Archive for the ‘Freddie Mac’ Category

Obama’s Economic “Rescue;” “The plan is very, very clever. Maybe too clever.”

March 27, 2009

“The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction.”

By Michael Kinsley
The Washington Post

Got that? It’s a sentence, chosen more or less at random, from the most recent (2002) Master Agreement of the International Swap and Derivatives Association. These are the people who brought you the “credit default swap,” the mysterious financial transaction that almost destroyed the world, and might yet do so if the Obama administration’s rescue plan doesn’t work. The Master Agreement is used for credit default swaps the way a standard real estate broker’s lease is used for renting a one-bedroom apartment.

Except that we all know what a one-bedroom apartment is. How many of us know what a credit-default swap is? The media do their best to explain it, often using attractive drawings with arrows showing money going hither and thither. Or sometimes they throw up their hands, as I’m doing, and simply describe them as “exotic financial instruments,” and leave it at that. Part of the hostility that banks and Wall Street now enjoy comes from a popular suspicion that the mystery and complexity are part of the point — that these things are made impossible to explain on purpose, as a way of avoiding scrutiny. “Don’t criticize what you can’t understand,” as the financier Bob Dylan once put it in another context.

One problem with the Obama financial rescue plan is that it is almost as complicated and obscure as the problem it is designed to solve. Treasury Secretary Tim Geithner, testifying yesterday on Capitol Hill, called for greater simplicity in financial regulation. Good luck with that. Here is a sample passage from one of the explanatory documents released by Treasury this week. “Private investors may be given voluntary withdrawal rights at the level of a Private Vehicle, subject to limitations to be agreed with Treasury including that no private investor may have the right to voluntarily withdraw from a Private Vehicle prior to the third anniversary of the first investment by such Private Vehicle.” All this talk of getting into and out of private vehicles may be a sly reference to the car and driver that did in Tom Daschle. Otherwise, who knows?

The government’s most urgent goal is to cleanse the financial system of “toxic assets.” These used to be known as “bad debts” until somebody decided that a more hysterical term was needed to reflect the gravity of the situation. Nobody gives a hoot about bad debts anymore. The government could have just swallowed hard and bought up these toxic assets itself. Then it could have buried them at Yucca Mountain in Nevada, where it has almost completed a $13.5 billion nuclear waste dump, just in time to promise never to use it, at least not for nuclear waste. Unlike nuclear waste, credit default swaps are unlikely to leach into the groundwater. And even if they do, there is no detectable difference between trading in derivatives such as credit default swaps and Nevada’s principal industry anyway. Except that the amounts involved in Nevada-style recreational gambling are much smaller. Oh, and the government doesn’t bail out petty gamblers. Yet.

But the administration decided that it would be more exciting to let private financiers in on the fun. This is an odd echo of what created the mess in the first place. Government-chartered entities such as Fannie Mae and Freddie Mac operated with an implicit government guarantee, whereas firms we all thought were private, like AIG and Citicorp, were deemed “too big to fail.” One way or another, the government got sucked in against its will. It felt it had no choice. The private firms now pondering whether to join the party do have a choice, so they will have to be subsidized.

The plan is very, very clever. Maybe too clever. It depends on convincing smart financiers that there is a killing to be made investing, with government help, in toxic assets. Inevitably, when the dust settles, it will turn out that some private firms and individuals actually have made a killing, which will cause another eruption of populist resentment like the one over the AIG bonuses. Fear of such an eruption, and any retrospective mischief coming out of Congress as a result, is going to make private money harder to entice, which means the subsidies will have to be larger, which means the killings will even be greater.

Read the rest:
http://www.washingtonpost.com/wp-dyn
/content/article/2009/03/26/AR20090
32603113.html?hpid=opinionsbox1

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Rahm Emanuel Can Bring Down Obama

March 26, 2009

The Chicago Tribune is an example of a newspaper America needs to speak truth to power.  And in this environment of failing newspapers, many people like Barack Obama, Rahm Emanuel and Rod Blagojevich would like the Trib to just go away……

Rahm Emanuel has been discussed as a possible troublemaker or ringleader in many questionable White House operations — already — but we’ve noticed that Bill O’Reilly won’t say anything about this until and unless more is disclosed.

What we do know is that Emanuel has a daily phone call with ABC news host George Stephanopoulos of “This Week,” frequent CNN talking head Paul Begula and James Carville.

We suspect Emanuel has a hand in the far left liberal media manipulation effort but we don’t see a “conspiracy;” just a tendency toward very inappropriate conduct: the kind that got the Nixon White House into trouble.

That’s not much….

Emanuel is also apparently one of the first to say, “never waste a good crisis.”

When asked why the White House Chief of Staff, President Obama’s Chief of Staff, got involved with trashing Rush Limbaugh, Charles Krauthammer said, “Because he loves to make mischief, because he wants to stay in power and because it is fun.”

Related:
 There’s More Room For Rahm In AIG Bonus Abomination

Arrogance Blinds “Public Servants”

Daily Conference Call: Emanual, Carville, Stephanopoulos, Begula

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Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

The Chicago Tribune

One of those allegedly asleep-at-the-switch board members was Chicago’s Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.

As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation’s mortgage woes and fulfilling the administration’s pledge to impose responsibility on the financial world.

Emanuel’s Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation’s current economic mess.

Read the rest:
http://www.chicagotribune.com/news/politics/o
bama/chi-rahm-emanuel-profit-26-mar26,0,
5682373.story

The Chicago Tribune is an example of a newspaper America needs to speak truth to power.  And in this environment of failing newspapers, many people like Barack Obama, Rahm Emanuel and Rod Blagojevich would like the Trib to just go away……

No, he wasn't thumbing his nose at ex- White House staffers. At least no one thinks he was. As new presidential Chief of Staff Rahm Emanuel made his way to his seat for the inauguration, his former congressional colleagues playfully heckled the ex- Illinois congressman from their seats on the inaugural platform. Ever combative, and equally playful, Emanuel heckled them back, spokeswoman Sarah Feinberg said.
Emanuel at Obama’s inauguration in January….

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Dick Morris On Rahm Emanuel

Published in the New York Post February 17, 2009

News broke last week that Rahm Emanuel, now White House chief of staff, lived rent- free for years in the home of Rep. Rosa De Lauro (D-Conn.) – and failed to disclose the gift, as congressional ethics rules mandate. But this is only the tip of Emanuel’s previously undislosed ethics problems.

One issue is the work Emanuel tossed the way of De Lauro’s husband. But the bigger one goes back to Emanuel’s days on the board of now-bankrupt mortgage giant Freddie Mac.

Emanuel is a multimillionaire, but lived for the last five years for free in the tony Capitol Hill townhouse owned by De Lauro and her husband, Democratic pollster Stan Greenberg.

During that time, he also served as chairman of the Democratic Congressional Campaign Committee – which gave Greenberg huge polling contracts. It paid Greenberg’s firm $239,996 in 2006 and $317,775 in 2008. (Emanuel’s own campaign committee has also paid Greenberg more than $50,000 since 2004.)

To be fair, Greenberg had polling contracts with the DCCC before – but each new election cycle brings its own set of consultants. And Emanuel was certainly generous with his roommate.

Emanuel never declared the substantial gift of free rent on any of his financial-disclosure forms. He and De Lauro claim that it was just allowable “hospitality” between colleagues. Hospitality – for five years?

Some experts suggest that it was also taxable income: Over five years, the free rent could easily add up to more than $100,000.

Nor is this all that seems to have been missed in the Obama team’s vetting process. Consider: Emanuel served on the Freddie Mac board of directors during the time that the government-backed lender lied about its earnings, a leading contributor to the current economic meltdown.

The Federal Housing Enterprise Oversight Agency later singled out the Freddie Mac board as contributing to the fraud in 2000 and 2001 for “failing in its duty to follow up on matters brought to its attention.” In other words, board members ignored the red flags waving in their faces.

The SEC later fined Freddie $50 million for its deliberate fraud in 2000, 2001 and 2002.

Meanwhile, Emanuel was paid more than $260,000 for his Freddie “service.” Plus, after he resigned from the board to run for Congress in 2002, the troubled agency’s PAC gave his campaign $25,000 – its largest single gift to a House candidate.

That’s what friends are for, isn’t it?

Now Rahm Emanuel is in the White House helping President Obama dig out of the mess that Freddie Mac helped start.

The president’s chief of staff isn’t subject to Senate confirmation, but his ethics still matter. Is this the change that we can depend on?

Read Michelle Malkin:
http://michellemalkin.com/200
9/03/26/rahms-ill-gotten-gains/

http://84rules.wordpress.com/
2009/03/27/obama-wants-tran
sparency-not-if-it-exposes-the-w
hite-house-chief-of-staff-rahm-e
manuel/

Obama plan to prevent foreclosures won’t help many California homeowners

March 6, 2009
Nearly a third of the state’s mortgage holders are underwater on their loans, many of them by amounts that would disqualify them for government-sponsored refinancing.
By E. Scott Reckard and Peter Hong
Los Angeles Times
10:38 PM PST, March 5, 2009
The Obama administration’s plan to stave off foreclosures could fall flat in California, where nearly one-third of mortgage holders are underwater on their loans — many of them by amounts that would disqualify them for government-sponsored refinancing.

The problem is likely to be especially acute in areas like the Inland Empire, where homes have lost more than 40% of their value in the last year and nearly half the homeowners owe more on their loans than the properties are worth.

Read the rest:
http://www.latimes.com/business/la-f
i-housing6-2009mar06,0,2516760.story

Foreclosed home auction A sign in front of a house in Palmdale announces an auction of foreclosed homes.  David McNew / Getty Images

Does the bailout spree signal the end of democracy?

December 22, 2008

“A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship….

“Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.”

These words – the author is unknown – are particularly sobering today. In the past few months, Uncle Sam has bailed out Wall Street, Fannie Mae and Freddie Mac, home-owners, banks, and US automakers, while the incoming administration promises a massive infrastructure investment.

Thomas Jefferson
Thomas Jefferson

Is it any surprise that cities, counties, and states are jostling for space at the federal trough? Who’s next? Big Media? Big Sports? Agribusiness?

By Randy Salzman
Christian Science Monitor

With the bailout “mother of all precedents,” it’s become difficult for Washington politicians to say “no” to any special interest that’s too massive, too economically important, or too well connected to fail.

Nor can politicians forget the poor. Or the crucial swing voters in the “struggling middle class.” And they can’t ignore seniors – AARP members are very vocal.

Virtually every group today is trying to meet with the Obama transition team to convey the urgency of its “crucial” spending requests. My local paper recently informed me that our area university is preparing its wish list for infrastructure dollars. Even the National Council for the Social Studies and the American Sportfishing Association have sent pitches to President-elect Obama.

Have we gone from “rugged individualism” to the complacency or even dependency of the national trajectory quoted above?

At the time of America’s founding, the Federalist Papers discussed the dangers of democratic politicians being forced to count on the votes and support of citizens or organizations too self-involved or uneducated to realize that short-term individual or group gain often precludes long-term prosperity.

And Thomas Jefferson sought to deal with politicians’ catering to their constituents’ convenience by founding the University of Virginia (UVA). He wanted an informed, intelligent, and thoughtful population in hopes of helping democracy survive. Today, sadly, UVA is the area university I read about in the paper seeking funds for its infrastructure wish list.

Read the rest:
http://news.yahoo.com/s/csm/20081222/cm_csm/ysalzman