Bankrupt Economics

In 2005, for the first time in history, a serious Fannie and Freddie reform bill, S. 190, was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets. If that bill had become law, then the world today would be different. But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0



In support of S 190, also known as the Federal Housing Enterprise Regulatory Reform Act of 2005, John McCain said: "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. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay."

http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16

Federal Housing Enterprise Regulatory Reform Act of 2005 would have Amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 to establish: (1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
Most importantly with regard to the CDS situation, S. 190 set forth operating, administrative, and regulatory provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting. Adoption of these regulatory provisions would have undoubtably affected the way CDSs were dealt with in "private" enterprises.
The bill would have also amended the Federal Home Loan Bank Act to establish the Federal Home Loan Bank Finance Corporation., and transfered the functions of the Office of Finance of the Federal Home Loan Banks to such Corporation. If this had been in place three years ago, this whole situation might have been averted.

http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab=summary

A better plan to fix liquidity for less than $700 Billion : 1)Moratorium all mortgage payments on all residential real estate for 5 years or until the houses are sold. This is cheaper and guaranteed to jump start the economy. 2) raise the FDIC insurance to $1 million on bank accounts; this will get money out of treasuries and into bank deposits: liquidity. 3) Means test all new home loans on 29% and 33% debt ratios and minimum down payments from 10% to 33% depending on the home cost. 4) Home equity loans should be for home improvements only.
5) Credit cards should be on net 30 basis only; if you can not afford it do not buy it. 6) special finance arrangements should be available for longer term purchases like cars, but not toasters and certainly not soap.

Interesting comments. The bailout will be reworked and hopefully won't cost the American taxpayers even one penny. With a drop of 777 points yesterday, I am relieved I switched to hotequity dot com. Just in the nick of time. My bank failed last week so I feel comfortable with the choices I am making. Many of us just don't know what to do, so I'm placing my bets on some international funds.

It is starting to look like the second coming of the great republican depression

A better plan to fix liquidity for less than $700 Billion : 1)Moratorium all mortgage payments on all residential real estate for 5 years or until the houses are sold. This is cheaper and guaranteed to jump start the economy. 2) raise the FDIC insurance to $1 million on bank accounts; this will get money out of treasuries and into bank deposits: liquidity. 3) Means test all new home loans on 29% and 33% debt ratios and minimum down payments from 10% to 33% depending on the home cost. 4) Home equity loans should be for home improvements only.
5) Credit cards should be on net 30 basis only; if you can not afford it do not buy it. 6) special finance arrangements should be available for longer term purchases like cars, but not toasters and certainly not soap.

IT IS JOHN McSAME and the HOUSE REPUBLICANS FAULT . . .

[1.] - While the global market burns; House Republicans fiddle.
[2.] - While Wall Street crashes and Asian markets follow; House Republicans play poker.
[3.] - While Main Street lay tied down on tracks as train barrels down hill towards them; House Republicans play musical chairs.
[4.] - While the nation disintegrates; John McRisky looks for camera to stand in front of so he can blame anybody just to get his poll numbers up.

WILL SOMEBODY COME AND GET "JOHN McGAMBLER" OUT OF HERE.
ROMNEY, HUCKABEE, PAWLENTY, WHERE ARE YOU, , , PLEASE!!

GOD HELP US!!

why should we have to pay for outher people mistakes.so if a trucking company is going to close and could let 2000 workersof will the gov. give them money to keep going so no one would lose a job the ans is no.but because wallstreet is in new your city and will hurt the city then in stead of the tax payers give money to wall street let the mayor put some of his money in to wallstreet he runs the city .dont hear of this in chicago il or san francisco cal.no bail out lit the people that have to much to spend invest in wall street buying bad loands for property.say no to bail out!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Adam Smith, the father of the Modern Economics ,it is flawed ,in his work : Wealth of the Nation he championed the division of labour ( productivity), pursuit of self-interest( greed), freedom of trade and no regulations and free market do what it pleases self to make a quick buck! He never have any inclination and any desire to safeguard the labour nor the the wealth of the citizens, he thought the " invisible hand" will solve any financial stress or difficulties. He put his trust in the moral sentiments of the rich !. He left out the populace .
In nut shell he believed in trickled down economics. In reality the wealth of the nation is the collective sum of assets of the masses and never of the rich few. What we are experiencing is a grim reminder of that failed theory; asking now poor masses to bail out the Wall street and other financial institutions.; thereby mortgaging their future and their hope.
The civilization collapses, has collapsed on debts and excesses, here we are witnessing a grim reminder_ how close we have come into this path of oblivion...!
AJ

Obama is getting a bump out of this because people are not being reminded of history where the economy is concerned, and who did what when. Call it bias by omission. The media simply says that the economy is Obama???s strong issue, but never discusses the facts in detail. If the simplistic ???party in power??? model were true, then the Democrats would not have needed the House Republicans when they tried to pass the bailout bill, as Democrats have the majority in both houses and there is no threat of a veto. Obviously, it is not so simple and the media does the voter a disservice by doing little more than reinforcing the error. As an aside, the media also misleads regarding the Clinton economy when they fail to mention that it ended in a recession, requiring the first round of Bush stimulus checks.

The first link below contains a purported list of the top 25 in Congress who got contributions from the folks at Fannie and Freddie. Obama is listed third, after Dodd and Kerry, even though Obama is just a junior Senator. Obama is followed next Clinton. Barney Frank is on the list as well.

http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080918

Do Obama and the Democrats deserve a lift in the polls as a result of the financial and mortgage problems? The answer from history is a clear NO. Here's the lead of a New York Times story on September 30, 1999 Fannie Mae Eases Credit To Aid Mortgage Lending [link below]. That's 1999 folks.

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. [see link below]

McCain said in co-sponsoring the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190: If Congress does not act, 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.

What was Barney Frank and fellow Democrats saying at the time of these attempted reforms? According to reports, Representative Barney Frank(D-MA) claimed of the thrifts "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt (D-NC) added of the reforms "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing." [ See Community Reinvestment Act, link below w/ history]

For an interesting article purporting to detail Barney Franks long history with Fannie Mae, See http://www.businessandmedia.org/printer/2008/20080924145932.aspx

The last link below describes how some in Congress tried to use the original version of the bailout bill to divert money eventually recovered to groups like ACORN. See:

http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080918

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

http://article.nationalreview.com/print/?q=M2QwNDhkZTg2OGYzZjkzM2E2NDEwM2U5OGVkNTc0YzU=

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260

http://online.wsj.com/article/SB122247015469280723.html?mod=googlenews_wsj

those who voted for bush are losing their jobs and their retirement in droves...

republican solution...." elect john mc cain "

ha,ha,ha.

this wall street bailout was in the making for a couple of years and alot of people have lost evryting they had,we cant even buy food in order to pay for high gas,elctric,propain.and heating oil never mine higher taxses.If we are to be humble then lets all be humble.this president and his backers have made planty, let them lose some of that money they have made on us.if this bailout is pass it will only for the rich and guess who will be paying for it.

If this financial crisis is not resolved soon, the US economy will grind to a halt. The stock market crash of 2008 will make the 1929 market crash look like a small bump in the road. Banks have tightened credit and underwriting scrutiny has increased dramatically. Small business loans are very difficult or impossible to get. The economy can lose millions of jobs as the credit crunch tightens, more banks fail, the stock market crashes and 401Ks and IRAs disappear forever. Today, is a small downturn compared to what will happen in the coming days while the US Congressional Republicans fiddle! Remember this financial disaster is the result of 7 plus years of failed Bush/Republican policies and lack of oversight!