 |  | Thought For The Day * Irony at its best: 290 people get the Swine Flu and everybody wants to wear a mask. Ten million people irrefutably have AIDS and no one wants to wear a condom. |
| | Thought For The Day * Irony at its best: 290 people get the Swine Flu and everybody wants to wear a mask. Ten million people irrefutably have AIDS and no one wants to wear a condom. |
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September 2008 ArchivesOn the Second Amendment, Don’t Believe ObamaThe presidential primary season is finally over, and it is now time for gun owners to take a careful look at just where nominee Barack Obama stands on issues related to the Second Amendment. During the primaries, Obama tried to hide behind vague statements of support for “sportsmen” or unfounded claims of general support for the right to keep and bear arms.
But his real record, based on votes taken, political associations, and long standing positions, shows that Barack Obama is a serious threat to Second Amendment liberties. Don’t listen to his campaign rhetoric! Look instead to what he has said and done during his entire political career. FACT: Barack Obama opposes four of the five Supreme Court justices who affirmed an individual right to keep and bear arms. He voted against the confirmation of Alito and Roberts and he has stated he would not have appointed Thomas or Scalia.17 Read More » FACT: Barack Obama voted for an Illinois State Senate bill to ban and confiscate “assault weapons,” but the bill was so poorly crafted, it would have also banned most semi-auto and single and double barrel shotguns commonly used by sportsmen.18 FACT: Barack Obama voted to allow reckless lawsuits designed to bankrupt the firearms industry.1 FACT: Barack Obama wants to re-impose the failed and discredited Clinton Gun Ban.15 FACT: Barack Obama voted to ban almost all rifle ammunition commonly used for hunting and sport shooting.3 FACT: Barack Obama has endorsed a 500% increase in the federal excise tax on firearms and ammunition.9 FACT: Barack Obama has endorsed a complete ban on handgun ownership.2 FACT: Barack Obama supports local gun bans in Chicago, Washington, D.C., and other cities.4
FACT: Barack Obama voted to uphold local gun bans and the criminal prosecution of people who use firearms in self-defense.5
FACT: Barack Obama supports gun owner licensing and gun registration.6 FACT: Barack Obama refused to sign a friend-of-the-court Brief in support of individual Second Amendment rights in the Heller case. FACT: Barack Obama opposes Right to Carry laws.7 FACT: Barack Obama was a member of the Board of Directors of the Joyce Foundation, the leading source of funds for anti-gun organizations and “research.”8 FACT: Barack Obama supported a proposal to ban gun stores within 5 miles of a school or park, which would eliminate almost every gun store in America.9 FACT: Barack Obama voted not to notify gun owners when the state of Illinois did records searches on them.10 FACT: Barack Obama voted against a measure to lower the Firearms Owners Identification card age minimum from 21 to 18, a measure designed to assist young people in the military.11 FACT: Barack Obama favors a ban on standard capacity magazines.12 FACT: Barack Obama supports mandatory micro-stamping.13 FACT: Barack Obama supports mandatory waiting periods.2 FACT: Barack Obama supports repeal of the Tiahrt Amendment, which prohibits information on gun traces collected by the BATFE from being used in reckless lawsuits against firearm dealers and manufacturers.14 FACT: Barack Obama supports one-gun-a-month handgun purchase restrictions.16 FACT: Barack Obama supports a ban on inexpensive handguns.9 FACT: Barack Obama supports a ban on the resale of police issued firearms, even if the money is going to police departments for replacement equipment.9 FACT: Barack Obama supports mandatory firearm training requirements for all gun owners and a ban on gun ownership for persons under the age of 21.9 1. United States Senate, S. 397, vote number 219, July 29, 2005. (http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=109&session=1&vote=00219) http://www.gunbanobama.com/Default.aspx?NavGuid=530ecfa4-ae4e-4819-97e6-892463d99f08 Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). « Close It Posted September 29, 2008 01:01 AM Permalink
The Financial Mess: How We Got Here
"How can you vote Republican when they so messed up the economy?" a liberal friend screams at me with such vehemence that I had to put the phone a full arms length from my ear. Of course, my friend never heard of the Community Reinvestment Act. He is one of those mindless liberals who thinks that George Bush and the Republicans are responsible for everything from Global Warming to Hurricane Katrina to the attempted genocide of the entire black population of New Orleans. He claims to be informed but he doesn't remember those dire warnings going back nine years ago that the Community Reinvestment Act would eventually cause a major financial and banking crisis in this country. Read More » The Community Reinvestment Act was pushed hard by Bill Clinton, although it originated under Jimmy Carter. Asked about it the other day on one of the morning TV talk shows, Clinton said times back then were different. Fannie and Freddie had lots of money and he (in his infinite wisdom) decided that the money should not go to share holders or to executive compensation, but should be used to put the poor into homes. As you can imagine, wonderful things happen when the government strong arms corporations as to how they should spend their money and, better yet, how they should assess the qualifications of home buyers. So the country's biggest buyers of mortgages were pressured into lowering the qualifications of applicants, in order to increase the percentage of poor that got mortgages. By 2006, 30% of all mortgages went to people who in any other circumstances wouldn't qualify. Now the political left would like you to know that the CRA-controlled institutions did not lend the largest percentage of sub-prime mortgages. But that's information by deception, because the mortgage business is a competitive business. If the government strong arms one part of the business, the other part will respond. And strong arm was what the Clinton administration did, even using the Office of the Comptroller of the Currency to pressure banks to lend more money to the disadvantaged. Caught in the act, a spokesman for the office noted that its abuse of power was "for the best of intentions:" the same inclination used to pave the road to hell. In the short run, all sorts of money was to be made by lowering standards and processing sub-prime loans for the poor. The Wall Street Journal raised concerns about Fannie's and Freddie's capital requirements. Senator Phil Gramm (R, TX) raised issues about community pressure groups, such as Barack Obama's ACORN, extorting money from banks by holding their feet to the CRA fire, and threatening to militate against mergers and acquisitions unless the banks entered into preferential agreements with community groups. The Gramm-Leach-Bliley Act cut down on CRA reporting requirements and upped the ante for groups such as ACORN, forcing them to disclose their relationships with local banks. Fannie and Freddie became big contributors to the Democratic Party. The sub-prime business paid off-at least while the bubble was growing. And the Kerry, Hillary and Obama campaigns have numbered among the leading recipients of the largess of the two mortgage lenders. Franklin Raines, the Fannie Mae C.E.O. from 1999 to 2004, had been budget director in the Clinton administration. The left would not like you to be reminded that Raines has been a consultant to the Obama campaign, according to theWashington Post, and that Freddie and Fannie number among the top 5 contributors to Obama's run for the presidency. Raines is being sued for the recovery of 50 million in compensation acquired by the alleged manipulation of Fannie's books. Now, that's not change we can believe in. That's Washington as we have come to know and "love" it. The Bush administration in 2003 tried to change the system, to no avail. Congressman Barney Frank, (D, MA ) was in the forefront of stopping the Bush proposal to take control out of Fannie and Freddie and put it into a third overseeing organization. Frank too has emerged in the current crisis as one of the major critics of the administration. Former Federal Reserve Chairman Alan Greenspan continued to raise the alarm over Fannie's and Freddie's weak capitalization. His concerns were ignored. Former Congressman Michael Oxley (R,OH), then chairman of the House Financial Services Committee and co-author of the Sarbanes-Oxley Act, introduced a bill in 2005 in response to the growing problem, but Fannie and Freddie put their lobbyists to work and the bill died. Democratic Senator Chris Dodd, who is now Chairman of the Banking Committee and who appears along side Majority Leader Harry Reid on television to discuss the current bailout negotiations, has had harsh words for the Bush administration for its alleged role in the crisis. But the rest of us should have some harsh words for Senator Dodd. After all, the Bush administration in 2003 and Senator Phil Gramm even earlier, in 1999, had been working to change the system. Dodd, like Obama, has been a big recipient of campaign funds from Fannie and Freddie, organizations that Dodd oversees. Dodd has apparently been more consumed with campaign contributions from the mortgage giants than the responsibilities of oversight. When I point out the long trail of Obama's corruption stretching back to his days in the Illinois legislature, my liberal friends invoke moral equivalence, "They're all corrupt." There is no shame among the left. When they think Bush is responsible for the collapse of the banking system, they scream at you. When you point out that the Community Reinvestment Act created a pattern of abuse that now threatens the entire financial system, without hesitation liberals say, "They're all corrupt." The Federal Deposit Insurance Corporation even has a web site so you could see how well your bank is meeting its obligations under the CRA. Those of you who had money in Washington Mutual, which just went belly up, will be happy to know that WaMu, over the five individual reporting periods, had almost exemplary ratings on its commitment to CRA. That should give WaMu depositors great joy, to compensate for the financial mess they may be in. If WaMu had been less responsive to the CRA and more responsive to the market, maybe it wouldn't be insolvent. I am not suggesting that the CRA by itself led to the current crisis, but the CRA was the first and most important part of the food chain. The CRA caused the expansion in the number of questionable loans that lending institutions made, but Wall Street and insurance underwriters were all to willing to package these loans, enhance their ratings through convenient exercises in fantasy, sell them, and insure them with reserves that were more inadequate than the incomes of the people who got the loans in the first place.. The best thing that can emerge from the current financial crisis is the realization that the government needs to stop directing economic decision making. In a sense, the government is putting out a fire it started when it both created the CRA and assessed lending institutions by how well they were doing in response to the program. When Clinton decided, in his usual arrogance, that he knew better than the market how banks should lend money, the seeds were sown for the current financial disaster. If you want to blame Bush for the current crisis, it might make you feel good, reinforce your sense of how the world works, enable you to find a meeting of the minds when you next engage your liberal friends over wine and quiche, but like so many things you believe and which make you feel good, it has no correspondence to reality. By Abraham H. Miller http://www.americanthinker.com/2008/09/the_financial_mess_how_we_got.html Hat tip: Len Salonsky "It is as useless to argue with those who have renounced the use and authority of reason as it is to administer medication to the dead." ~~ Thomas Jefferson Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). « Close It Posted September 29, 2008 12:12 AM Permalink
Shot in the Fannie Mae
Hat tip: Ken Draeger and Tom Dworzanski (but Ken was first). Posted September 28, 2008 11:43 PM Permalink
Wrecking the financial industryExcerpt from the article: “Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains." Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001. Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee." Read More » Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact. When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices. In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded." Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses. A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off. In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system. Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them! The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats. Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients. Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.” by Ann Coulter http://www.humanevents.com/article.php?id=28714 Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). So, we KNOW who is to blame for most of these "bad loans" that has brought our financial system to the brink of collapse. Have we heard ANYONE from the (liberal) mainstream media place the blame where it belongs? Why do you think that is? Instead, we hear the sound of crickets. If Republicans had mandated such terribly irresponsible lending practices, there would now be multiple investigatory commissions in progress to pillory those republicans responsible for the current financial debacle. The real Democrat culprits who ENABLED most of the subsequent collapse of the financial dominos have been given a "pass" by a liberal cadre that cares more about "good intentions" than they do about competency, good judgment, and authentic leadership. Not coincidentally, they are the same sycophants who unquestionably rally around Obama now. « Close It Posted September 28, 2008 12:49 PM Permalink
Economic JusticeBarack Obama's Stealth Socialism Election '08: Before friendly audiences, Barack Obama speaks passionately about something called "economic justice." He uses the term obliquely, though, speaking in code — socialist code. During his NAACP speech earlier this month, Sen. Obama repeated the term at least four times. "I've been working my entire adult life to help build an America where economic justice is being served," he said at the group's 99th annual convention in Cincinnati. And as president, "we'll ensure that economic justice is served," he asserted. "That's what this election is about." Obama never spelled out the meaning of the term, but he didn't have to. His audience knew what he meant, judging from its thumping approval. Read More » It's the rest of the public that remains in the dark, which is why we're launching this special educational series. "Economic justice" simply means punishing the successful and redistributing their wealth by government fiat. It's a euphemism for socialism. In the past, such rhetoric was just that — rhetoric. But Obama's positioning himself with alarming stealth to put that rhetoric into action on a scale not seen since the birth of the welfare state. In his latest memoir he shares that he'd like to "recast" the welfare net that FDR and LBJ cast while rolling back what he derisively calls the "winner-take-all" market economy that Ronald Reagan reignited (with record gains in living standards for all). Obama also talks about "restoring fairness to the economy," code for soaking the "rich" — a segment of society he fails to understand that includes mom-and-pop businesses filing individual tax returns. It's clear from a close reading of his two books that he's a firm believer in class envy. He assumes the economy is a fixed pie, whereby the successful only get rich at the expense of the poor. Following this discredited Marxist model, he believes government must step in and redistribute pieces of the pie. That requires massive transfers of wealth through government taxing and spending, a return to the entitlement days of old. Of course, Obama is too smart to try to smuggle such hoary collectivist garbage through the front door. He's disguising the wealth transfers as "investments" — "to make America more competitive," he says, or "that give us a fighting chance," whatever that means. Among his proposed "investments": • "Universal," "guaranteed" health care. His new New Deal also guarantees a "living wage," with a $10 minimum wage indexed to inflation; and "fair trade" and "fair labor practices," with breaks for "patriot employers" who cow-tow to unions, and sticks for "nonpatriot" companies that don't. That's just for starters — first-term stuff. Obama doesn't stop with socialized health care. He wants to socialize your entire human resources department — from payrolls to pensions. His social-microengineering even extends to mandating all employers provide seven paid sick days per year to salary and hourly workers alike. You can see why Obama was ranked, hands-down, the most liberal member of the Senate by the National Journal. Some, including colleague and presidential challenger John McCain, think he's the most liberal member in Congress. The seeds of his far-left ideology were planted in his formative years as a teenager in Hawaii — and they were far more radical than any biography or profile in the media has portrayed. A careful reading of Obama's first memoir, "Dreams From My Father," reveals that his childhood mentor up to age 18 — a man he cryptically refers to as "Frank" — was none other than the late communist Frank Marshall Davis, who fled Chicago after the FBI and Congress opened investigations into his "subversive," "un-American activities." As Obama was preparing to head off to college, he sat at Davis' feet in his Waikiki bungalow for nightly bull sessions. Davis plied his impressionable guest with liberal doses of whiskey and advice, including: Never trust the white establishment. "They'll train you so good," he said, "you'll start believing what they tell you about equal opportunity and the American way and all that sh**." After college, where he palled around with Marxist professors and took in socialist conferences "for inspiration," Obama followed in Davis' footsteps, becoming a "community organizer" in Chicago. His boss there was Gerald Kellman, whose identity Obama also tries to hide in his book. Turns out Kellman's a disciple of the late Saul "The Red" Alinsky, a hard-boiled Chicago socialist who wrote the "Rules for Radicals" and agitated for social revolution in America. The Chicago-based Woods Fund provided Kellman with his original $25,000 to hire Obama. In turn, Obama would later serve on the Woods board with terrorist Bill Ayers of the Weather Underground. Ayers was one of Obama's early political supporters. After three years agitating with marginal success for more welfare programs in South Side Chicago, Obama decided he would need to study law to "bring about real change" — on a large scale. While at Harvard Law School, he still found time to hone his organizing skills. For example, he spent eight days in Los Angeles taking a national training course taught by Alinsky's Industrial Areas Foundation. With his newly minted law degree, he returned to Chicago to reapply — as well as teach — Alinsky's "agitation" tactics. (A video-streamed bio on Obama's Web site includes a photo of him teaching in a University of Chicago classroom. If you freeze the frame and look closely at the blackboard Obama is writing on, you can make out the words "Power Analysis" and "Relationships Built on Self Interest" — terms right out of Alinsky's rule book.) Amid all this, Obama reunited with his late father's communist tribe in Kenya, the Luo, during trips to Africa. As a Nairobi bureaucrat, Barack Hussein Obama Sr., a Harvard-educated economist, grew to challenge the ruling pro-Western government for not being socialist enough. In an eight-page scholarly paper published in 1965, he argued for eliminating private farming and nationalizing businesses "owned by Asians and Europeans." His ideas for communist-style expropriation didn't stop there. He also proposed massive taxes on the rich to "redistribute our economic gains to the benefit of all." "Theoretically, there is nothing that can stop the government from taxing 100% of income so long as the people get benefits from the government commensurate with their income which is taxed," Obama Sr. wrote. "I do not see why the government cannot tax those who have more and syphon some of these revenues into savings which can be utilized in investment for future development." Taxes and "investment" . . . the fruit truly does not fall far from the vine. (Voters might also be interested to know that Obama, the supposed straight shooter, does not once mention his father's communist leanings in an entire book dedicated to his memory.) In Kenya's recent civil unrest, Obama privately phoned the leader of the opposition Luo tribe, Raila Odinga, to voice his support. Odinga is so committed to communism he named his oldest son after Fidel Castro. With his African identity sewn up, Obama returned to Chicago and fell under the spell of an Afrocentric pastor. It was a natural attraction. The Rev. Jeremiah Wright preaches a Marxist version of Christianity called "black liberation theology" and has supported the communists in Cuba, Nicaragua and elsewhere. Obama joined Wright's militant church, pledging allegiance to a system of "black values" that demonizes white "middle classness" and other mainstream pursuits. (Obama in his first book, published in 1995, calls such values "sensible." There's no mention of them in his new book.) With the large church behind him, Obama decided to run for political office, where he could organize for "change" more effectively. "As an elected official," he said, "I could bring church and community leaders together easier than I could as a community organizer or lawyer." He could also exercise real, top-down power, the kind that grass-roots activists lack. Alinsky would be proud. Throughout his career, Obama has worked closely with a network of stone-cold socialists and full-blown communists striving for "economic justice." He's been traveling in an orbit of collectivism that runs from Nairobi to Honolulu, and on through Chicago to Washington. Yet a recent AP poll found that only 6% of Americans would describe Obama as "liberal," let alone socialist. Public opinion polls usually reflect media opinion, and the media by and large have portrayed Obama as a moderate "outsider" (the No. 1 term survey respondents associate him with) who will bring a "breath of fresh air" to Washington. The few who have drilled down on his radical roots have tended to downplay or pooh-pooh them. Even skeptics have failed to connect the dots for fear of being called the dreaded "r" word. But too much is at stake in this election to continue mincing words. Both a historic banking crisis and 1970s-style stagflation loom over the economy. Democrats, who already control Congress, now threaten to filibuster-proof the Senate in what could be a watershed election for them — at both ends of Pennsylvania Avenue. A perfect storm of statism is forming, and our economic freedoms are at serious risk. Those who care less about looking politically correct than preserving the free-market individualism that's made this country great have to start calling things by their proper name to avert long-term disaster. By INVESTOR'S BUSINESS DAILY http://www.ibdeditorials.com/IBDArticles.aspx?id=302137342405551&kw=socialism Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). « Close It Posted September 28, 2008 07:23 AM Permalink
What would Obama do?Powell's No-Brainer War On Terror: Islamic terrorists have attacked a hotel and a U.S. embassy in the span of two weeks. Russia is invading American allies and sending warships to our hemisphere. What would Obama do? - Gut the military. That's right, the Democrat choice for commander in chief wants to not only slash military spending but dismantle our nuclear arsenal — all so he can pay for his massive new welfare programs. Didn't hear that in his acceptance speech in Denver? That's because he knows better than to make such an anti-military plan widely known. But he made the little-noticed pledge just before the Iowa caucus to a left-wing pacifist group that seeks to reallocate defense dollars to welfare programs. The lobbying group, Caucus for Priorities, was so impressed by Obama's anti-military offering that it steered its 10,000 devotees his way. Read More » In a 132-word videotaped pledge (still viewable on YouTube), Obama agreed to hollow out the military by slashing conventional and nuclear weapons. The scope of his planned defense cuts, combined with his angry tone, is breathtaking. He sounds as if the military is the enemy, not the bad guys it's fighting. Here's a transcript: "I'm the only major candidate who opposed this war from the beginning; and as president, I will end it. "Second, I will cut tens of billions of dollars in wasteful spending. I will cut investments in unproven missile defense systems. I will not weaponize space. I will slow our development of future combat systems. "I will institute an independent defense priorities board to ensure that the Quadrennial (Defense) Review is not used to justify unnecessary defense spending. "Third, I will set a goal for a world without nuclear weapons. To seek that goal, I will not develop nuclear weapons; I will seek a global ban on the production of fissile material; and I will negotiate with Russia to take our ICBMs off hair-trigger alert, and to achieve deep cuts in our nuclear arsenal." Our ICBMs have been off "hair-trigger" alert for decades. But his threat to unilaterally hollow out our nuclear forces is chilling. You can bet that Obama won't make this sweeping indictment of our security forces again as he tries to lurch to the center before the election. But this is what he thinks and plans to do. His plan, needless to say, is frighteningly irresponsible given the world threats. And there are no signs his attitude has changed following Russia's invasion of Georgia and flexing of its military muscle off the coast of Venezuela. Or after al-Qaida's bombings this month of the U.S. embassy in Yemen and the Marriott in Islamabad, which killed some 60 people, including U.S. Defense Department and State Department officials. In contrast, John McCain's mantra that the transcendent challenge of the 21st century is "radical Islamic extremism" is right on target. It's a phrase he's refused to back down from even as Muslim groups have convinced President Bush to stop using it. Obama seems oblivious to the threat from Islamic extremism. During his 4,350-word acceptance speech in Denver, he couldn't summon enough spit even to utter the phrase a single time. The gap between the two candidates in understanding the dangerous threats America faces around the world, particularly from Islamic extremism, is yawning. Ret. Gen. Colin Powell, former chairman of the Joint Chiefs of Staff, says he's not going to vote for Obama "just because you're black." The critical issue, he recently averred, "is who is going to keep us safe." Who does that leave other than McCain-Palin? By INVESTOR'S BUSINESS DAILY Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). « Close It Posted September 27, 2008 03:31 PM Permalink
What Is An “Islamophobe?”
For the past five years, I’ve been traveling the world in an effort to inform people about the threat of radical Islam. I have often been accused of “hate speech” and “Islamophobia.” The latest was in an article in the New York Times, where I was described not just as an “Islamophobe,” but a “radical Islamophobe.” This made me question what those terms really mean. What is the difference between “hate speech” and “free speech”? What is “Islamophobia” and who are the true “Islamophobes?” Read More » When I describe the threat presented by radical Islam, I quote chapter and verse from the Koran and authoritative classical Islamic sources. When I describe the worldwide campaign of Islamist hate indoctrination against the West, and the mind-numbing mass violence committed and glorified by radical Islamists, I am relaying facts that have been published by print and electronic media outlets all over the world. Do some of the facts about Islamist supremacist manifest “hatefulness?” Certainly. However, it’s not my fault that the truth about Islamist supremacist teachings and edicts is that they promote hate. I wish they didn’t. But wishing doesn’t make it so (contrary to the belief of the New York Times). The Koran explicitly tells Muslims to hate (terrorize, subdue, oppress, and slaughter) the unbeliever until Islam is supreme in the world: "Your Lord inspired the angels with the message: ‘I am with you. Give firmness to the Believers. I will terrorize the unbelievers. Therefore smite them on their necks and every joint and incapacitate them. Strike off their heads and cut off each of their fingers and toes.’" (Koran 8:12) The New York Times itself dutifully reported on various European newspapers printing the Muhammad cartoons in solidarity with and support of the Danish newspaper. [4] The Times could have taken the hint and printed the cartoons, but was apparently oblivious to the irony of being taught a lesson in freedom of the press by a bunch of Europeans. Instead, the Times’ fear of Islam, its Islamophobia, caused the great Grey Lady of the Fourth Estate, the most respected voice in American print media, to roll over and play dead. This is dangerous, craven Islamophobia. http://frontpagemagazine.com/Articles/Read.aspx?GUID=63E81FA2-BB8A-466C-9BC4-7CF20C272431 Brigitte Gabriel is the author of Because They Hate: A Survivor of Islamic Terror Warns America and the founder of American Congress for Truth.org. She is an expert on the Middle East and lectures nationally and internationally on the subject. Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). « Close It Posted September 27, 2008 04:47 AM Permalink
I’ve changed my mindBAILOUT ISN'T WORTH IT I’ve changed my mind. After about three days of wide-eyed faith in the smart boys in Washington, this deal is starting to smell like what it is. Bull crap. The entire Wall Street bailout. It’s nothing but stinking bull crap. It’s the biggest money and power grab in the history of our country. It guts the Constitution, it financially enslaves us and our children, it essentially bankrupts our nation, and it violates every rule of fair play there is. Read More » Economic collapse is preferable to this deal. And I think we ought to call their bluff. Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). « Close It Posted September 25, 2008 08:54 AM Permalink
Can Congress just walk away?
Congress Lies Low To Avoid Bailout Blame Congress says it likely will adjourn this month having done nothing on the most important issue in America right now: the financial meltdown from the subprime lending crisis. Can Congress just walk away from a problem it helped create? Maybe, maybe not. There's now some talk of a grand deal between the Treasury, the Fed and Congress for a "permanent" solution: creating a government agency to buy up all the bad subprime debt, just like the Resolution Trust Corp. did with bad real estate in the 1980s and 1990s. Already, the U.S. Treasury and Federal Reserve are spending hundreds of billions of dollars to keep the subprime crisis from crashing the world economy. The collapse of twin mortgage giants Fannie Mae and Freddie Mac, along with the failures of Lehman Bros., Bear Stearns and insurer AIG, expose taxpayers to more than $1 trillion in liabilities. Read More » Until now, Congress has been surprisingly passive. As Sen. Majority Leader Harry Reid put it, "no one knows what to do" right now. Funny, since it was a Democrat-led Congress that helped cause the problems in the first place. When House Speaker Nancy Pelosi recently barked "no" at reporters for daring to ask if Democrats deserved any blame for the meltdown, you saw denial in action. Pelosi and her followers would have you believe this all happened because of President Bush and his loyal Senate lapdog, John McCain. Or that big, bad predatory Wall Street banks deserve all the blame. "The American people are not protected from the risk-taking and the greed of these financial institutions," Pelosi said recently, as she vowed congressional hearings. Only one problem: It's untrue. Yes, banks did overleverage and take risks they shouldn't have. But the fact is, President Bush in 2003 tried desperately to stop Fannie Mae and Freddie Mac from metastasizing into the problem they have since become. Here's the lead of a New York Times story on Sept. 11, 2003: "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." Bush tried to act. Who stopped him? Congress, especially Democrats with their deep financial and patronage ties to the two government-sponsored enterprises, Fannie and Freddie. "These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Rep. Barney Frank, then ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." It's pretty clear who was on the right side of that debate. As for presidential contender John McCain, just two years after Bush's plan, McCain also called for badly needed reforms to prevent a crisis like the one we're now in. "If Congress does not act," McCain said in 2005, "American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole." Sounds like McCain was spot on. But his warnings, too, were ignored by Congress. To hear today's Democrats, you'd think all this started in the last couple years. But the crisis began much earlier. The Carter-era Community Reinvestment Act forced banks to lend to uncreditworthy borrowers, mostly in minority areas. Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race. These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans. Lenders who refused would find themselves castigated publicly as racists. As noted this week in an IBD editorial, no fewer than four federal bank regulators scrutinized financial firms' books to make sure they were in compliance. Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was. It was economic hardball. "We have to use every means at our disposal to end discrimination and to end it as quickly as possible," Clinton's comptroller of the currency, Eugene Ludwig, told the Senate Banking Committee in 1993. And they meant it. In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings. Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market. That's how the contagion began. With those changes, the subprime market took off. From a mere $35 billion in loans in 1994, it soared to $1 trillion by 2008. Wall Street eagerly sold the new mortgage-backed securities. Not only were they pooled investments, mixing good and bad, but they were backed with the implicit guarantee of government. Fannie Mae and Freddie Mac grew to become monsters, accounting for nearly half of all U.S. mortgage loans. At the time of their bailouts this month, they held $5.4 trillion in loans on their books. About $1.4 trillion of those were subprime. As they grew, Fannie and Freddie grew heavily involved in "community development," giving money to local housing rights groups and "empowering" the groups, such as ACORN, for whom Barack Obama once worked in Chicago. Warning signals were everywhere. Yet at every turn, Democrats in Congress halted attempts to stop the madness. It happened in 1992, again in 2000, in 2003 and in 2005. It may happen this year, too. Since 1989, Fannie and Freddie have spent an estimated $140 million on lobbying Washington. They contributed millions to politicians, mostly Democrats, including Senator Chris Dodd (No. 1 recipient) and Barack Obama (No. 3 recipient, despite only three years in office). The Clinton White House used Fannie and Freddie as a patronage job bank. Former executives and board members read like a who's who of the Clinton-era Democratic Party, including Franklin Raines, Jamie Gorelick, Jim Johnson and current Rep. Rahm Emanuel. Collectively, they and others made well more than $100 million from Fannie and Freddie, whose books were cooked Enron-style during the late 1990s and early 2000s to ensure executives got their massive bonuses. They got the bonuses. You get the bill. By Terry Jones http://www.ibdeditorials.com/IBDArticles.aspx?id=306632135350949 Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). « Close It Posted September 24, 2008 05:30 PM Permalink
Socialism Is Coming to AmericaThe liberal media are, of course, also trying to keep the American people in the dark about what is happening. It would be an exaggeration to say that we are getting close to anything resembling the Soviet system. But it is also a big mistake to call this a “bailout.” It is socialism. Why are so many in the media afraid of using this term? Read More » Over at Political Affairs Magazine, a publication of the Communist Party USA, writer John Case is gloating. His article about the crisis is headlined, “A Dose of Socialism to Forestall Disaster.” He thinks that Paulson and Federal Reserve Board chairman Ben Bernanke have been reading the works of closet Marxists. But none of this is secret. At a time when many pieces of legislation before Congress take up thousands of pages and do their best to hide pork barrel spending, Paulson’s three-page plan for Wall Street socialism is straightforward and simple. If passed by Congress, Paulson would assume the dictatorial power and authority to designate financial institutions “as financial agents of the Government” and order them to perform “all such reasonable duties related to this Act as financial agents of the Government as may be required of them…” The bill gives Paulson automatic access to $700 billion and raises the limit on the public debt to $11.3 trillion. He gets the power to issue regulations, hire people, establish various financial “vehicles,” and take other “necessary actions.” Conservative Senator Jim Bunning is brutally honest, saying that “…the free market for all intents and purposes is dead in America.” He said Paulson’s plan “will take away the free market and institute socialism in America. The American taxpayer has been misled throughout this economic crisis. The government on all fronts has failed the American people miserably.” “After reviewing the Administration’s proposed bailout plan, I believe it is completely unacceptable,” said conservative Senator Jim DeMint. “This plan does nothing to address the misguided government policies that created this mess and it could make matters much worse by socializing an entire sector of the U.S. economy. This plan fails to oversee or regulate the government failures that led to this crisis. Instead it greatly increases the role for Secretary Paulson whose market predictions have been consistently wrong in the last year…” Every newspaper in America should print a copy of his plan. Every news anchor and commentator should read it out loud to the American people. The American people have a right to know that President Bush and Congress are officially creating a socialist America. Over at the “conservative” Fox News Channel, however, some commentators think this is just great. “I love it,” Fred Barnes of the “conservative” Weekly Standard said of the temporary market rise in response to the anticipated Paulson plan. “Look,” Barnes said, “when I keep hearing this is going to cost a trillion dollars, and so on, it may not cost anything.” The U.S. may “come out ahead” in the long run, he confidently predicted. He praised Paulson and Bernanke for acting “boldly.” Another “conservative,” Charles Krauthammer, was almost giddy. “It took FDR a decade to put in place all the institutions of the New Deal,” he commented. “Paulson and Bernanke did it in ten hours. I mean, in one night, they created a whole new world.” However, on the September 21 edition of Fox News Sunday, host Chris Wallace pointed out that Paulson has already been caught making reassuring but false statements about the crisis. In March, also on Fox News Sunday, Wallace had asked him, “Are more Wall Street firms in danger, at risk, of going under? Paulson replied, “I’ve got great confidence in our financial market, our financial institutions. Our markets are resilient. They’re flexible. Our institutions, our banks and investment banks, are strong.” And this is the guy being entrusted with virtual dictatorial power over Wall Street? Rather than praise him for his intellect and ability, why aren’t Barnes and Krauthammer demanding that Bush fire him? The liberal media are, of course, also trying to keep the American people in the dark about what is happening. The Washington Post deceptively calls it a “rescue plan.” The “debate” taking place in Washington and the media is being carefully controlled. The Republican Bush Administration supports the plan and Congressional Democrats want to take it further. The Democrats want even more federal involvement in the firms that are being acquired. In other words, it is a question of how much socialism they want. The Democrats want more socialism; the Bush Republicans want slightly less. But it is still socialism. There is a bipartisan note: both sides agree that there should be a new government board assigned to monitor America’s transition into a socialist economy. Both major party presidential candidates, John McCain and Barack Obama, have not objected to the proposed federal takeover, although McCain has raised questions about giving Paulson too much power. He said, “So far, the only solution being talked about is more of the same failed monetary policies that got us into this mess in the first place―more fake money, more debt, more usury. It is time to demand a return to sound money.” On the House side, 31 members of the House of Representatives have voiced public objections in writing to going further down the socialist road. They are members of the Republican Study Committee (RSC), the Caucus of House Conservatives. They have sent a letter to Paulson and Bernanke. Rep. Mike Pence, the former chairman of the RSC, said, “The Administration’s request amounts to the largest corporate bailout in American history. Congress should act, but should act in a way that protects the integrity of our free market and protects the American taxpayer from more debt and higher taxes. To have the freedom to succeed, we must preserve the freedom to fail. Any solution to our present crisis must preserve our essential economic freedom.” “Government bailouts and takeovers are nothing new,” points out financial advisor Ric Edelman. He cites the following: “In 1971, Richard Nixon rescued Lockheed by providing $250 million in loan guarantees. When the Penn Central Railroad failed in 1971, Nixon created Amtrak. Jimmy Carter gave $1.5 billion in loan guarantees to Chrysler in 1979. Under Ronald Reagan, the FDIC in 1984 spent $4.5 billion to rescue Continental Illinois, which still holds the record as the largest U.S. bank failure. Then, during the S&L crisis of the 1980s, George H. W. Bush approved the bailout of 747 savings and loans at a cost to taxpayers of $124.6 billion. In 1998, under Bill Clinton, the Federal Reserve Bank of New York bailed out Long Term Capital Management at a cost of $3.6 billion. During the Mexican Peso Crisis, Clinton arranged for loans and guarantees to Mexico totaling almost $50 billion. Then, following the September 11, 2001, terrorist attacks, George W. Bush approved $15 billion in subsidies and loan guarantees to aid the faltering airline industry. This year, the Federal Reserve approved a $30 billion credit line to help JP Morgan Chase acquire Bear Stearns and engineered takeovers of Freddie Mac, Fannie Mae and AIG. The names, dates and amounts are different, but that’s about it.” In fact, however, the massive scope and price tag make the Paulson plan far different. Meanwhile, some “progressive” economists and writers are urging the Democrats in Congress to take the plan much further by implementing the first phase of a global tax. James Parrott of the Fiscal Policy Institute says that Washington needs to establish a “new regulatory regime that covers all financial institutions (including hedge funds), controls risk and introduces a tax on financial transactions to help repay U.S. taxpayers for coming to the industry’s rescue.” A tax on financial transactions, which would affect stocks and mutual funds, could be part of a global “Tobin Tax,” named after the late Yale University economist James Tobin, to bring in billions and even trillions of dollars a year to national governments and international institutions such as the United Nations. Such a plan has usually been marketed as a way to diminish “global financial instability.” Dean Baker of the Center for Economic and Policy Research says that “The government should impose a modest financial transactions tax, comparable to the one in the United Kingdom. This can both restrain excessive trading and raise more than $100 billion a year in revenue.” One cannot exclude the possibility of such a proposal being slipped into the final legislation. It is being reported that Senator Christopher Dodd, Democratic chairman of the Banking Committee, has been circulating a 44-page version of the bill. But Dodd’s Banking Committee website only has a three-page summary. What is in the rest of the proposal? The next few days are critical. The American people can stop this rush into socialism, if only the liberal and conservative media start telling the truth about the socialist “new world” into which we are about to enter. AIM Column http://www.aim.org/aim-column/socialism-is-coming-to-america/ Comments are welcome at redstatepatriot@hughes.net. Please include the title of the article as your subject line. Selected responses, in whole or part, may be published (appended to the article). --------------------- I've just finished reading this and I am ready to go puke! --------------------- From my vantage point, the American people have been enabling the turn towards socialism for decades by their complacency and by their almost universal demand for entitlement increases whose implementation lie outside the principles and codification of the US Constitution. Unscrupulous politicians (perhaps the majority) are glad to accommodate any end-run around the Constitution if such an act will bring them a majority of votes. The American people will never knowingly adopt Socialism, but under the name of Liberalism, they will adopt every fragment of the Socialist program until one day America will be a Socialist nation without knowing how it happened. ~ Norman Thomas - Socialist Party Presidential candidate (1976) No republic has long outlived the discovery by a majority of its people that they could vote themselves largesse from the public treasury. ~ Alexander Tyler In general, the art of government consists in taking as much money as possible from one party of citizens to give to the other. ~ Voltaire (1764) You cannot bring about prosperity by discouraging thrift. You cannot strengthen the weak by weakening the strong. You cannot help the wage earner by pulling down the wage payer. You cannot further the brotherhood of many by encouraging class hatred. You cannot help the poor by destroying the rich. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by taking away mans initiative and independence. You cannot help men permanently by doing for them what they could and should do for themselves. ~ Abraham Lincoln There are severe limits to the good that the government can do for the economy, but there are almost no limits to the harm it can do. ~ Milton Friedman, Nobel laureate « Close It Posted September 24, 2008 09:46 AM Permalink
The end of lying as we know it?
India’s Novel Use of Brain Scans in Courts Is Debated MUMBAI, India — The new technology is, to its critics, Orwellian. Others view it as a silver bullet against terrorism that could render waterboarding and other harsh interrogation methods obsolete. Some scientists predict the end of lying as we know it. Now, well before any consensus on the technology’s readiness, India has become the first country to convict someone of a crime relying on evidence from this controversial machine: a brain scanner that produces images of the human mind in action and is said to reveal signs that a suspect remembers details of the crime in question. Read More » For years, scientists have peered into the brain and sought to identify deception. They have shot infrared beams through liars’ heads, placed them in giant magnetic resonance imaging machines and used scanners to track their eyeballs. Since the Sept. 11 attacks, the United States has plowed money into brain-based lie detection in the hope of producing more fruitful counterterrorism investigations. The technologies, generally regarded as promising but unproved, have yet to be widely accepted as evidence — except in India, where in recent years judges have begun to admit brain scans. But it was only in June, in a murder case in Pune, in Maharashtra State, that a judge explicitly cited a scan as proof that the suspect’s brain held “experiential knowledge” about the crime that only the killer could possess, sentencing her to life in prison. Psychologists and neuroscientists in the United States, which has been at the forefront of brain-based lie detection, variously called India’s application of the technology to legal cases “fascinating,” “ridiculous,” “chilling” and “unconscionable.” (While attempts have been made in the United States to introduce findings of similar tests into court cases, these generally have been by defense lawyers trying to show the mental impairment of the accused, not by prosecutors trying to convict.) “I find this both interesting and disturbing,” Henry T. Greely, a bioethicist at Stanford Law School, said of the Indian verdict. “We keep looking for a magic, technological solution to lie detection. Maybe we’ll have it someday, but we need to demand the highest standards of proof before we ruin people’s lives based on its application.” Law enforcement officials from several countries, including Israel and Singapore, have shown interest in the brain-scanning technology and have visited government labs that use it in interrogations, Indian officials said. Methods of eliciting truth have long proved problematic. Truth drugs tend to make suspects babble as much falsehood as truth. Polygraph tests measure anxiety more than deception, and good liars may not feel anxious. In 1998, the United States Supreme Court said there was “simply no consensus that polygraph evidence is reliable.” This latest Indian attempt at getting past criminals’ defenses begins with an electroencephalogram, or EEG, in which electrodes are placed on the head to measure electrical waves. The suspect sits in silence, eyes shut. An investigator reads aloud details of the crime — as prosecutors see it — and the resulting brain images are processed using software built in Bangalore. The software tries to detect whether, when the crime’s details are recited, the brain lights up in specific regions — the areas that, according to the technology’s inventors, show measurable changes when experiences are relived, their smells and sounds summoned back to consciousness. The inventors of the technology claim the system can distinguish between people’s memories of events they witnessed and between deeds they committed. The Brain Electrical Oscillations Signature test, or BEOS, was developed by Champadi Raman Mukundan, a neuroscientist who formerly ran the clinical psychology department of the National Institute of Mental Health and Neuro Sciences in Bangalore. His system builds on methods developed at American universities by other scientists, including Emanuel Donchin, Lawrence A. Farwell and J. Peter Rosenfeld. Despite the technology’s promise — some believe it could transform investigations as much as DNA evidence has — many experts in psychology and neuroscience were troubled that it was used to win a criminal conviction before being validated by any independent study and reported in a respected scientific journal. Publication of data from testing of the scans would allow other scientists to judge its merits — and the validity of the studies — during peer reviews. “Technologies which are neither seriously peer-reviewed nor independently replicated are not, in my opinion, credible,” said Dr. Rosenfeld, a psychologist and neuroscientist at Northwestern University and one of the early developers of electroencephalogram-based lie detection. “The fact that an advanced and sophisticated democratic society such as India would actually convict persons based on an unproven technology is even more incredible.” After passing an 18-page promotional dossier about the BEOS test to a few of his colleagues, Michael S. Gazzaniga, a neuroscientist and director of the SAGE Center for the Study of the Mind at the University of California, Santa Barbara, said: “Well, the experts all agree. This work is shaky at best.” None of these experts have met the Indian inventors and the investigators using the test. One British forensic psychologist who has met them said he found the presentation highly convincing. “According to the cases that have been presented to me, BEOS has clearly demonstrated its utility in providing admissible evidence that has been used to assist in the conviction of defendants in court,” Keith Ashcroft, a frequent expert witness in the British courts, said in an e-mail message. Two states in India, Maharashtra and Gujarat, have been impressed enough to set up labs using BEOS for their prosecutors. Sunny Joseph, a state forensic investigator in Maharashtra who used to work with Dr. Mukundan as a researcher on BEOS in Bangalore, said the test’s results were highly reliable. He said Dr. Mukundan had done extensive testing, as had the state. Here in Maharashtra, about 75 crime suspects and witnesses have undergone the test since late 2006. But the technique received its strongest official endorsement, forensic investigators here say, on June 12, when a judge convicted a woman of murder based on evidence that included polygraph and BEOS tests. The woman, Aditi Sharma, was accused of killing her former fiancé, Udit Bharati. They were living in Pune when Ms. Sharma met another man and eloped with him to Delhi. Later Ms. Sharma returned to Pune and, according to prosecutors, asked Mr. Bharati to meet her at a McDonald’s. She was accused of poisoning him with arsenic-laced food. Ms. Sharma, 24, agreed to take a BEOS test in Mumbai, the capital of Maharashtra. (Suspects may be tested only with their consent, but forensic investigators say many agree because they assume it will spare them an aggressive police interrogation.) After placing 32 electrodes on Ms. Sharma’s head, investigators said, they read aloud their version of events, speaking in the first person (“I bought arsenic”; “I met Udit at McDonald’s”), along with neutral statements like “The sky is blue,” which help the software distinguish memories from normal cognition. For an hour, Ms. Sharma said nothing. But the relevant nooks of her brain where memories are thought to be stored buzzed when the crime was recounted, according to Mr. Joseph, the state investigator. The judge endorsed Mr. Joseph’s assertion that the scans were proof of “experiential knowledge” of having committed the murder, rather than just having heard about it. In the only other significant judicial statement on BEOS, a judge in 2006 in Gujarat denied the test the status of “concluded proof” but wrote that it corroborated already solid evidence from other sources. In writing his opinion on the Pune murder case, Judge S. S. Phansalkar-Joshi included a nine-page defense of BEOS. Ms. Sharma insists that she is innocent. Even as the debate continues over using scans to trip up obfuscators, researchers are developing new uses for the technology. No Lie MRI, a company in California, promises on its Web site to use the scans to help with developing interpersonal trust and military intelligence, among other tasks. In August, a committee of the National Research Council in Washington predicted that, with greater research, brain scans could eventually aid “the acquisition of intelligence from captured unlawful combatants” and “the screening of terrorism suspects at checkpoints.” “As we enter more fully into the era of mapping and understanding the brain, society will face an increasing number of important ethical, legal and social issues raised by these new technologies,” Mr. Greely, the Stanford bioethicist, and his colleague Judy Illes wrote last year in the American Journal of Law & Medicine. If brain scans are widely adopted, they said, “the legal issues alone are enormous, implicating at least the First, Fourth, Fifth, Sixth, Seventh and 14th Amendments to the U.S. Constitution.” “At the same time,” they continued, “the potential benefits to society of such a technology, if used well, could be at least equally large.” By Anand Giridharadas http://www.nytimes.com/2008/09/15/world/asia/15brainscan.html?_r=1&oref=slogin Hat tip: Joanne Cuccia « Close It Posted September 23, 2008 01:42 PM Permalink
Interview of Mike Gravel (former Senator, D-AK)Posted September 21, 2008 10:03 AM Permalink
Obama's links to failed Fannie and Freddie
Fannie Mae, Freddie Mac execs now offering advice to Obama Campaign contributions from Fannie Mae and Freddie Mac made to Barack Obama may backfire if the Democratic presidential hopeful wages an aggressive campaign to cast blame on rival John McCain and the Republicans in Congress for the mortgage-related losses that forced the U.S. Treasury to take over the quasi-governmental mortgage giants. A review of Federal Election Commission records back to 1989 reveals Obama in his three complete years in the Senate is the second largest recipient of Freddie Mac and Fannie Mae campaign contributions, behind only Sen. Christopher Dodd, D-Conn., the powerful chairman of the Senate banking committee. Dodd was first elected to the Senate in 1980. Read More » According to OpenSecrets.com, from 1989 to 2008, Dodd received $165,400 in Fannie Mae and Freddie Mac campaign contributions, including contributions from PACs and individuals, followed by Obama, who received $126,349 in such contributions since being elected to the Senate in 2004. In contrast, McCain warned of the coming mortgage crisis as he pressed in 2005 for regulatory reform of Fannie Mae and Freddie Mac. "For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac – known as government-sponsored entities or GSEs – and the sheer magnitude of these companies and the role they play in the housing market," McCain said on the floor of the Senate in 2005, speaking in favor of the Federal Housing Enterprise Regulatory Reform Act of 2005. McCain pointed out Fannie Mae's regulator had stated the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal. The bill passed the House but was never brought up for a vote in the Senate, largely because of Democratic opposition to change in the Fannie Mae and Freddie Mac regulatory structure that remained in place until the Treasury takeover two weeks ago. As evidenced by the failure to pass the Federal Housing Enterprise Regulatory Reform Act of 2005, the Democrats in Congress have repeatedly fought back Republican Party efforts to reform the two mortgage banking giants. Instead, Democrats in Congress have sought to preserve the quasi-governmental status of the mortgage giants, seeing Fannie Mae and Freddie Mac as places to locate former top Democratic Party operatives, where they have earned millions in compensation, despite a continuing series of financial scandals. Enron-like accounting manipulation, for example, boosted earnings to a level at which massive executive bonuses could be paid. In the aftermath of the U.S. government takeover, attention has focused on three Democrats with close ties to Obama who served as Fannie Mae executives: Franklin Raines, former Clinton administration budget director; James Johnson, former aide to Democratic Vice President Walter Mondale; and Jamie Gorelick, former Clinton administration deputy attorney general. All three Obama-related executives earned millions in compensation from Fannie Mae. Johnson earned $21 million in just his last year serving as Fannie Mae CEO from 1991 to 1998; Raines earned $90 million in his five years as Fannie Mae CEO, from 1999 to 2004; and Gorelick earned an estimated $26 million serving as vice chair of Fannie Mae from 1998 to 2003, according to author David Frum, a fellow at the American Enterprise Institute. All three have been involved in mortgage-related financial scandals. In 1998, according to the Washington Post, Gorelick, as Fannie Mae vice chairman, received a bonus of $779,625, despite a scandal in which employees falsified signatures on accounting transactions to manipulate books to meet 1998 earning targets. The moves, in turn, triggered multi-million-dollar bonuses for top executives. Gorelick was embroiled in another controversy over an alleged conflict of interest when a 1995 memo she authored as deputy attorney general surfaced while she was a member of the 9/11 commission. The memo, which became known as the "Gorelick Wall," appeared to establish barriers that barred federal anti-terrorist criminal investigators from accessing various federal records and databases that may have assisted them in their criminal investigations. According to the Associated Press, Raines and several other Fannie Mae top executives were ordered in a civil lawsuit to pay nearly $31.4 million for manipulating Fannie Mae earnings over a period of six years to trigger their massive bonuses. Raines was also forced in the settlement to give up Fannie Mae stock options valued at $15.6 million. Last year, the Securities and Exchange Commission alleged Freddie Mac had engaged in accounting fraud from 2000 to 2002, imposing a $50 million fine on the company and on four executives fines for amounts ranging from $65,000 to $250,000. Raines currently advises Obama on housing policy. Johnson was appointed to head Obama's vice presidential selection committee, until a controversy concerning an alleged $7 millions in questionable real estate loans he received on favorable terms from failed sub-prime mortgage lender Countrywide Financial surfaced and forced him to step down. WND previously reported a panel chaired by Elena Kagan, dean and professor of law at Harvard Law School, speculated at the June two-day meeting of the American Constitution Society that Gorelick was a possible attorney general cabinet appointment if Obama should be elected president. The decision by the U.S. Treasury to take over Freddie Mac and Fannie Mae could end up costing the U.S. taxpayer as much as $100 billion, although the extent of losses at the two giant mortgage companies remains to be determined. According to the Wall Street Journal, Freddie and Fannie own or guarantee about $5.2 trillion worth of mortgages. The riskiest loans held by Freddie and Fannie are known as "Alt-A" and sub-prime mortgages, worth about $780 billion, or about 15 percent of the total portfolio. The federal government takeover of Freddie and Fannie passes to U.S. taxpayers the contingent liability for failures in the entire $5.2 trillion loan portfolio held by the two mortgage giants. Over the past four quarters, Freddie and Fannie have suffered losses of about $14 billion, as the mortgage market has been hit by a wave of defaults and foreclosures not seen in the U.S. since the 1930s. By Jerome R. Corsi http://www.worldnetdaily.com/index.php?pageId=75586 Hat tip: Dick Doubek « Close It Posted September 21, 2008 08:45 AM Permalink
The Drumbeat
The drumbeat. It's always there. Day and night. Rain or shine. Winter or Summer. Sunday or Monday. It comes at you from every direction. It comes over the TV, the radio, at work, at school, in music, in the newspapers, from the politicians, in conversation with others, even in church. It wears you down. It robs you of the will to resist its message. Even short-lived victories, which stop it briefly, leave you with the knowledge that it will return; each minor victory bound to be lost to the redoubled efforts of this patient and persistent force. You can't escape it. It never stops. It never gives up. It never ends. It rains upon you from every possible angle, from every possible source. It's the drumbeat of the left. It is political, philosophical, theological, and social. It pervades every activity. It is post-structural, post-modern, post-everything in the parlance of the day. It is tolerant, diverse, non-judgmental, non-discriminatory, egalitarian, politically correct, multicultural, globalist, and collectivist. It insists that there are no rights and wrongs, no moral absolutes. It turns everything upside down in its looking glass world. It denies the correctness of all that produced what our culture revered before the deconstruction of the world in accordance with the tenets of cultural Marxism. Read More » It denies God, human exceptionalism, and the soul. We are reduced to Darwinian animals floundering in an amoral sea of meaninglessness. It is a product of the nihilistic, existentialist philosophical movement, which went hand in hand with modern art, atonal music, scientific materialism and modern physics, and the generally discordant nature of the twentieth century. It is said that a fish is not aware of the water in which it swims since it is totally immersed in it. This is the way cultural Marxism is taking over our world in its inexorable Gramscian march. We swim in it. It enters every pore of our existence. It is everywhere. We can't escape it. Many people accept this world without even realizing it, just as the fish accepts the water in which it swims. They don't realize it as the left creates new conventional wisdom and new intuitions about truth. The cultural Marxists convince us that the truth is that there is no truth. And even though this unresolvable paradox lies at the very center of all this, the constant drumbeat keeps the masses in line, anesthetized enough to not make an issue of it. Fed a constant diet of sex, drugs, poisonous pop culture, materialistic trinkets, and unkeepable promises of security provided by huge leftist government, ever more globalist in nature, the masses are diverted from realizing, as they are told there is no truth, that this claim itself is subject to the same test. It is logically impossible for the leftist drumbeat to be true by its own axioms. The principles upon which Western culture rests and upon which America was built are under attack by these slow acting but deadly forces. The drumbeat is grinding down the will of the West to maintain itself. The ideas of individual sovereignty and responsibility, natural rights, and objective truth have been derided by the left to the point that many of our young people reject them, if, indeed, they are even aware of them as the basis for our culture. All that ensures that a culture will pass its ideas down from one generation to the next is its cultural memory. The drumbeat is slowly but surely replacing our cultural memory. As each school is renamed and the name of a Founder or other great person from our history is removed from its entrance way, we lose a bit of that memory. As our great authors and works of Western culture are replaced with those in line with the message of the drumbeat, we rapidly lose our cultural memory. As each school textbook is rewritten to reflect the new ideas of family and cultural heritage, our children are lost to the forces of the drumbeat as they learn to view America and traditional Western culture as oppressive and imperialistic. And it doesn't take long for there to be only a shell left, the substance of our culture sucked out and destroyed by the cultural Marxists. If you believe that all this is a paranoid overreaction, you have plenty of company. Those of us who can still see the water and hear the drumbeat are subject to attempts to make us sound evil and foolish. To believe in traditional Western cultural values, American Exceptionalism, God, and moral truth is to be branded as old fashioned and foolish, even by the best assessments of those who have bought into the cultural Marxist's message. And by the worst of them, we are branded as stupid and evil, and in need of being destroyed. It may be too late to do anything about this as the world plays out its story. The power-hungry arrogance of human beings seems to be the force that underlies the events carrying us forward to the final chapter. And as this arrogance and lust for power feeds the wills of those who would gain control of the world, humankind is gaining just enough knowledge to destroy itself in that arrogance. Never before in human history has there been such a confluence of forces. Technology, globalism, and the leftist drumbeat are joining together in a way that is allowing mankind to believe, on a worldwide scale, that it can control its own destiny. The main thing that is being ignored in all this is human nature. It is all based upon the arrogant presumptions of the elitist cultural Marxists concerning how people ought to act. It leads to totalitarianism and destruction. In truth, and in direct opposition to the drumbeat, each human being must be accorded his or her natural rights, individual sovereignty, and self responsibility to be in harmony with human nature. Each of us must have the freedom to succeed or to fail. Western culture, culminating in the great American experiment, has been perverted. Due to these perversions, many failures have already occurred, which have then, ironically, been used to justify further perversions of the same sort as those which caused the problems to begin with. Generally, these perversions are manifested in bigger government, more laws, more bureaucracy, more regulations, more taxes, and government controlled redistribution of wealth, more collectivism, less individualism, and less freedom. We all hear it constantly from leftist politicians as they add their part to the drumbeat: government must do more to ensure Americans avoid the consequences of their choices. We all know the song, sung to the cheers of the unthinking throngs who would give up their very humanity for the promise of a free lunch. These are the joys of cultural Marxism. And the drumbeat goes on. By William Staneski http://www.americanthinker.com/2008/09/the_drumbeat.html Response by Len S.: Joe McCarthy was so right about the left. He was the first conservative to be skewered by them. But now he has been proven correct by the release of the Venona papers (Google it). The leftist media has ignored those damning documents. The entire country is now overrun by collectivists: socialists with no clue about history or why millions died to allow them the freedom to hopefully choose to think without the thought police. Instead of a country of heroes and hard workers, they have turned it into a land of whiners and leeches, ready to exchange their votes for a demagogue who promises to deliver to them the earnings of others. Karl Marx smiles at Orwell's prescience. « Close It Posted September 21, 2008 08:16 AM Permalink
Q & A with Peter Wallison
Q&A: Transcript with Peter Wallison LAMB: Peter Wallison, in a book that you published several years ago, you had a piece in there with Ralph Nader. And Ralph Nader said, ”The mentality of see no evil, hear no evil and speak no evil that pervades official Washington’s approach to the GSEs is a product of an influence machine that is oiled by revolving doors, the care and feeding of key politicians across the nation, a quick strike, taking no prisoners, public relations operation and targeted contributions to advocacy organizations – activities financed by slush funds created by generous forms of corporate welfare.” Why was he in your book, a book that was published by the American Enterprise Institute? WALLISON: Well, I always looked at Fannie Mae and Freddie Mac as key examples – maybe the poster children – of corporate welfare. They are the ones who were most helped by the federal government. And I figured – I didn’t know, but I figured – that Ralph Nader probably looked at it the same way. And I wanted to be sure that when I started on this process, writing that book and doing other things, that I showed that this was not simply something that Republicans or conservatives were interested in, but people who were interested in a fair government, a fair economy and government policies that really didn’t favor corporations. Read More » LAMB: We started a number of weeks ago trying to get you to come talk to us, and you were on vacation. And you live six months of the year in Colorado. So, it was – I guess it was perfect for you to be here the week of the takeover. WALLISON: Oh, yes. This has been quite a week. LAMB: Where are you personally coming from? Where do you reside, and what have you done in your past? WALLISON: Well, I’ve been in the government a fair amount. I’ve never run for office, but I’ve helped people who are running for office. And then, in Republican administrations, I’ve had some roles. I’m a lawyer – graduate of a law school, and then I practiced law for many years. But during that time … LAMB: Harvard Law. WALLISON: Harvard Law School. And during that time, I came in and out of government. I was a counsel to Nelson Rockefeller. I’m a New Yorker, actually, by birth. And so, I got to know Nelson Rockefeller. I became his counsel when he was vice president. And then in the Reagan administration, I was the general counsel of the Treasury Department. And finally, when Don Regan went over to become chief of staff in the Reagan White House, I went over about a year later – left my practice once more – and became a White House counsel for Ronald Reagan. So, I’ve had a fair amount of government experience and a lot of financial experience in the government. That’s one of the things that gave me a real interest in Fannie Mae and Freddie Mac. LAMB: When did you start getting interested? WALLISON: Well, when I was at the Treasury Department. They were – Fannie Mae was a fairly significant company in the early 1980s, when I was at Treasury. And even then, it occurred to me that this was an accident waiting to happen. They were in a – they had a business model that seemed to me to be unworkable, and one that would eventually cause a lot of problems. I wasn’t able to do anything at Treasury at the time. We were too busy with many of the problems, including the S&L collapse. But what I did remember when I left Treasury was that this is a subject that I’d like to return to at some time in the future. And fortunately, when I had an opportunity to go to AEI, I was able then to start looking more seriously at Fannie and start investigating a little bit more exactly how they were doing and whether my thoughts about what was going to happen to them were likely to come true. LAMB: The statement by Ralph Nader had the word G – or the letters – GSE in it. I want to run a clip, just a very brief clip, of Henry Paulson, the secretary of the Treasury, last Sunday, at 11 o’clock in the morning, when he announced the takeover of Fannie Mae and Freddie Mac. (BEGIN VIDEO CLIP) HENRY PAULSON, U.S. TREASURY SECRETARY: These preferred stock purchases 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. (END VIDEO CLIP) LAMB: OK. Break it down. What is MBS? WALLISON: Mortgage-backed securities. LAMB: What does that mean? WALLISON: Well, what happens, one of the ways that Fannie and Freddie operate is to create pools of mortgages. And then they sell securities that are backed by those pools of mortgages. That’s how you get a mortgage-backed security. LAMB: OK. Let me stop you for a second. I buy a house. I go to a bank, or the realtor gets me a mortgage. And I agree to pay, let’s just say $400,000 for a mortgage. What happens to that mortgage? WALLISON: Well, if the mortgage gets to Fannie Mae or Freddie Mac, it’s put into a pool with a lot of other mortgages. That’s not the only thing they do. They have another way of doing this, but let me deal with the mortgage-backed security issue first. It’s put into a pool with a lot of other mortgages. Some of them are larger, some of them smaller, but thousands of them, all in the same pool. Then, securities are sold, backed by that pool. And the securities say we will pay you what we receive from the mortgages in the pool – your share of what we receive from the mortgages in the pool. And if we don’t – if the mortgages in the pool don’t perform as we anticipate they will perform, we will pay you anyway. In other words, we guarantee a certain return out of this pool. That’s what a Fannie or Freddie mortgage-backed security entails. Now, the reason you are able to get your $400,000 mortgage from some bank that is the lender, is that they know they can sell your mortgage to Fannie, which will buy the mortgage and put it into the pool, and then reimburse itself by selling mortgage-backed securities to investors. LAMB: So, as an individual, could I turn right around and then buy securities with Fannie’s name on them? WALLISON: Absolutely. LAMB: Preferred or common? And what’s the difference? WALLISON: No. It’s not that kind of security. It’s called a mortgage-backed security. And what it would say is, this security represents a one-millionth share of a certain pool of mortgages that we have created. And if we don’t pay you the specified amount to come out of this pool, then you have us backing the pool. LAMB: So, if I had bought a security – and where would I buy that? Through a … WALLISON: Through a broker. LAMB: … broker? WALLISON: Sure. LAMB: And I owned it right now, and the government just took over Fannie Mae and Freddie Mac, do I still have the security backed? WALLISON: Oh, sure. S ecurity is absolutely solid. And that’s one of the reasons why the government had to take over Fannie Mae and Freddie Mac, because so many individuals and mostly financial institutions around the world hold exactly those kinds of securities. LAMB: How much of those securities do the Chinese own? WALLISON: Oh, I don’t know the number, but it would be very large, probably running into maybe the hundreds of billions of dollars. LAMB: Japanese, same thing? WALLISON: Very large. Yes. Most central banks own these kinds of securities. And not only the mortgage-backed securities, but they buy direct borrowings by Fannie Mae and Freddie Mac, that they use – that is, the two GSEs, government-sponsored enterprises – use to buy and hold mortgages themselves. They don’t securitize all their mortgages. They hold a certain number of those mortgages, amounting now to about $1.5 trillion, in their own portfolios. That is, in fact, the most profitable way that they operate. The mortgage-backed securities is not a very profitable business. It’s a much less risky business. And as a result, it’s not as profitable. But when they really want to make profits, they buy and hold the mortgages themselves, because what is being paid on the mortgages is a lot more than they have to pay for the money they borrow in order to buy those mortgages. LAMB: OK. What is a GSE, a government-sponsored enterprise? WALLISON: Government-sponsored enterprise. LAMB: And when was the first one started? WALLISON: Fannie Mae was created in 1968 from an existing organization called Fannie Mae, which was started during the New Deal, and was an actual government agency. The trouble is that, by 1968, when we were in the middle of the Vietnam War, we were running deficits. And … LAMB: In our general government. WALLISON: In the general government. And the Johnson administration realized that the way Fannie Mae was growing, it was causing these deficits, because it was putting out a lot more cash than it was taking in any year, as it grew and bought more and more mortgages. So, they decided one of the ways to reduce this deficit was to get Fannie Mae off the government’s books, which they did by selling shares to the public in Fannie Mae, and turning it into a quasi-public company – with private shareholders, but at the same time, a kind of implicit government guarantee, because they were allowed to keep a number of ties to the U.S. government. So, since that time, the capital markets have believed that the government would back Fannie Mae, and ultimately, Freddie Mac, which was created a few years later, in case they got into any difficulty. And that’s why they’ve never had any trouble raising funds, because there was always the thought in the markets that the government would back them if they got into any trouble. They denied this for many years. They said, no, no, no. There’s no doubt that we are independent of the government. The government has no responsibility for us. Their supporters in Congress said exactly the same thing. But now we realize that the markets were right all along. And as soon as they got into trouble, the government stepped in and saved them. LAMB: I want to jump in this process, because I found this on the Web, again from Ralph Nader. And it’s – he wrote a letter to Christopher Cox, who runs the Securities and Exchange Commission, about a lot of things, and including why do the people who run Fannie Mae – and there’s also Freddie Mac in this – but Fannie Mae make so much money? And the time period was the years 1998 to 2003. I’m just going to go down the list. Franklin Raines, at the time, the CEO, compensation from 1998 to 2003 was $90 million. Portion derived from components tied to attaining EPS goals – earnings per share goals, I assume – $52 million. Timothy Howard, compensation the same time period, $30 million. He was, I believe, the chief financial officer. WALLISON: Yes, CFO. LAMB: Jaime Gorelick, who we saw a lot of during the 9/11 Commission, she was the Vice Chairman of Fannie Mae, took away $26 million in those years, ’98 to 2003. And that her portion derived from components tied to attaining her earnings per share goals was $14 million. And then, Daniel Mudd, who was just let go as the CEO, during that time period – we’ll come back to him in a moment, because there was a lot more money since 2003 – took out $26 million. Now, how is it – I’m just asking you as a citizen. How is it that this government would have an organization that was solely government, and then created – Lyndon Johnson created a private company – quasi-private company … WALLISON: Right. LAMB: … with 18 board members … WALLISON: Right. LAMB: … and five board members from him … WALLISON: Right. LAMB: … and then subsequent presidents … WALLISON: Right. LAMB: … would let this kind of money be taken out of this organization? How did that happen? WALLISON: Well, they are private companies, after all. If they have private shareholders, their obligation is to make sure that their shareholders earn profits. And to the extent that they were successful doing that, they would claim, like any other CEO, or any other major officer of a private company, that they’re entitled to the compensation that they were receiving. The problem with that argument is that they were helped substantially by the backing of the taxpayers of the United States. And so, one would think that anyone who realized he or she was getting that kind of backing would be less demanding in the compensation that they wanted. Unfortunately, they didn’t behave that way. They behaved as though they were entitled to all this compensation, when their jobs were made very easy by the fact that the government was seen by the markets as backing them up. LAMB: Was the original decision on Lyndon Johnson’s part cynical? WALLISON: You know in Washington, it’s very hard to say what is cynical. This is called smoke and mirrors, I think. It was – the idea was to get Fannie and Freddie – well, get Fannie, at that point, off the books of the government. If they had done it completely, if they had said, you won’t have a congressional charter, what you will have is a charter from, say, the State of Delaware, and you won’t have any line of credit to the Treasury Department, as they initially had, and we won’t say it’s possible for banks to invest in an unlimited manner in your securities, take away many of the benefits that Fannie and Freddie were given at the time they were privatized – then, it would have been a perfectly reasonable thing to do. That would have been a real privatization. Unfortunately, they only did a quasi-privatization, where they allowed the markets to believe that over time, if it was necessary, the government would step in and back them. LAMB: Well, as you know an awful lot of political people in this town were put on the boards over the years. But I found this – and I’m going to go over a list in one of your books – but I found these couple of paragraphs in a ”New York Times” today. We’re recording this on Tuesday before the Sunday night airing. ”Mr. Bush has never been a fan of the government’s involvement in the mortgage markets. He has long viewed Fannie Mae and Freddie Mac as ’ticking time bombs,’ said his former chief economist adviser, Al Hubbard. As far back as 2002, he began arguing for greater regulatory control over the companies, but was thwarted by Republicans who controlled Congress. Democrats eventually granted the authority, which provided the legal underpinning for the takeover announced on Sunday.” ”Mr. Bush was so disapproving of Fannie Mae and Freddie Mac, Mr. Hubbard said, that beginning early in his administration, he refused to appoint members to their boards. ’That is very significant,’ Mr. Hubbard said. ’No president has ever done that.’ But he said, ’We’re not going to put people on the boards of these institutions that are these huge, systemic financial risks to the economy.’” Now we call it OFHEO. WALLISON: Yes. LAMB: Which is a long way of saying … WALLISON: Their regulator. LAMB: … a regulator of this. I mean, it’s interesting that these are supposed to be private organizations, but regulated by outsiders. WALLISON: Yes. LAMB: So, we just asked that simple question. ”Can you tell us what’s the regulation? What’s the fact today about presidents you know naming people to the board?” And they said ”You have to write us a letter.” And we said, ”We’d like an answer quickly.” And they said, ”How quickly?” I said, ”We’d like it today or tomorrow.” And we never have gotten an answer from them. WALLISON: Is that right? LAMB: Yes. But I just bring that up, because when you wade into this, you look at this fact right here, that he has not appointed … WALLISON: That’s right. LAMB: … board members, can you explain that? WALLISON: Sure. LAMB: And is the president on the side of right as far as you’re concerned? WALLISON: Yes. Absolutely. I was for this. I was for a number of things the president was proposing, and still am. But the point he was trying to make, I think – I think Al Hubbard’s got one part of it right. But I think what the White House was trying to do was to separate the government from Fannie Mae and Freddie Mac to the extent possible. The way this thing was set up by Lyndon Johnson and his administration, was to have a real quasi-government agency, in which the president appointed five members of the board, and the shareholders elected the remaining 13. And so, that reflected a certain involvement of the government in their business. And that – I think the White House thought – encouraged the markets to believe that, if they went belly up at some point, the government would step in. So, I think what the president was trying to do here was to send a different signal. And that is no. We’re not responsible for Fannie Mae and Freddie Mac. They were trying to get the markets to believe during this period that there really wasn’t a connection between the United States government and Fannie Mae and Freddie Mac, and the markets simply would not believe it. And the markets turned out to be right, because now we find, when they have gotten into financial trouble, that in fact the government did step in and back them. And this has happened before. I mean, the markets are not crazy, and they are not – they are not particularly prescient. They just look at what’s happened in the past. And in the 1980s, the farm credit system had financial difficulties. And, of course, that was also a government-sponsored enterprise. And, of course, the government stepped in and bailed them out. So, the markets look at that, and they look at what Fannie and Freddie are in relation to the government, and they say, well, this is going to be the same thing. The U.S. government is never going to allow one of these organizations to fail. And the markets, of course, turned out to be right. We are not allowing them to fail. LAMB: Again, help us understand how the left and the right come together, on both ends of this, for it and against it. Bill Greider, a liberal writer for The Nation Magazine – found this on TheNation.com – just six weeks ago wrote this. ”So much for market discipline. For everyone else, Washington recommends a cold shower. Talk about warped priorities! The government puts up $29 billion as a sweetener for J.P. Morgan, but only can come up with $4 billion for Cleveland, Detroit and other urban ruins.… A generation of conservative propaganda, arguing that markets make wiser decisions than government, has been destroyed by these events. The interventions amount to socialism, American style, in which the government decides which private enterprises are too big to fail.” WALLISON: Yes. Well, Fannie Mae and Freddie Mac are sui generis in this respect. And that is, it was always clear to me, and to a lot of other conservatives, that the government was going to bail them out if they got into difficulty. And that’s why they would get into difficulty, because there wasn’t any market discipline. We believe – and I think most economists believe – that the best way to control risk in private companies is to make sure the market is at risk. And so, they will not get the funds that they need, if they are taking risks, and the market is wary and interested in the steps that they are taking in their business before it will lend them any money. But when they’re backed by the government, that doesn’t happen. And that’s how – at least in my mind – we get this kind of corporate welfare that we’ve had with Fannie Mae and Freddie Mac in particular. LAMB: But what about the bailing out of a Bear Stearns, or … WALLISON: Well you know all of these things have their reasons, which are somewhat different. The Bear Stearns issue – and I happen to agree with that, because at the time the Bear Stearns bailout occurred, the market, the international financial markets, were in a panic. And there was for the first time, certainly in my lifetime, and probably for the first time since the Great Depression, there was real concern worldwide in the stability of all of the major financial institutions in the world, in the global capital markets – the major banks in Europe, the major banks in the United States, the investment banks in the United States and many other such institutions. And I think the fear was, at the Treasury Department and at the Federal Reserve, that if Bear Stearns – which was not one of the larger investment banks in the United States – but if Bear Stearns failed, the panic that was current in the market at the time would cause investors to run to all these other financial institutions and start withdrawing their funds – in other words, runs throughout the world. And they hoped to prevent that by showing that the government will step in and stop that from happening. This actually was the right thing to do under the circumstances. And with all respect to Bill Greider, if the government had not done that, the people of the United States and the people in the developed world, generally, would be far worse off now, because there wouldn’t be – many of these financial institutions would have failed, and there wouldn’t be the financing available that is necessary to keep our economies running. LAMB: Do the people running these institutions ever pay a price? It seems like they walk out with these tremendous severances … WALLISON: Yes. LAMB: … multi-millions of dollars they take out, and just go on with life while everybody else gets punished. WALLISON: Yes, well, this is – this, unfortunately, is part of the process of recruiting executives very frequently. They get contracts. I’m not justifying this in any way. But in order to recruit a high-powered executive, you have to sign a contract with that person. And frequently, the contract says, unless you do something wrong, if you’re dismissed by the company, we will pay you a certain amount as a severance. Again, I don’t want to justify it, but if you go through each of these conditions, each of these cases, case-by-case, I think you’ll find that that’s what happens much of the time. And it’s happening again with Fannie Mae and Freddie Mac, because their two top executives, according to today’s newspapers, may walk away with almost $15 million each as severance – for managing these companies down the tubes. LAMB: What I see – the ”Washington Post” this morning has a piece. The severance packages could be worth as much as 14.9 for – is it Syron? Is that his last name? WALLISON: Syron. LAMB: Syron, Richard Syron, the former Freddie Mac chairman and chief executive. As much as $9.8 million for Daniel Mudd. But why, in the first place – again, I go back to the point, the government of the United States created these institutions. I know you say they were standalone companies, but they had five members of their board provided by the United States … WALLISON: Yes. LAMB: … by the President of the United States. Why wouldn’t there be some restriction on taking that kind of money out, when they’re supposed to be serving, in many cases, the little person? WALLISON: Yes. Well, I think from the standpoint of the boards of directors – let’s assume the president still had five members on the board. What is the obligation of the board members? Those board members, I think, were advised by their counsel, that their obligation was to the shareholders, and not to the government. That’s one of the reasons I think why the White House decided initially to withdraw those board members, and not to appoint them anymore, because they weren’t doing anything on behalf of the United States. They were just there as kind of symbols of the government’s backing of Fannie Mae and Freddie Mac, but were not changing the policies of the company in any way. LAMB: Let me show you a piece of paper. This is not very fancy graphics, but there are 70 members of the House Financial Services Committee. Every time you see a line through a name, that means that, in the 2008 cycle – and you can actually turn the pages here, same thing on the other side – the names really don’t matter. But out of the 70 members, 50 of them got (ph) money for their campaigns … WALLISON: That’s right. LAMB: … from Fannie Mae. And, of course, money from Freddie Mac. But we can add to that, not only do they get tremendous amounts of money all the time in the coffers, they have their PACs give to PACs. WALLISON: Yes. LAMB: And the PACs end up serving the members. WALLISON: Right. LAMB: And then you have the foundation, which was shut down last year, which I want to ask you about. And then you have the advertising. They spent $75 million a year on advertising. Why would these institutions have to advertise? Why would Fannie Mae or Freddie Mac have to spend $75 million on advertising? WALLISON: A very good question. And in fact, until they ran into their financial difficulties, there were many in the financial world, including mortgage lenders, who believed that Fannie and Freddie were trying to get into the business of originating mortgages, and so, were trying to make themselves familiar to the American public in general as good guys. So, they were doing a lot of kind of public service advertising, and trying to tell the American people that a Fannie Mae or a Freddie Mac mortgage would be something they should want. They never did get into the mortgage origination business. They stayed in the business of buying mortgages from other lenders. But that was only because they ran into financial difficulties in the early 2000s. That’s why they were advertising. And all of these payments to Congress, that’s only part of the story. This was truly a culture of corruption. This is the kind of thing that, say, John McCain, who is running against the culture of corruption in Washington, can point to as a perfect example of what is wrong with this town. These organizations were made out of federal backing, taxpayers’ backing. They were made into powerful organizations. And their executives and their shareholders took tremendous profits out of these companies – again, because of the backing of the shareholders. They then took some of these profits, and they turned it over through campaign contributions to the people on the committees in Congress, who were supposed to be supervising them … LAMB: By the way, in 2005, total lobbying expenditures, Freddie Mac – this is not for Fannie Mae, and I want to ask the difference between the two – was $12,560,000. WALLISON: Yes. Oh, that surprises me it’s so low. LAMB: That was actually – their highest year was 2004. It was close to $16, $17 million. WALLISON: Yes. Well, it depends on the issues that were before Congress at that time. They hired just about every lobbying firm in Washington, D.C. LAMB: At one point, there were 42 outside lobbyists. WALLISON: Yes. And one of the reasons they did that is, not that they needed 42 outside lobbyists. They just wanted to keep anyone else from having lobbyists. And they practice a very tough business in politics, very tough on individuals who are critics. And a critic could get in a great deal of trouble. There were people whose careers had been ruined by criticizing Fannie Mae and Freddie Mac. And I personally happen to be very fortunate that I’m working at a place like the American Enterprise Institute, because they were not intimidated by Fannie Mae and Freddie Mac when I began to criticize those two companies, but they made a run at me in other aspects of my life, including a board of directors that I was on. And … LAMB: Where was that? WALLISON: I was a director of the Mortgage Guarantee Insurance Corporation, which is a mortgage insurer, and dealt regularly with Fannie Mae. LAMB: And in what way? How would you deal with Fannie Mae? WALLISON: Well, they guarantee, they insure mortgages that Fannie Mae makes. Fannie Mae makes a mortgage that has more than an 80 percent loan-to-value ratio. They are required by statute to have mortgage insurance for the remaining 20 percent. So, that’s – the mortgage insurance business relies very much on Fannie Mae and Freddie Mac for much of their business. And it came to pass that the president of this mortgage insurance company went to speak to Fannie Mae about the fact that they weren’t being selected as a mortgage insurer. And he came back to the board meeting that I was at, and he said, ”Well, we were told that they only like to deal with companies that are friends of theirs. And with Peter Wallison on your board, we just don’t regard you as a friend anymore.” So, I resigned, right then and there. But it is to me an example of the kind of thuggery that these companies were capable of. And they did that all through Washington, so that the media in Washington and individuals in Washington, and people in Congress who wanted to stand up to them, were under threats all the time. LAMB: The next one, Public Radio did a report in September – actually, it was in July. And they just had this one line in here. It was a piece by Peter Overby. ”A rival lobbyist once described Fannie Mae as a political organization that happened to be in the mortgage business.” WALLISON: Yes. LAMB: I mean, you had people coming out of the Reagan administration, like Ken Duberstein – you worked in the Reagan administration – he went on their board. Ann McLaughlin Korologos was on their board. WALLISON: Right. LAMB: She was secretary of labor back in those years. There’s a lot of other Republicans. John Buckley came out of one of the campaigns from the Republican side and went to work over there. WALLISON: Right. LAMB: What … WALLISON: This … LAMB: I mean, what’s – how does this happen? Where are the morals of people who have been in the government? They know they’re taking this kind of money. And they know that they are allegedly in the business of helping – again, how many times have we heard it – the little people who can’t get mortgages. WALLISON: Yes. It’s very sad. It’s sad that people are willing to do this. But the trouble is that this was known. This was known to everybody in Washington. This was known to the media. Where was the ”Washington Post”? Where was the ”Washington Times”? Where was the ”New York Times” These things were known. But Fannie and Freddie are huge advertisers in all of those media. Maybe that’s the reason why all of this stuff was not exposed. On the other hand, there’s the National Public Radio, which presumably doesn’t have major advertising from Fannie and Freddie, or didn’t at the time. And they didn’t expose it either. So, it is a very troubling thing to see that something as serious as this, which everyone in Washington knew about, everyone who was on the inside in Washington knew about, refused to do anything about. That’s why you really do need a political revolution, if you will, someone coming in at the top who says, ”I’m going to change the way this town does business.” LAMB: Well, let me – and I don’t mean to be accusatory toward any individual, but just take the secretary of the Treasury, Hank Paulson. He used to run Goldman Sachs. A whole bunch of Goldman Sachs CEOs have been involved in all this process. WALLISON: Yes. LAMB: Wikipedia site says he’s worth $700 million. He served on the Financial Forum, or whatever they call it. TIME Magazine called it the most powerful organization in town, 20 big financial institutions. One of those on there besides Goldman Sachs is Merrill Lynch. The guy who was brought in now to run Fannie Mae is Herb Allison, who used to be the finance chief of the McCain campaign in 2000. He came out of Merrill Lynch. He’s now running Fannie Mae for the government. What are the – and I’m not impugning his motives. But it seems like the financial community is all interconnected. And the person that just wants the mortgage out there is the one that is least thought of in this process. WALLISON: Yes. Although I certainly wouldn’t blame Herb Allison – yet. LAMB: I’m not blaming anybody. I’m just saying, it’s all a matter of people who are in these banks, all these banks around the United States are all interchanged with these companies. WALLISON: But you do – you do need to have knowledge of the financial markets in order to function in the financial markets. You have to know the people, and you have to know the way the markets work, and so forth. We actually are very fortunate that Paulson is there right now, because the two earlier secretaries of the Treasury in the Bush administration were not people from the financial markets, and probably would have required a lot of coaching to understand what they were seeing happening. So … LAMB: Could I, though, suggest this, and just see what your reaction is? D on’t you really have to have people on these boards that will stand up … WALLISON: Sure. LAMB: … to the leadership, and more importantly, just ask questions? WALLISON: Yes, absolutely. And the fact that they brought in people from Washington for these boards was a terrible mistake, but one that they could be expected to make, because they were purely political creatures. The reason they survived as they did was because they had the support of the government. So, you would want people on your board who don’t know anything about the financial markets, or anything about making mortgages, or anything about how to construct a financial system or a financial business. You don’t need those skills on your board. What you need in Washington are people who are in the Washington cognoscenti, the people who go to the cocktail parties and know the congressmen and know the senators, and can make sure that you’re getting heard when there is a challenge. LAMB: OK. We’ve established that they spent a tremendous amount of money on advertising. They spent a tremendous amount of money on lobbying. They interchanged former presidential appointees in both Republican and Democratic administrations to the board of directors and to the staff. WALLISON: Yes. LAMB: They had this kind of quasi-backing – now, the full backing – of the United States government. WALLISON: Yes. LAMB: And then, there’s the foundations. WALLISON: Yes. This is a very interesting – a very interesting thing, because, of course, we tend to think of foundations as (INAUDIBLE) and charitable, and in some cases, educational. But they use their foundations for the purpose of garnering what? Political support. LAMB: OK. Let me put on the screen here some information from the Fannie Mae Foundation. Funded by $650 million in stock since 1995, and $12.5 million in cash in late 2006. Employed 105 people. Headed by Stacey Stewart, whose 2005 salary is $575,000 plus $72,000 in benefits and deferred compensation. Shut down in February of 2007. Ms. Stewart went to work inside Fannie Mae. And then, in a statement that was made by Director Jim Lockhart, who is the now-regulator of Fannie Mae … WALLISON: Right. LAMB: … it was just – it was kind of an off-hand comment. I was watching his news conference last Sunday, and he had eight or nine points that he made. And the eighth one was, all political activities, including all lobbying, will be halted immediately. But then there’s this one line, and it wasn’t explained. ”We will review the charitable activities.” The Fannie Mae Foundation spent $60 million there last year, giving $60 million around the country in every state and every district. I think $20 million of that was given in Washington, D.C., alone. Why did they need a foundation? And what purpose did it serve? WALLISON: Well, it served their political purposes, like everything else at Fannie. The boards of directors served their political purposes and their foundation served their political purposes, because they gave money to community groups. And whenever there was a challenge to Fannie Mae or Freddie Mac of any kind, those community groups would write to the congressmen or call the congressmen or the senator and say, ”Don’t do anything to Fannie Mae. They’re good people. They support us. We are in your district. We do these good things for the people in your district.” So, even though the money was actually being used – probably, I assume – for good purposes within these districts, the reason Fannie Mae and Freddie Mac gave out this money was to gain the political support that it bought them in districts all over the country. LAMB: Do you have any idea why they shut it down? WALLISON: Yes, because I think they recognized that this was the purpose, that what they were doing – every time a challenge came up to Fannie and Freddie inside the government, a call went out to all these community groups – e-mails and telephone calls – and said, ”You better get on the phone to your congressman and let him know that, if he does anything that’s adverse to our interests, you will be very upset. And you represent X number of people in his district.” There were records of that. And presumably, when Dan Mudd came in at Fannie Mae after the accounting scandals they had, he said to himself, we don’t need this problem anymore. We’d better shut this stuff down. LAMB: By the way, Dan Mudd is the son of Roger Mudd … WALLISON: Yes. LAMB: … former CBS … WALLISON: But this is a – frankly, this is just another part of the scandalous process that was going on here. This is using essentially government money, taxpayer money, to lobby Congress indirectly through these groups. And more has happened. In the new housing legislation, one of the elements in this housing legislation, which contained the new regulations for Fannie Mae and Freddie Mac, never would have been passed, but for the fact that the Democrats wanted the housing bill aspect of this, because the problems in the housing market – Senator Shelby said, there isn’t going to be a housing bill out of this committee unless you put tough regulations of Fannie Mae and Freddie Mac in it. So, he got those tough regulations in the bill. But in addition, Congressman Barney Frank in the House wanted a special fund that comes out of the profits of Fannie Mae and Freddie Mac, and is then used for all of these community groups around the country. So, we see the same process continuing to work. Even though reform legislation was passed, it contains a nice slush fund that can be used by community groups around the country. So we see the same process continuing to work, even though reform legislation was passed, it contains a nice slush fund that can be used by the officials of Fannie Mae and Freddie Mac to reward community groups. LAMB: You can go on Google and go looking for this Freddie Mae foundation and some of the information is still there. I did it and I just looked up one state, one year, to get an idea of the kind of money they gave away … WALLISON: Yes. LAMB: … and I wondered if you could fill in the blanks here, and I’m just going to read a couple of them. This is from 2006. The state of California, first one on the list is $5000 and they are all in various denominations, even $750 for somebody that travels some then, support the AFI Silver Theatre and Cultural Center’s 17 annual Larsen Latin American Film Festival that fostered cross-cultural understanding and civic dialogue. There—let me just read a couple of them. Korean churches for community development, supportive research on how Korean faith-based institutions could strengthen the cohesiveness of the communities in which they are based, building relationships between different ethnic and racial groups and supporting the community infrastructure, $10,000. Media (ph) economics for women, 16th Maxwell Award, that’s named after David Maxwell, your CEO … WALLISON: Right. LAMB: (INAUDIBLE) Excellence for Tierra del Sol, a 119-unit affordable rental housing project for low income people in Canoga Park, California. And then this is an interesting one: Regents of the University of California at Berkeley. A rather rich place. $35,000 approved in 2006, supportive research on the nexus between housing and schools and effective ways of integrating housing and educational policies in order to create prosperous livable communities. I can go on, and … WALLISON: Sure. LAMB: … this is an idea, and there are thousands of them … WALLISON: Sure. LAMB: … over the years. WALLISON: Sure. LAMB: … and that bought them very substantial political support. WALLISON: See, ordinary corporations, of course, give away lots of money to community organizations and charitable organizations and cultural organizations, and they do this in part to support their products. So if General Motors gives a gift to a cultural organization, what they hope is that people will then think better of buying a General Motors car. Fannie Mae and Freddie Mac are different. Those gifts were given for the purpose of building political support for them, not their products because they weren’t at that point selling any products directly to the—to individuals. They were buying mortgages from banks. These gifts were given to organizations that would then, hopefully, come back and support them politically in Congress, so they were using, in effect, the taxpayer money that was backing them to gain—to buy political support in districts around the country that then reflected back on the Congressmen and Senators here in the United States. That was the process that was going on here. LAMB: Now, you were a lawyer in Gibson Dunn … WALLISON: Yes. LAMB: … Crutcher—and Crutcher. That’s a—isn’t that a political … WALLISON: No. LAMB: I mean, aren’t there a lot of political lawyers in there? Isn’t Ted Olson there? WALLISON: Ted is there. Yes. Ted is one and Brad (ph) Starr (ph) was a partner of Ted Olson, yes, but the — this is a — Gibson, Dunn & Crutcher is about 850 lawyers at this point, but all business lawyers and litigators, there’s very little political work done, and even in the Washington office of Gibson Dunn. LAMB: So you didn’t lobby? WALLISON: I never lobbied, but I think we had one or two. We may now have one or two lawyers in a 150-lawyer office here in Washington who actually lobby. LAMB: I mean, the reason I’m bringing this up, I mean, Fannie Mae and Freddie Mac are not the only American institutions that do everything we’re talking about in this town. The connection here and the reason I’m asking you to explain it is because they were government institutions and had government sponsored people on their boards, and were backed up, even though they weren’t directly backed up, by the government money and we’ve seen how … WALLISON: Yes. LAMB: … the government’s taking them over. Explain this, and I know you’re on the other side politically, but just help us out on this. This was in the ”New York Times” today. WALLISON: Yes. LAMB: This is Tuesday, before the Sunday that this runs. Mr. Dodd, that’s Chris Dodd, is Chairman of the banking committee. WALLISON: Yes. LAMB: The Democratic Chairman, called the White House, accusation incredible and libel, Mr. Dodd all but accused Mr. Paulson, Secretary of the Treasury, of misleading Congress less than two months ago when the Treasury Secretary prevailed upon lawmakers to give him the authority to spend untold billions of dollars to rescue the two companies, assuring them at that time that he had no intention of using that authority. Boy, when I read that I said (INAUDIBLE) WALLISON: Yes. That was the same thing that … LAMB: Well, let me read some more. WALLISON: Yes. Go on. I … LAMB: I asked Dodd on the record you know why would you get an authority if you weren’t going to use it, quote, ”We accepted him at his word that all he needed was the authority and that he wasn’t going to exercise it, then he used this authority very aggressively. An angry-sounding Mr. Dodd said in the telephone conference call with reporters, he indicated that he would approach any future commitments by outgoing administration more skeptically, quote, ’Fool me once, your fault, fool me twice, my fault.’ Asked whether he felt duped, Mr. Dodd said, ’I was born at night but not last night. I heard experts over the last few days predicting this outcome, but I responded that I take the administration at their word to find out late Friday afternoon that it was going in this direction. It was hard to believe’.” WALLISON: There’s a person who is attempting to fool everybody. I think he understood what was happening here. Though he wasn’t being lied to or misled by the Secretary of the Treasury. What Paulson was saying, and I thought actually what Paulson said was the truth at the time, and that is I think we thought, Paulson thought, that with the backing of the U.S. government made explicit through what Congress had authorized in July, there wouldn’t be any need to back—to come in specifically and take over Fannie and Freddie. But what they found was that the markets didn’t quite believe that Fannie and Freddie were going to pay all of their obligations, and what they found as the days went on was that the spread of interest rates that Fannie and Freddie were paying over treasury rates was gradually growing, and as it grew, it meant that mortgages in the United States would become more expensive because if Fannie has to pay more for its money, then the banks that they lend to will have to pay more for their money, and people will have to pay more for money when they buy homes. So what I think Paulson saw happening was that he had to reassure the markets that the government was actually behind these institutions, and the only way to do it was to actually take them over, and I think he also knew from the investigations that they did of Fannie and Freddie’s financial condition that they were close to if not insolvent. So I don’t think Paulson misled anyone in the Senate. I think what he said was you give me this authority, I probably won’t have to use it because the markets will believe that I could come in at any time and take over these companies, and therefore they will know that their loans will be repaid. Well, they didn’t quite believe it, and we have read during the recent weeks that the Bank of China was beginning to sell off part of its portfolio of Fannie and Freddie’s. Fewer people were showing up at the auctions for Fannie and Freddie securities. They were bidding—they weren’t bidding as aggressively, so Fannie and Freddie were beginning to have to pay more and more for the money they were borrowing, and the pattern was becoming very clear, so treasury really had to act. Now, I happen to believe they did the wrong thing. He should not have appointed a conservator for Fannie and Freddie. He should have appointed a receiver for Fannie and Freddie. A receiver would be able to modify their business model substantially, and even in his statement Paulson said that they have flawed business models. You, I think, read part of that. They have flawed business models. That is true. That’s why I thought from the beginning that they were going to be causing trouble for everyone because they are partly profit-making companies and partly companies with a government mission with government backing. Those two things can’t go together in the same institution. So, Paulson should have moved in and taken them over with a receiver so he could have changed that business model. He didn’t do that. LAMB: Let me show you and the audience places you’ve seen … WALLISON: Yes. LAMB: … we have video of both Fannie Mae and Freddie Mac. Their institutions are both here in Washington. One of them’s out in the plain … WALLISON: Right. LAMB: … one of them’s in—out on—what is it, Wisconsin Avenue. WALLISON: Yes. LAMB: So Freddie Mac’s on the screen right now, and that’s the one out in the … WALLISON: Yes. LAMB: … plain in Virginia in the suburbs. Do you have any idea how many people work there? WALLISON: No, I don’t. LAMB: They also had … WALLISON: The reason this may … LAMB: … they had a foundation and you know it’s a bipartisan kind of thing. WALLISON: Yes. LAMB: Dennis Deacon, senior former Senator, was a former board member, David Gribben , who was a Richard—a Dick Cheney aid, was a former board member and George Herbert Walker Bush aid, Harold Ickes was a former board member, Clinton advisor, Ron Emmanuel, former board member, Clinton senior advisor, and then he—Ron Emmanuel received contributions when he got into the House … WALLISON: Yes. LAMB: … from the lobbyists, and Susan Molinari, former Congresswoman, Republican, was an outside lobbyist for Freddie Mac. Here’s Fannie Mae, and as we look at Fannie Mae, which is … WALLISON: Yes. LAMB: … quite a building you can see when you drive up Wisconsin Avenue. What is the difference between Freddie Mac and Fannie Mae? We’ve been talking a lot about Fannie Mae. WALLISON: Well, I would say there isn’t any substantial difference at all between them. Fannie is the larger, the more politically active of the two, but as between them, they have exactly the same charters and they’ve done exactly the same thing, and to some extent, they are in competition with one another. LAMB: Why do we need two? WALLISON: Well, I think it was good to have two because they were in some competition. If we only had one, that would be a monopoly. We have had two. Some argue that they were in monopoly pricing anyway, but that’s not been established yet. In any event, two is always better than one because it does produce a certain degree of competition between these two government-backed organizations. LAMB: Another article this morning from ”The Wall Street Journal.” Home loan banks draw focus or made rescue plan. WALLISON: Yes. LAMB: Now, it starts out by James Haggerty writing the Fannie Mae and Freddie Mac takeover raises questions about another set of institutions started by Congress to help finance housing. There are 12 regional federal home loan banks. You know a generalist, and I am a generalist, drowns in all this language … WALLISON: Yes. LAMB: … and all these institutions, and you get on, there are 12 of those federal home-owned banks across the country. They often have local board members, bankers, in many cases. WALLISON: Yes. LAMB: GSEs? WALLISON: Yes, of course. The government sponsored … LAMB: Government service—government sponsored enterprises. WALLISON: Right. LAMB: And also you add Jenny Mae into that, which … WALLISON: Well, now that is a government agency. That’s not a government sponsored … LAMB: That replaced what Fred—what Fannie … WALLISON: Yes. LAMB: … was in the beginning. WALLISON: Right. LAMB: Under HUD. WALLISON: Right. LAMB: What about these federal—no, I mean, you know … WALLISON: (INAUDIBLE) LAMB: (INAUDIBLE) no idea. WALLISON: Look, Ronald Reagan said the closest we’ll ever come to immortality in this life is a government agency, and the federal home loan banks are a perfect example of that because they were established in the depression era to assist the development of a mortgage market and to help people get mortgages, but since then we have developed a very sophisticated mortgage system here in this country, and we don’t need the federal home loan banks. But they provide subsidized financing to banks, and the banks don’t want to give up this subsidized money that they received from this government-sponsored enterprise. LAMB: Do you have any idea how much money these individual board members make on these banks and on those … WALLISON: No. LAMB: … on the … WALLISON: No. LAMB: … Fannie Mae, do they get paid? WALLISON: Sure. In Fannie and Freddie they get paid, and it’s true also in the federal home loan banks. I just don’t know how much that is. LAMB: When the stock has fallen at Freddie Mac and Fannie Mae from 65 roughly, $70 down to below a dollar … WALLISON: Yes. LAMB: … in less than a year … WALLISON: Yes. LAMB: … did the board members protect themselves? WALLISON: I have no idea, but if they—I don’t know whether they got stock compensation. I don’t know whether they got stock options or anything of that kind … LAMB: What would you to protect yourself … WALLISON: (INAUDIBLE) major cash. LAMB: … to make sure that if all that is going on right now happened that you got your money? WALLISON: Well, I—if they had stock, if they were given stock or they had bought stock when they became directors, they probably should not have sold that stock while the stock was going down. I don’t know, as a matter of fact, whether they have. I haven’t ever looked into that, but one way to protect yourself is if you see a disaster looming in the future and you’ve got a substantial amount of that stock, you would sell it off. But I have no idea whether they did that. LAMB: You’ve been around this town for a long time. WALLISON: Yes. LAMB: How much time do you spend in the town now? WALLISON: About half the year. LAMB: What do you do for AEI? WALLISON: I write. I organize conferences. I speak from time to time. When I say half the year, I’m here half the year. I work 100 percent of the year, but in Colorado where I live the rest of the time, and I’m doing all of this work for the American Enterprise Institute. LAMB: Now, people on the other side of politics would say AEI is funded by American industry, has its own … WALLISON: Not quite. N ot quite. It’s got a third of its funding comes from corporations, a third comes from individuals, and a third comes from foundations. So it is not in any sense connected with corporations, and in fact, if anything, if there’s any group that you would identify as connected with AEI, it would be entrepreneurs. This is a free market organization. LAMB: How would you explain people looking in from the outside to Washington, D.C. right now, seeing these stories, and we have just skimmed the surface. WALLISON: Right. LAMB: One word you could apply to our summer is just greed. WALLISON: Yes. LAMB: Where is it coming from in this society? Why is this happening in this town now? WALLISON: Well, I’m not sure it’s only now, but it’s certainly become more prominent now. I’ve never understood this myself, frankly. I mean, there are—there seem to be two classes of people. There are people who keep score based on money, and there are people who keep score based on success in some other areas like academic success and so forth. I deal a lot with academics. I hope to rise to the level of an academic some day in my time. And those are not people who are motivated by money. Those are people who are interested in learning, in producing things that are useful. But other people keep track according to money, and I’m afraid that’s why we have so much, I would call it greed, going on here in Washington when people are trying to use their positions to enrich themselves. LAMB: Why hasn’t the Congress done more than it has? WALLISON: Because the Congress is part of the problem rather than part of the solution. LAMB: Let me read the last paragraph of today’s editorial in ”The Wall Street Journal,” this being Tuesday. ”Mr. Frankn it turned out”… Barney Frank is their Chairman of the Financial Services Committee in the House, ”has had many accomplices from both parties in his protection of Fan and Fred, but he was and is among the most vociferous and powerful. In any other area of American life this track record would get a man run out of town. In Washington he’s hailed as a sage and his history of willful error will be forgotten faster than taxpayers can write a check for $200 billion dollars.” WALLISON: That’s powerful language. LAMB: Not to single out Barney Frank, and listen, he’s had many hours on this network so he’s had his time to talk. He—there were journalists saying both Republicans and Democrats. WALLISON: Yes. And it’s true. It’s true. This could not have happened if both parties weren’t implicated, and I think that raises a lot of questions about our campaign finance system in this country. I think there are ways we could address this problem through the campaign finance system. In fact, I’ve written a book about the subject that’ll be out in April. Maybe we’ll have a chance to talk about it then. But the Congress is part of the problem here. They are implicated in creating Fannie and Freddie, keeping it alive, protecting those two companies against attack from any side within the political process and in the private sector, and they get benefits from Fannie and Freddie. You’ve mentioned many of them. They get campaign finance reform. How they get campaign finances, they hire the staff of these people, they hire the lobbyists who are the friends of congressmen and senators, they give out money to community groups who then in turn support those congressmen and senators who are their friends. It is a very unpleasant thing to watch, and ultimately, it is a way for Congress, without actually appropriating any money, to direct money to their friends, and that’s why I mentioned this thing that Barney Frank was so anxious to get into his bill, this idea of a slush fund that would be available to pay to community groups to support housing, maybe. We hope its housing and not other things, but ultimately it is a way for the Democrats, at least in this case the Democrats, to direct the funds to the groups that support them, and it’s not even appropriated funds. It’s not anywhere. LAMB: Peter Wallison, thank you very much for your time. WALLISON: Thank you. END Hat tip: « Close It Posted September 17, 2008 02:29 PM Permalink
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