Archive for the ‘Foreclose’ Category

Live Analysis of Governor Granholm’s Michigan State of the State Address

February 3, 2009

The Michigan State of the State address is about to begin.  I will be live blogging the event, giving my analysis (so my apologies for any spelling errors – I’ll fix them eventually).

Alright, she’s entering the chamber (I’m not sure if this is the House or Senate – probably House since  it’s bigger).

Oh – my roommate (Democrat) just about made me die of laughter – he said, “Where is she?”  I said, “Right there.”  And he goes, “Oh, I thought that was a dude.”

Alright – she’s making her way up to the podium – about half the room is still clapping – probably the Democrats.  There’s Lt. Governor John Cherry up in his chair.

There’s Senate Majority Leader Mike Bishop (R) and Speaker of the House Andy Dillon (D).

She’s saying welcome and thank you.  She’s welcoming and congratulating the new representatives.

She’s now welcoming Supreme Court Justice Dianne Hathaway, elected this year.  And she’s congratulating the longest serving president of the State Board of Education.

Now thanking the servicemen and women from Michigan as well as the first responders.

We just gave a moment of silence for those who lost their lives defending this country and state overseas.

“I will not sugar-coat the crisis facing this state. … Our auto companies fought for their very existence, and as the bottom fell out of the national economy” Michigan “went from bad to worse.”  She’s absolutely right about that.  “Any honest assessment of our state’s economy must recognize that things are likely to get worse before they get better. … Things will get better … because Michigan citizens are resilient … because our battle plan is focused on the three things that matter most: fighting for more good paying jobs in Michigan, educating and training people to fill those good paying jobs, and protecting out people.”

“This is not time for pet projects or special interests.”

Now talking about Michigan now having “a friend in the White House who now shares our agenda.  I say this based on pragmatism, not upon partisanship.”  BULL CRAP!

She’s talking about him being focused on energy jobs, education, and protecting people.  COME ON Madame Governor, the Republicans are interested in all of those things too!

“We’ve made many tough choices in our budget.”  True, but you could have done a lot more to fix the state, but you didn’t, and that’s why we’re as bad as we are now.

“I have a veto pen, and I will use it. … The President’s economic plan is a one-time opportunity.”  Really?  Because so far, I count THREE bailout bills.  What’s to stop three more?

She’s saying that our problems will be here after the economic stimulus money is gone.  Lt. Governor Cherry will be in charge of downsizing government, reducing number of departments from 18 to 8.

Something about we can’t have “9-5 government in a 24/7 world.”  Good point there – I’ll give her that one.

Her and Cherry are reducing salaries of all elected state officials in Michigan by 10%.  That’s a good move – I COMMEND HER on that, but I don’t really see how she can directly do that.

“Already, I’ve cut more than any other Governor in Michigan.”

She’s saying that a national survey showed that MI has done more to cut spending than other state in the country.  I’d like to see the details of the survey, but if it’s all true, I commend her on that.

She’s cutting funding for the state fair – because it’s not essential to government.  GOOD CALL!

Talking about preserving our wetlands.

Talking about reducing corrections spending.  We’re going to close 3 more facilities in the coming months.  Reinvest in more law enforcement on the street.  More law enforcement is good, but I’m not too keen on closing 3 facilities – that means more criminals on the streets, since our prisons are already TOO FULL!

Funding for roads, bridges, and transit systems – um, we’ve needed that for the past FEW years!

We can focus on jobs when we spend within our means.

We need to diversify, but that doesn’t mean sacrificing our number one industry, the auto industry.  When pundits and ill-informed politicians take cheap shots at the auto industry and its workers, we (she’s saying this) will defend the auto industry.

Talking about the green auto industry being great.

Hundreds of thousands of jobs being lost since 2000.  “These losses have fueled our determination to bring new industry to Michigan.”  Good – we can’t JUST depend on the auto industry anymore.

Talking about film and TV project coming to Michigan after the tax breaks to film companies.

Three major announcements:

  • Wonderstruck Animation Studios – $86 million in Detroit.
  • Stardock Systems (digital gaming) – build in Plymouth
  • Motown Motion Pictures – $54 million in Pontiac (former GM plant)

Motown MP alone will create 3,600 jobs.  That’s great news – especially for the Pontiac area.

“But our success with the film industry is not an isolated example.”  Talking about renewable energy industry – solar panel production companies are building here in Michigan.

Just like the auto industry “it creates all kinds of jobs for all kinds of people.”  And that’s a good thing – I am VERY enthusiastic about renewable energy, as long as it’s not expensively forced on the people.

She’s talking about wind turbines (and wind power is something I have always been really excited about – that  and nuclear power).

Jobs for manufacturers and engineers – for solar panels and electric car batteries.

She’s getting really intense about this.  “The fact that these jobs are in Michigan is no accident.”

We bring them here by beating out other states and countries.

We passed incentives to make sure those batteries are made in Michigan.  Within weeks of passage, GM said that they’d make batteries for the Volt automobile will be made here in Michigan.  5 million electric car batteries to be made a year, creating 14,000 jobs.

She’s saying that we want electric cars researched and designed here as well as all kinds of renewable energy companies.

She set a goal for becoming more dependent on renewable energy.

  • 3 wind turbine manufactures to expand in Michigan.
  • Unisolar to build solar panel factory in Battle Creek.
  • HSC – $1 billion for solar panel expansion
  • Dow-Corning – more solar panels.
  • Great Lakes Turbine to build in Monroe (where my roommate’s from!)

“We all know that  we need more jobs – a lot more.”  I agree with you there.

President Obama has demanded more use of renewable energy.  This will increase jobs in Michigan.

“By 2020, Michigan will reduce our reliance on fossil fuels for generating electricity by 45%. … We’ll do it through increased renewable energy and gains in energy efficiency.”  Sounds like a good idea to me, but I think 45% is high.  I have no problem with it as long as it doesn’t jack up prices.  But if it makes energy unaffordable, don’t do it.

Instead of importing coal, we’ll spend energy money on Michigan wind turbines and solar panels and energy efficiency devices, all installed by Michigan workers.

Ask Legislatures to allow for Michigan homeowners to become entrepreneurs by installing solar panels on roofs and selling money back to power company.  Sounds good to me – it’s giving people the choice to do this, and enables people to eventually make that money back.

Asking utility companies to invest in energy efficient products.  Good.

Unlike the coal we buy right now, the money that we will spend on energy efficiency will create jobs in Michigan.

Create Michigan Energy Corps - creating jobs and turning natural resources into renewable fuels and weatherizing houses.

Saying that we’ll need less coal power  plants here in Michigan.

I’m kinda mad that she hasn’t said anything about more nuclear here in Michigan.

Talking about how she’ll bring new jobs to Michigan – that she’s gone all over the world to get jobs.  Yeah, well you haven’t been too successful so far.  You can go places to bring jobs here, but that doesn’t matter until you bring some here.

Saying she’ll require (I think it was universities) to buy Michigan.  I have a problem with that though, because she wants a tuition freeze in order for universities to get stimulus money.  How can they do that if you FORCE them to buy Michigan-made (more expensive at times).

Saying people should buy Michigan products.  Buy everything from Ford to Faygo.

Talking about the Michigan $4,000 putting college in the reach of all students.  Um, $4,000 really doesn’t do that much.

Michigan will be the first state to replicate the Kalamazoo promise on a large scale.  Something about free education, and I missed the rest.

#2 in the country for well qualified teachers in the classroom.  How are we #2 with the Detroit Public School system?

No Worker Left Behind: Talking about free college tuition – $5,000 per year for 2 years.  Training people for jobs, such as nurses, electricians, computer technicians.  52,000 people.  Helping us to remake Michigan.

Added more resources to the unemployment system – THAT’s what we need – to allow more people to rely on welfare!

Asking universities and colleges to freeze tuition for the next year.  The problem with that is, what if THEY can’t afford it?

Give people 90 days without the fear of foreclosure.  That’s absolutely insane.  If people buy a house that they can’t afford, then they should lose it.

Talking about asking auto insurance companies to freeze rates on auto insurance.  Sure, if they want to, but don’t make it mandatory.

She’s saying we’ll use every administrative tool to ensure that affordable rates are given to consumers.  That should be up to the companies, not the government.

Saying that we shouldn’t strip people of health coverage in order to reduce spending.  We shouldn’t HAVE state sponsored health care!  She’s saying we should protect those whom people of faith often call “the least of these.”  Well, people of faith need to step up and help the poor.  That’s their duty as good Christians (as it is my duty), NOT the governments.  When did Jesus ever say that the government should help the poor?  He didn’t!  He said his followers should – that’s why it makes me angry when people give that as a reason that Jesus would be a Democrat!

And wouldn’t “the least of these” refer to the unborn babies as well?  I don’t see you protecting them, Madame Governor!

“Is it harder to balance the state budget or the budget of a family who went from 2 paychecks to 1?”  Talking about the harships of family being much greater than the hardships of politicians as leaders.

She’s now giving an example of a guy on unemployment who used No Worker Left Behind to go to a university and now he’s working for Dow Corning.

Sorry – my news station just stopped covering it – ABC needed to go back to “regular scheduled programming.”

OK – I’m back.

Talking about hope and strength.  “We together will build a better Michigan.  God bless you all, and God bless the great state of Michigan.”

Tim Skubik is on now – saying that “Doom and Gloom” only got 2 paragraphs.  He’s right – I think she could’ve shown that things are bad more than she did instead of just saying, “This is what we WILL do,” since she’s been saying that for YEARS now.

She never really said exactly how much she wanted to cut out of the government.  I will commend her for some of her pro-energy efficient plans, but I think she may wind up driving up costs at a time that we can’t afford it.  Allowing people to sell back energy from solar panels is a GOOD thing, because it gives individuals the choice to do it, instead of  mandating it.

And now Mike Bishop’s response:

He’s saying that “we all want what’s best for our state.”

“Each one of us has felt the effects of this economy.”

Saying that the Governor wants to use federal funds to fix the state, but a quick infusion of money “will never be the antidote. … You can’t increase spending and debt and somehow hope to resolve a serious budget crisis.”  The Republicans will submit a plan in the next 45 days for instant stimulus – it incentives job providers instead of increasing spending.

The House must pass Senate Bill 1.  Get rid of the 22% business surcharge.

Talking about manufacturing complexes and other companies coming in due to tax cuts, proving that business tax cuts DO work.

The second part of the plan would bring property taxes in line with home values.  Third, a tax credit for purchases of new homes will be created.  This would spur the housing market.  And he’s absolutely right – that was one of the things my parents looked into was the huge jump in taxes we would’ve payed if we moved this past summer.

Review each item in the state budget and find savings – good!

We must “be certain that state resources are used efficiently.”  Absolutely!

Talking about opportunities coming with adversity – leaders need to rise up and “take the reins that will lead us back to prosperity. … Time for us to fix Michigan. … Thank you … God bless you, our families, and our great state of Michigan.”

Alright – I’m off to a meeting – I’ll spell check this and finish my analysis when I get back.

Done Reporting,

Ranting Republican
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53% of Rescued Homeowners Still Not Paying Mortgages on Time

December 12, 2008

I was watching FOX News the other day, and Neil Cavuto the Great (yes, I’ve now given Cavuto the Republican Ranting honorary title of “the Great”) was discussing a bill before Congress that would help bankrupt homeowners restructure their mortgages.  Cavuto discusses the issue with Wall Street Journal editorialist Steve Moore.  Watch the video, and I’ll discuss it below:

Folks, I’ve been saying this all along: these bailouts will not work.  There is an attitude at the heart of this problem, and that attitude is, “If I can’t pay my mortgage, it’s the bank’s fault for giving me that loan.”

And  the way that this bill was sent through doesn’t help matters either.  If you’re at least 3 months delinquent on your mortgage, you’re eligible for federal help.  Well who doesn’t want free money?  What you have happening is people falling a month or 2 behind in their payments and then just realizing, “If I just keep this up for another month or so, I can get the government to help pay for my mortgage!”

As I’ve said NUMEROUS times before (such as here and here), the majority of the blame in these instances falls on the HOMEOWNERS for trying to buy homes that they can’t afford.  If you can’t afford something don’t buy it.  And if you try to buy it and fail, you should lose that home.  It’s unfair to the mortgage companies to just let you get a free pass and keep your home because you were financially stupid.  Then again, a lot of these people who “can’t afford” these homes actually can.  They would just rather spend their money on other things.  We have so many people wasting money on cable TV and iPods and cell phones when they can’t make a simple mortgage payment.  If you have cable TV and you’re having a hard time making mortgage payments, stop buying cable.  That’ll save you $30+ a month.  The same with cell phones.  Depending on how many family members have cell phones, you could save over $100 a month.  High speed Internet – get rid of the Internet, and if you REALLY need it, get dial-up (it’s like $12/month).

Trust me, a lot of the people who “can’t afford” their homes simply have terrible budget skills.  And it’s not the bank’s fault, and it’s certainly not the government’s job to fix that.

We have to stop this cycle of “helping” homeowners, otherwise, we’re going to have  the government pay for everybody’s houses (except those of us who would be decent enough to refuse government help because we’re committed to paying for what we bought).

These people need to learn to live within their means, and if that means losing their house, then so be it.

Done Ranting,

Ranting Republican
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Live Analysis of the Senate Vote on the New Bailout Bill: Bill Passes

October 1, 2008

Alright, so I’ve been watching C-SPAN throughout the day as much as I could, and saw everything from the US-India nuclear agreement and the Amtrak bill to the discussion on the Financial Industry Bailout bill.  They’ll be voting on that next, and I’ll be live blogging as they vote, whether it looks like it’ll pass or fail.  The rumor is that it’s expected to pass the 60-vote threshold, since they added some tax cut packages; however, these packages were rejected earlier in the week by the house, so it may clear the Senate, but fail the House by more than H.R. 3997 did.

This is now discussion on H.R. 1424, the Paul Wellstone (former Senator from MN) Mental Health and Addiction Equity Act of 2007:

Bernie Sanders (I-VT), speaking for an amendment on the bailout bill, although he’s stated that he is against the bailout bill overall.

Senator Judd Gregg (R-NH), now speaking that the current bill is a good bill, and it’s “necessary that we pass it now.”  He is saying that Senator Sanders amendment would be bad for taxpayers.

Vote on the Amendment:

The Noes have it.

Senator Harry Reid (D-NV), now speaking.  Saying that it’s the waning hours of the Senate, and that the Senators depend on their staff a lot, talking about them working unbelievable hours: “they make this place operate.”  Talking about the Legislative Clerk, David Tinsley.  Thanking him for his service.

Mitch McConnell (R-KY), now wishing Tinsley well in his retirement.

McConnell now speaking again, there’s 2 minutes to each side.  Talking about the bipartisan work in coming together to build a bill to resolve this financial crisis.  Saying that Senators Gregg and Dodd (who were appointed as designees for delegating time for discussion, etc) did a good job on the bill.  Saying that this will help resolve the “problems facing mainstream Americans.”  Saying that “we came together” in the middle of an election year.  He’s congratulating Senators for coming together and urges the passage of the bill.

Senator Reid: Is now reading letters from people who have written in to him, regarding the financial bill.  Saying that this bill isn’t for Wall Street, but for families across America.  Well, Mr. Reid, it may not be for them, but it’s going to benefit them for a time, and ultimately hurt American families.  Talking about keeping taxpayers first.  But this isn’t going to keep taxpayers safe.  He’s saying it’s an investment, but this will only set precedent for further government losses.  He’s talking about giving help to people who will have their homes foreclosed on, but it’s their fault they bought houses the couldn’t afford.  We have to draw the line, and helping people avoid foreclosure will only set precedent and make the situation worse.  Talking about getting alternative energy (BUT HE DIDN’T MENTION NUCLEAR!).  Talking about how much land in Nevada is owned by the government – 87% of the land is owned by the federal government, and 40% is no-flyover – I never realized it’s so much!  Some Senator’s cell phone went off.  Now talking about “each Senator … facing a critical test of leadership” tonight.  “Help is on the way.”

They’re voting now on an amendment to H.R. 1424 (a mental health bill which also had a tax break section added into it, as I said above), which will add the Emergency Economic Stabalization section to the bill – I thought McConnell had leader time to speak still???

Calling the roll:

Akaka: Aye

Alexander: Aye

Barasso: Aye

Baucus: Aye

Bayh: Aye

Bennett: Aye

Bingamen: Aye

Boxer: Aye

Brown: Aye

Brownback: No

Burr: Aye

Cantwell: No

Cardin: Aye

Casey: Aye

Clinton: Aye

Cockren: No

Coleman: Aye

Collins: Aye

Conrad: Aye

Corker: Aye

Cornyn: Aye

Craig: Aye

Crapo: No

Dodd: Aye

Dole: No

Domenici: Aye

Dorgan: No

Durbin: Aye

Ensign: Aye

Enzi: No

Feingold: No – WHAT!

Feinstein: Aye

Grassley: Aye

Gregg: Aye

Hagel: Aye – DANG IT!

Harkin: Aye

Hatch: Aye

Hutchison: Aye

Inhofe: No

Inouy: Aye

Isakson: Aye

Kerry: Aye

Flobecarh: Aye

Cole: Aye

Kyle: Aye

Landreau: No

Lautenberg: Aye

Levin: Aye

Lieberman: Aye

Lincoln: Aye

Luger: Aye

Martinez: Aye

McCain: Aye

McCaskill: Aye

McConnell: Aye

Menendez: Aye

McCulski: Aye

Murkowski: Aye

Murray: Aye

Nelson (FL): No

Obama: Aye

Pryor: Aye

Reed: Aye

Reid: Aye

Roberts: No

Salazar: Aye

Sanders: No

Schumer: Aye

Sessions: No

Shelby: No

Smith: Aye

Snowe: Aye

Specter: Aye

Stabenow: No

Stevens: Aye

Sununu: Aye

Tester: No

Thune: Aye

Vitter: No

Voinovich: Aye

Warner: Aye

Webb: Aye

Whitehouse: Aye

Wicker: No

Widen: No

Biden: Aye

Bunning: No

Borasso: No

Byrd: Aye

Coburn: Aye

Demint: No

Johnson: No

Allard: No

Chambliss: Aye

Lahey: Aye

Graham: Aye

Bond: Aye

Nelseon (NE): Aye

Carper: Aye

The vote passes 74-25.  The Amendment having 60 votes, the amendment is agreed to.  (I later found out that Senator Ted Kennedy was not present tonight, as he is having medical difficulties.  My thoughts and prayers go out to the Senator).

Reid is now speaking, saying he’s happy with tonight’s vote.  “When we work together, we can accomplish good things. … Thank you” to everyone.

Now the vote on HR 1424, a Mental Health Bill which now includes the above amendment.  This bill is expeced to pass.

Akaka: Aye

Alexander: Aye

Allard: Aye

Barasso: No

Bayh

And I’ve lost sound on C-SPAN??  It’s too hard to keep up with her on this one – I’ll summarize it once they’re done voting.

And we’ve now lost all sound from C-SPAN, so I’m clueless as to what’s going on.  The vote tally listed on the screen is for the amendment to the bill, so I’m not sure if the bill is passing as of now or not, but as I said above, this bill is expected to pass.  It’s funny, the media is now reporting that the Senate passed the bailout bill, although all they actually did was add it on to another bill, which they’re just voting on now.

Lieberman: Aye

It passed 74-25.  The bill, as amended, has passed, having obtained 60 votes.

I’m guessing that the votes were the same as on the amendment.

And they’re moving on to other business.  I’m done!

I really don’t think this bill should’ve passed.  Obviously I think it’s better than the first bill, but I’m still not happy with it.  We’ll see what happen in the House later this week.

Done Reporting,

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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McCain Changes His Mind on Mortgage Plan – Now He Wants to “Help” Homeowners

April 11, 2008

Well, in a move that honestly shocked me, John McCain has outlined a Mortgage/Homeowner plan, contrary to earlier statements that he made, saying, “I believe the role of government is to help the truly needy. … Reforms should focus on improving transparency and accountability in our capital markets. … What is not necessary is a multibillion-dollar bailout for big banks and speculators, as Senators Clinton and Obama have proposed”:

Remarks By John McCain On The Economy At Brooklyn Small Business Roundtable

April 10, 2008

ARLINGTON, VA – U.S. Senator John McCain will deliver the following remarks as prepared for delivery at a small business roundtable in Brooklyn, New York, today at 12:45 p.m. EST:
Thank you for joining me here today. It is a real pleasure to be participating in this roundtable with so many accomplished entrepreneurs and small business owners. You represent the engine of economic growth in America. Small business creates the majority of new jobs in America every year — so thank you for your ingenuity, perseverance, and hard work.
For Americans, a good job is the best program for housing, education, clothing, health care and transportation ever devised. A strong, growing economy with good jobs is central to everything we want for America. Today our economy is weakening, and as I travel this country and meet and talk with people, I can see how things are getting tougher for many Americans.

As I see it, individuals and families are feeling real pressure in four major areas. Housing prices are flat or declining and Americans have lost their homes or are in danger of losing them. A credit crunch is making personal loans, student loans, or business loans harder to get. Gas prices and food prices are threatening family budgets. And people are worried about their jobs.

I have a plan of action to get the American economy back on track. My plan is comprised of two parts: First is a tangible, near-term plan to address and relieve some of the serious problems that Americans are facing right now. The second part of the plan is to create the right medium and long-term environment for our economy to rebound and thrive.

Let me discuss the short-term challenges and actions first.

Recently, a sustained period of rising home prices made many home lenders complacent, giving them a false sense of security and causing them to lower their lending standards. They stopped asking basic questions of their borrowers like “can you afford this home? Can you put a reasonable amount of money down?” Lenders ended up violating the basic rule of banking: don’t lend people money who can’t pay it back. Some Americans bought homes they couldn’t afford, betting that rising prices would make it easier to refinance later at more affordable rates. There are 80 million family homes in America and those homeowners are now facing the reality that the bubble has burst and prices go down as well as up.

More generally, credit is drying up and liquidity is now severely limited — and small business and hard-working families find themselves unable to get their usual loans. Business managers have become not only more cautious about hiring, but some have been reducing their workforce. All of this led to a discouraging jobs report last Friday.

As if this were not enough, oil prices and therefore gas prices have been climbing for well over a year. For a long time, companies and businesses absorbed those increases but recently they have had to pass them on to consumers. The reason the price of milk, eggs and all kinds of goods are up so much is, simply, the increased cost of transporting these products to your store. Even the costs of product containers and cartons — often made from petroleum products — have been affected by the rising cost of oil and gas.

So what can we do in the near term?

Let’s start with the housing challenges. There is nothing more important than keeping alive the American dream to own your home, and priority number one is to keep well meaning, deserving home owners who are facing foreclosure in their homes. I am pleased that the Congress is considering bi-partisan reforms to help the mortgage crisis. Bipartisan efforts may not make for great political theater, but they remain the most effective way to address quickly our nation’s problems. Bipartisan efforts are also sometimes less than perfect, and I believe we can improve on the legislation before Congress.

I’ve made my principles in this area clear: Tax breaks for builders, funds to purchase homes in foreclosure, and tax credits that are not targeted to where the need is greatest do not constitute the federal help that is warranted. In some case, lenders and borrowers alike were caught up in the speculative frenzy that has harmed the housing market. And it is not the responsibility of the American public to spare them from the consequences of their own bad judgment. The goal should be to help homeowners who are struggling, and only about $5 billion of the bill addresses their concerns in any way. I believe we can do better.

We can also encourage groups like Neighborworks America and others provide mortgage assistance to homeowners in their communities. And our government can give them the resources to expand their efforts. I also believe that the mortgage lending industry has an obligation to help refinance mortgages. If what I have read about industry-led efforts is true, it appears that a stronger effort could be launched.

I believe a more robust, timely and targeted effort is my HOME plan. It offers every deserving American family or homeowner the opportunity to trade a burdensome mortgage for a manageable loan that reflects the market value of their home. This plan is focused on people. People decide if they need help, they apply for assistance and if approved the government under my HOME Program supports them in getting a new mortgage that they can afford. There will be qualifications which require the home to be a primary residence and the borrower able to afford a new mortgage. We will combine the power of government and the private sector to find immediate solutions for deserving American homeowners.

My plan follows the sound economic principle that when markets decline dramatically, debts must be restructured. It is built on the reality that homeowners should have an equity capital stake in their home. Homeowners would end up with a 30-year mortgage and an equity stake in their home. The new lender would receive a federal guarantee of the mortgage. And the taxpayer gets a benefit if the sale value ever recovers.

The result is a restructured financial arrangement for the homeowner. Over the long term, financial institutions must follow suit, writing off losses, restructuring their balance sheets, and raising more capital.

I am also calling for an immediate DOJ [Department of Justice] task force to aggressively investigate potential criminal wrongdoing in the mortgage lending and securitization industry. If there were individuals or firms that defrauded innocent homeowners or forged loan application documents, then the punishments of the market are not enough, and they must answer for their conduct in a court of law.

Now let me turn to gas and food prices. We need to help everyone who relies on gas to commute or pick up the kids or get to doctors appointments. As President, I promise to pursue a national energy strategy that won’t be another grab bag of handouts and a full employment act for lobbyists. It will promote the diversification and conservation of our energy sources, including a robust expansion of nuclear power, that will in sufficient time break the dominance of oil in our transportation sector.

Right now I think we should stop adding to the Strategic Petroleum Reserve. The SPR is intended to offset the impact of physical disruption of oil supplies. But with oil at over $100 a barrel and an adequate supply in the SPR, it is time to suspend purchases. This will lessen worldwide demand for oil, and if the classic laws of supply and demand hold, we should see a welcome decrease in the price of oil. And I ask every American to consider how you can sacrifice a bit for the common good and cut back where you can on your energy use.

Job security may well be the most pressing problem of these challenging economic times. Right now, jobs are in jeopardy and the government backstop is not up to the task. For over a year, I have been calling for a comprehensive reform to our unemployment insurance and displaced worker programs.

In our current unemployment insurance system, benefits are the same regardless of whether a job is found quickly or slowly. There is no reward for work, or getting to work quickly. Training programs are duplicative, balkanized and inefficient. The Department of Labor alone has over a half-dozen programs under different organizational umbrellas.

I propose that we build a new system so that as women and men work, their taxes help to build up a buffer account against lost earnings. Then, if they are unfortunate enough to lose a job, they will be able to better meet their obligations. There will also be no need to wait for a bureaucrat or obey a timetable. Every day will count and give incentives to get back to work.

If new skills are needed, displaced workers should find quick assistance at a community college using a flexible training account that permits them to pay for training and use some of the leftover to keep their health insurance. They will be able to get the hands-on skills needed by employers in the area and move to a new job. And my plan contains special, targeted assistance for older workers.

We also must make health care portable. The biggest fear people have when they lose their job is losing their health insurance. I have proposed comprehensive reforms that will lead to innovative, portable insurance. But we can start by making sure that workers are eligible for affordable coverage under COBRA.

These short term measures are designed to help people where they face the most challenges right now. I think they could make a significant difference in the everyday lives of many people.

Much work remains to be done on addressing the issues and challenges that will ensure we remain the largest and strongest economy in the world in the future. I believe that in order to accomplish this we must do three things. First, we must invest in the greatest resource we have, the American people. Second, we must reignite and drive a spirit of innovation in America. And third, we must foster growth and economic freedom, which really means low and effective taxes, free trade on a level playing field, small government and a smart, enforceable regulatory and legal framework.

Next week I will outline my longer term vision for American economic growth and power. But let me make it clear that in these challenging times, I am committed to using all the resources of this government and great nation to create opportunity and make sure that every deserving American has a good job and can achieve their American dream.

Frankly, I am VERY disappointed in Senator McCain, although there is somewhat of a silver lining here.  I don’t agree with the plan that the Congress passed.  I think it helps out individuals who made bad decisions and sets a precedent that “the government will bail you out if you screw up,” and, unfortunately, I think that part of Senator McCain’s plan would do the same.  Although I disagree with his point that the government should be bailing people out of this, I will note several parts that I either agreed with or made me more comfortable accepting his plan over Obama’s or Clintons:

  • I like the fact that people would have to prove that they were credit-worthy at the time that they received the loan.  Here’s an excerpt from the Los Angeles Times that explains McCain’s plan a little more:

    McCain’s aides said his home mortgage plan could help 200,000 to 400,000 people and cost $3 billion to $10 billion. That would be far less than the proposals offered by Clinton and Obama, but McCain aides said it would be bigger than the efforts envisioned by the Bush administration.

    The plan would retire old loans that homeowners no longer can pay and replace them with less expensive, 30-year, fixed-rate mortgages that are federally guaranteed. McCain said families would gain “the opportunity to trade a burdensome mortgage for a manageable loan that reflects the market value of their home.”

    In line with his concern about bailing out speculators, McCain’s proposal would apply only to homeowners who took out sub-prime mortgages after 2005 for homes that are their main residence. They would need to have proved they were credit-worthy at the time of the loan.

  • I like the fact that he will have the Department of Justice investigate wrongdoings.  As a hard core law and order conservative, I support finding and prosecuting anybody who breaks the law.
  • I also like a lot of his health care plan, especially encouraging competition between insurance companies and allowing people to get insurance from out of state.

Clinton and Obama also had some comments saying that they didn’t think McCain’s plan did enough, which made me feel somewhat better, since their plans would do WAY too much:

While campaigning in Gary, IN, Obama said, “Just look at the speech he’s giving today about our economy.  I’m glad he’s finally decided to offer a plan.  Better late than never.  But don’t expect any real answers, don’t expect it to actually help struggling families because Senator McCain’s solution to the housing crisis seems a lot like the George Bush solution of sitting by and hoping it passes while families face foreclosure and watch the value of their homes erode.”

Clinton issued a press release, speaking out against McCain’s switch from a laissez-faire approach to a more socialized approach:

Senator McCain is apparently of two minds on the housing crisis and neither seems to know how to steward the economy effectively. Just two weeks ago, Senator McCain said he’d rather do nothing than something about the housing crisis and attacked my plan with tired right-wing talking points.

Today, it looks like he’s proposing a warmed over, half-hearted version of the very plan he criticized, to help families restructure mortgages to save homes and keep housing prices from falling further. Apparently, Senator McCain got the message: letting the phone simply ring and ring is not the way to respond to economic crises. So now he’s changed positions and is finally responding to a housing crisis that has been going on for months, but unfortunately his actions are only half-measures.

This is all part of a pattern.

Senator McCain admitted not knowing enough about economics. He can’t keep his own position on Social Security straight. And now he’s shown himself to be dangerously inconsistent on addressing our nation’s housing crisis.

For eight years, we’ve had a President who didn’t know enough or care enough to do enough on behalf of the middle class. With a credit crisis, a home mortgage crisis, and an economy facing a potentially deep and painful recession, we can’t afford four more years of more of the same.

At a time of economic crisis and uncertainty, Americans need a President with a steady hand and steady positions, not someone whose economic positions are as unpredictable as our troubled economy itself.

So, the fact that those two don’t like the plan DOES make me feel a little easier about it, but I still think it’s a mistake.  People need to accept the consequences of their actions.  The government can’t be there to bail people out all the time – it’s just not what the government is for.

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: https://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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Monopoly Electronic Banking & Credit Cards: Terrible for Kids

March 19, 2008

OK, so over the weekend, me and some friends got bored and wanted to play Monopoly, but nobody had the game up here at college, so we decided to go out and try the new Monopoly Electronic Banking Edition.

It’s pretty cool – you put the credit card in, and the calculator senses a bump on the card (each card’s bump is different & some have 2), and it keeps track of how much money you have.  It makes the game go a whole lot faster.

But, we had been discussing (before we bought it) how terrible this is for kids.  The game is marketed for ages 8 & up.  After we bought it, this fact became apparent – this game is terrible for kids, and pretty much everybody who stopped by to see what we’re playing made a comment along those lines.

Now, let me explain why:

  • Monopoly used to teach kids counting and stuff – not with a calculator.
  • The even bigger problem: we’re teaching kids to use credit cards at age 8 (of course you can’t spend more money than you have in Monopoly).  And here’s why that’s a bad idea: most adults don’t know how to use a credit card properly.  Rule #1 of a credit card: never use it to buy something that you couldn’t buy with cash.  If you don’t have the money to pay for it in cash, don’t pay for it with a credit card.  Rule #2: ALWAYS pay the credit card balance off every month – then you don’t get charged interest.

It’s the fact that adults can’t use their money wisely that’s put us into this economic mess.

  • People are going around buying houses that they NEVER should have bought for way more than they’re worth.  Just because you can afford the down payment doesn’t mean that you will be able to make the monthly payments.
  • The banks are giving mortgages to people that they never should have, and now they too are losing money.  Banks are actually not wanting to foreclose on homes because they know that they won’t be able to resell them and make a profit.
  • How many people actually have budgets?  If you don’t have even a basic budget, unless you’re loaded, you’re going to find yourself in a financial mess that you 1) weren’t planning to get into and 2) have no clue how to get out of. 
  • Adjustable rate mortgages (ARMs) are terrible ideas – that’s what’s getting people into these messes.  Mortgage companies advertise these things, and then people who normally wouldn’t qualify for a fixed rate mortgage (FRT) are qualifying for an ARM and just getting slaughtered financially.
  • Cars – people are buying cars with dollar down payments or even no down payments, but that only means that they’ll have to pay MORE in interest later – people just see original costs and don’t factor any of this in.

If adults can’t even manage their finances correctly (the Stock Market Crash of 1929 – Hoover was absolutely right in not bailing them out – the government isn’t here to help people who make stupid financial decisions, it’s not the government’s job.  If you screw up your checkbook, the government is not here to balance it), then we shouldn’t be teaching 8 year-olds to use credit cards.

I really am scared of what’s going to happen when my generation is going around buying houses and in charge of financial institutions – with some of the spending and loaning principles that are going on now, I am terrified of the worse things that could come in the future.

Done Ranting,

Ranting Republican
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