs are expected to moderately increase the size of their portfolios over the next 15 months through prudent mortgage purchases, complementary government efforts can aid mortgage affordability. Treasury will begin this new program later this month, investing in new GSE MBS. Additional purchases will be made as deemed appropriate. Given that Treasury can hold these securities to maturity, the spreads between Treasury issuances and GSE MBS indicate that there is no reason to expect taxpayer losses from this program, and, in fact, it could produce gains. This program will also expire with the Treasury’s temporary authorities in December 2009.

Together, this four part program is the best means of protecting our markets and the taxpayers from the systemic risk posed by the current financial condition of the GSEs. Because the GSEs are in conservatorship, they will no longer be managed with a strategy to maximize common shareholder returns, a strategy which historically encouraged risk-taking. The Preferred Stock Purchase Agreements minimize current cash outlays, and give taxpayers a large stake in the future value of these entities. In the end, the ultimate cost to the taxpayer will depend on the business results of the GSEs going forward. To that end, the steps we have taken to support the GSE debt and to support the mortgage market will together improve the housing market, the US economy and the GSEs’ business outlook.

Through the four actions we have taken today, FHFA and Treasury have acted on the responsibilities we have to protect the stability of the financial markets, including the mortgage market, and to protect the taxpayer to the maximum extent possible.

And let me make clear what today’s actions mean for Americans and their families. Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe. This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement. A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation. That is why we have taken these actions today.

While we expect these four steps to provide greater stability and certainty to market participants and provide long-term clarity to investors in GSE debt and MBS securities, our collective work is not complete. At the end of next year, the Treasury temporary authorities will expire, the GSE portfolios will begin to gradually run off, and the GSEs will begin to pay the government a fee to compensate taxpayers for the on-going support provided by the Preferred Stock Purchase Agreements. Together, these factors should give momentum and urgency to the reform cause. Policymakers must view this next period as a “time out” where we have stabilized the GSEs while we decide their future role and structure.

Because the GSEs are Congressionally-chartered, only Congress can address the inherent conflict of attempting to serve both shareholders and a public mission. The new Congress and the next Administration must decide what role government in general, and these entities in particular, should play in the housing market. There is a consensus today that these enterprises pose a systemic risk and they cannot continue in their current form. Government support needs to be either explicit or non-existent, and structured to resolve the conflict between public and private purposes. And policymakers must address the issue of systemic risk. I recognize that there are strong differences of opinion over the role of government in supporting housing, but under any course policymakers choose, there are ways to structure these entities in order to address market stability in the transition and limit systemic risk and conflict of purposes for the long-term. We will make a grave error if we don’t use this time out to permanently address the structural issues presented by the GSEs.

In the weeks to come, I will describe my views on long term reform. I look forward to engaging in that timely and necessary debate.

-30-

And here’s the FHFA statement:

FEDERAL HOUSING FINANCE AGENCY

STATEMENT

Contact:      Corinne Russell     (202) 414-6921
Stefanie Mullin     (202) 414-6376

For Immediate Release
September 7, 2008

****EMBARGOED UNTIL 11 a.m. ****

STATEMENT OF FHFA DIRECTOR JAMES B. LOCKHART

Good Morning

Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Their market share of all new mortgages reached over 80 percent earlier this year, but it is now falling. During the turmoil last year, they played a very important role in providing liquidity to the conforming mortgage market. That has required a very careful and delicate balance of mission and safety and soundness. A key component of this balance has been their ability to raise and maintain capital. Given recent market conditions, the
balance has been lost. Unfortunately, as house prices, earnings and capital have continued to deteriorate, their ability to fulfill their mission has deteriorated. In particular, the capacity of their capital to absorb further losses while supporting new business activity is in doubt.

Today’s action addresses safety and soundness concerns. FHFA’s rating system is called GSE Enterprise Risk or G-Seer. It stands for Governance, Solvency, Earnings and Enterprise Risk which includes credit, market and operational risk. There are pervasive weaknesses across the board, which have been getting worse in this market.

Over the last three years OFHEO, and now FHFA, have worked hard to encourage the Enterprises to rectify their accounting, systems, controls and risk management issues. They have made good progress in many areas, but market conditions have overwhelmed that progress.

The result has been that they have been unable to provide needed stability to the market. They also find themselves unable to meet their affordable housing mission. Rather than letting these conditions fester and worsen and put our markets in jeopardy, FHFA, after painstaking review, has decided to take action now.

Key events over the past six months have demonstrated the increasing challenge faced by the companies in striving to balance mission and safety and soundness, and the ultimate disruption of that balance that led to today’s announcements. In the first few months of this year, the secondary market showed significant deterioration, with buyers demanding much higher prices for mortgage backed securities.

In February, in recognition of the remediation progress in financial reporting, we removed the portfolio caps on each company, but they did not have the capital to use that flexibility.

In March, we announced with the Enterprises an initiative to increase mortgage market liquidity and market confidence. We reduced the OFHEO-directed capital requirements in return for their commitments to raise significant capital and to maintain overall capital levels well in excess of requirements.

In April, we released our Annual Report to Congress, identifying each company as a significant supervisory concern and noting, in particular, the deteriorating mortgage credit environment and the risks it posed to the companies.

In May OFHEO lifted its 2006 Consent Order with Fannie Mae after the company completed the terms of that order. Subsequently, Fannie Mae successfully raised $7.4 billion of new capital, but Freddie Mac never completed the capital raise promised in March.

Since then credit conditions in the mortgage market continued to deteriorate, with home prices continuing to decline and mortgage delinquency rates reaching alarming levels. FHFA intensified its reviews of each company’s capital planning and capital position, their earnings forecasts and the effect of falling house prices and increasing delinquencies on the credit quality of their mortgage book.

In getting to today, the supervision team has spent countless hours reviewing with each company various forecasts, stress tests, and projections, and has evaluated the performance of their internal models in these analyses. We have had many meetings with each company’s management teams, and have had frank exchanges regarding loss projections, asset valuations, and capital adequacy. More recently, we have gone the extra step of inviting the Federal Reserve and the OCC to have some of their senior mortgage credit experts join our team in these assessments.

The conclusions we reach today, while our own, have had the added benefit of their insight and perspective.

After this exhaustive review, I have determined that the companies cannot continue to operate safely and soundly and fulfill their critical public mission, without significant action to address our concerns, which are:
• the safety and soundness issues I mentioned, including current capitalization;
• current market conditions;
• the financial performance and condition of each company;
• the inability of the companies to fund themselves according to normal practices and prices; and
• the critical importance each company has in supporting the residential mortgage market in this country,

Therefore, in order to restore the balance between safety and soundness and mission, FHFA has placed Fannie Mae and Freddie Mac into conservatorship. That is a statutory process designed to stabilize a troubled institution with the

objective of returning the entities to normal business operations. FHFA will act as the conservator to operate the Enterprises until they are stabilized.

The Boards of both companies consented yesterday to the conservatorship. I appreciate the cooperation we have received from the boards and the management of both Enterprises. These individuals did not create the inherent conflict and flawed business model embedded in the Enterprises’ structure.

The goal of these actions is to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their mission, and mitigate the systemic risk that has contributed directly to the instability in the current market. The lack of confidence has resulted in continuing spread widening of their MBS, which means that virtually none of the large drop in interest rates over the past year has been passed on to the mortgage markets. On top of that, Freddie Mac and Fannie Mae, in order to try to build capital, have continued to raise prices and tighten credit standards.

FHFA has not undertaken this action lightly. We have consulted with the Chairman of the Board of Governors of the Federal Reserve System, Ben Bernanke, who was appointed a consultant to FHFA under the new legislation. We

have also consulted with the Secretary of the Treasury, not only as an FHFA Oversight Board member, but also in his duties under the law to provide financing to the GSEs. They both concurred with me that conservatorship needed to be undertaken now.

There are several key components of this conservatorship:

First, Monday morning the businesses will open as normal, only with stronger backing for the holders of MBS, senior debt and subordinated debt.

Second, the Enterprises will be allowed to grow their guarantee MBS books without limits and continue to purchase replacement securities for their portfolios, about $20 billion per month without capital constraints.

Third, as the conservator, FHFA will assume the power of the Board and management.

Fourth, the present CEOs will be leaving, but we have asked them to stay on to help with the transition.

Fifth, I am announcing today I have selected Herb Allison to be the new CEO of Fannie Mae and David Moffett the CEO of Freddie Mac. Herb has been the Vice Chairman of Merrill Lynch and for the last eight years chairman of TIAA-CREF. David was the Vice Chairman and CFO of US Bancorp. I appreciate the willingness of these two men to take on these tough jobs during these challenging times. Their compensation will be significantly lower than the outgoing CEOs. They will be joined by equally strong non-executive chairmen.

Sixth, at this time any other management action will be very limited. In fact, the new CEOs have agreed with me that it is very important to work with the current management teams and employees to encourage them to stay and to continue to make important improvements to the Enterprises.

Seventh, in order to conserve over $2 billion in capital every year, the common stock and preferred stock dividends will be eliminated, but the common and all preferred stocks will continue to remain outstanding. Subordinated debt interest and principal payments will continue to be made.

Eighth, all political activities — including all lobbying — will be halted immediately. We will review the charitable activities.

Lastly and very importantly, there will be the financing and investing relationship with the U.S. Treasury, which Secretary Paulson will be discussing. We believe that these facilities will provide the critically needed support to Freddie Mac and Fannie Mae and importantly the liquidity of the mortgage market.

One of the three facilities he will be mentioning is a secured liquidity facility which will be not only for Fannie Mae and Freddie Mac, but also for the 12 Federal Home Loan Banks that FHFA also regulates. The Federal Home Loan Banks have performed remarkably well over the last year as they have a different business model than Fannie Mae and Freddie Mac and a different capital structure that grows as their lending activity grows. They are joint and severally liable for the Bank System’s debt obligations and all but one of the 12 are profitable. Therefore, it is very unlikely that they will use the facility.

During the conservatorship period, FHFA will continue to work expeditiously on the many regulations needed to implement the new law. Some of the key regulations will be minimum capital standards, prudential safety and soundness standards and portfolio limits. It is critical to complete these regulations so that any new investor will understand the investment proposition.

This decision was a tough one for the FHFA team as they have worked so hard to help the Enterprises remain strong suppliers of support to the secondary mortgage markets. Unfortunately, the antiquated capital requirements and the turmoil in housing markets over-whelmed all the good and hard work put in by the FHFA teams and the Enterprises’ managers and employees. Conservatorship will give the Enterprises the time to restore the balances between safety and soundness and provide affordable housing and stability and liquidity to the mortgage markets. I want to thank the FHFA employees for their work during this intense regulatory process. They represent the best in public service. I would also like to thank the employees of Fannie Mae and Freddie Mac for all their hard work. Working together we can finish the job of restoring confidence in the Enterprises and with the new legislation build a stronger and safer future for the mortgage markets, homeowners and renters in America.

Thank you and I will now turn it back to Secretary Paulson.

Well, there you have it.  The government has again decided that it has to bail someone out “for the better good of all of the citizens.”  But where and when is this going to stop?  Is it going to be that any time a major financial institution, who greatly affects the economy, goes under the government is going to bail them out so that the the economy doesn’t get worse?  When it comes to the economy, the government needs to learn how to let things just run their course, otherwise major companies will begin to see a pattern that they can take risks, and if they wind up losing, the government “will have to bail us out!”

We cannot continue to allow this government intervention to happen, otherwise we will completely destroy the flow of our free economy.

Done Ranting,

Ranting Republican
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Why the Economic Stimulus Package Was a Terrible Idea

March 21, 2008

Alright, so I was looking around Senator Chuck Hagel’s (R-NE) website to see about his new book, and I stumbled across this press release:

Hagel Statement on Vote Against Senate Economic Stimulus Package
 
February 7th, 2008 – U.S. Senator Chuck Hagel issued the following statement today after voting against the passed United States Senate economic stimulus package:“In the last few years we have overbuilt, overmortgaged, overleveraged and abused credit. The market is now self-correcting.

“This economic stimulus package is wrongheaded, short-sighted and will only drive our country deeper into debt and continue to perpetuate this irresponsible mantra of spend, spend, spend. We are borrowing money that our children are going to have to pay back. Flying over America dropping rebate checks that we can’t cover doesn’t solve anything. This isn’t free money.”  

###

I’ve gotta say – I will always love that man and his politics – I disagree with him on a couple of things things, but he is by far my favorite politician (other than Reagan) – it still saddens me that he’s retiring, but I hope he gets back into it.  I told him on my last visit to D.C. (I should post a picture of that) that if he ever runs for anything, he has my full support.

OK, back to economics:

Here’s the bill that he was referring to: House Resolution 5140: H.R. 5140 Economic Stimulus Act of 2008 – here’s the summary, at least where I have a problem – the tax rebate stuff is fine, but Title II is dangerous:

Title II: Housing GSE and FHA Loan Limits – (Sec. 201) Raises the statutory ceiling on the maximum original principal obligation of a mortgage originated between July 1, 2007, and December 31, 2008, that may be purchased by either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Disregards mortgages purchased with the increased ceiling amount for purposes of meeting certain housing goals established under the Housing and Community Development Act of 1992.

Expresses the sense of Congress that Fannie Mae and Freddie Mac should securitize mortgages acquired pursuant to the increased conforming loan limits of this Act if the manner of securitization does not: (1) impose additional costs for mortgages originated, purchased, or securitized under existing limits; or (2) interfere with the goal of adding liquidity to the market.

(Sec. 202) Establishes a temporary loan limit increase for FHA-insured mortgages in specified high-cost areas for which a borrower received credit approval by December 31, 2008.

Grants the Secretary of Housing and Urban Development (HUD) discretionary authority to increase loan limits in 2008 based upon the size and location of residences in particular areas.

Directs the Secretary to publish the median house prices and mortgage principal obligation limits as revised by this Act not later than 30 days after its enactment.

And here’s why it’s dangerous: As Senator Hagel said, “we have … overmortgaged … and abused credit.  And what does this act do?  Raises limits on mortgages dealing with approved credit.  But here’s the problem (as I addressed in this post: http://inkslwc.wordpress.com/2008/03/19/monopoly-electronic-banking-credit-cards-terrible-for-kids/):

  1. People bought overpriced houses.
  2. They couldn’t afford these houses.
  3. Mortgages were given to people who NEVER should’ve been given mortgages, especially for as much as was loaned.
  4. People got adjustable rate mortgages (ARMs), which are normally used for people with bad credit, because it puts more of the risk on the person taking out the mortgage.
    1. The problem was that SO many people took out ARMs and then couldn’t pay.
    2. The banks don’t want to foreclose, because they can’t resell the property because the market is now in a state where most of the houses are overpriced, and too many people are already in financial trouble from previous mortgages.
  5. Another problem is credit – we have people all over using credit cards for whatever they want.  Rule #1 of a credit card: NEVER buy something that you couldn’t pay with cash.  Credit cards are meant for convenience so that you don’t have to carry around a wad of cash or keep all your money in a checking account where you aren’t earning interest, NOT as a secondary source for spending money.  Rule #2: Pay off the balance monthly so you don’t get nailed with interest.
  6. Yet another problem: All this $0 downpayment stuff – sure, it looks good, but that just means that you’re going to have to pay that $500 later PLUS interest!

Americans really need to go and take a simple budget or economics class, because these quick fixes are only going to hurt us.

Why is it the government’s job to fix problems that we created?  If I go out and buy a house I can’t afford and then can’t make payments, why is it the government’s job to right my stupidity?  It’s not, but ever since FDR did it in the depression, we’ve become dependent.  Herbert Hoover was right in not helping the people who just kept investing all their money in the stock market – their stupidity cost them.  Now, I understand that banks shouldn’t have been investing money that they didn’t actually have, but I’m not talking about that – I’m talking about the individuals.

If Americans aren’t careful, the economy will be slaughtered and the government won’t be able to bail people out time after time.  LEARN from your mistakes and don’t make them again, PLEASE for the sake of all of us!

Done Ranting,

Ranting Republican
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