Quickies

A round-up of articles, columns, news items and blog posts that caught our eye this week.

Programming note: We will be out of pocket for most of the rest of the day on work-related matters. We'll share later.



You can gage the effectiveness of a piece of legislation when two people get into a pissing contest with respect to semantics alluding to just how god-awful that particular piece of legislation was.

In my August 23 Examiner column I wrote, “The 2009 stimulus package is so unpopular that Democrats have banned the word from their campaign vocabulary. ‘I’m not supposed to call it stimulus,’ Rep. Barney Frank told the Daily Show’s Jon Stewart. ‘The message experts in Washington have told us that we’re supposed to call it the recovery plan.’” Chairman Frank, whom I’ve known and admired since I was in college, writes and says that I misinterpreted his comment. I’m not sure he’s right, but I’m not sure the point is worth quibbling about. So let me quote the text of his letter and let readers decide.

More Michael Barone v. Barney Frank, here.




Christoper Hitchens on the cease-less and end-less chore civilizations must perform in being a moderating influence on religion

Those who wish that there would be no mosques in America have already lost the argument: Globalization, no less than the promise of American liberty, mandates that the United States will have a Muslim population of some size. The only question, then, is what kind, or rather kinds, of Islam it will follow. There's an excellent chance of a healthy pluralist outcome, but it's very unlikely that this can happen unless, as with their predecessors on these shores, Muslims are compelled to abandon certain presumptions that are exclusive to themselves. The taming and domestication of religion is one of the unceasing chores of civilization. Those who pretend that we can skip this stage in the present case are deluding themselves and asking for trouble not just in the future but in the immediate present.

We suppose this is a sword that cuts both ways. We know a few conservative Catholics out there that are not terribly pleased with the outcome of Vatican II and the World South of the Anglican church is resisting many of the changes of their "reform"-minded brethren of the Northern Hemisphere.



Not enough Labor. Steve Chapman of Reason on the job-killing consequences of government. These two paragraphs caught our eye:

Many liberals admire Europeans for their civilized habit of working less than Americans do. But they used to work more. The change came about because higher taxes on that side of the Atlantic have greatly reduced the gains from working.

Generous social welfare benefits were another factor in sapping the European work ethic. But the United States is moving in the same direction. President Obama recently signed a bill extending unemployment insurance benefits, allowing those out of work to collect for up to 99 weeks.

As recently as just a couple years back we recall both friends and writers alike pining for the "civilized" European lifestyle with its sub-40 hour work weeks and month-long vacations in August and how it contrasted so sharply with the brutish nature of the work-a-daddy American lifestyle. How's that worked out for Europe?



And speaking of how's that worked out?: Pass. the. Damn. Bill., they clamored:

"It's a process argument of murky merits that will be long forgotten by November," Chait wrote in January of the roundabout moves used by the Democrats to Pass The Damn Bill once Scott Brown was elected. But a USA Today/Gallup poll taken March 26 to 28 found that 53 percent of adults and 58 percent of independents considered these tactics an "abuse of power" and 50 percent of independents (and 49 percent of all respondents) blamed them for the ugliness that surrounded its passage.

"Because of the way it was passed ... the country has simply not accepted it," Pat Caddell would say later.

The main reason given to "Pass. The. Damn. Bill." was to give Democrats something to run on, but Democrats who voted "no" are now running against it, while others don't dare bring it up. "Being perceived as wrong, as opposed to ... wrong and incompetent is not much progress," political pollster Charles Cook noted.

As Tom Bevan wrote when Chait had his brainstorm, they "seem to have no comprehension of the political consequences of pursuing action that treats the public -- not just in Massachusetts, but across the country -- with such utter contempt."

Again, process matters. It's unconstitutional and the manner in which it was pushed across the finish line wheezing, creaking, stalling and with parts falling off and lobbyist-approved Bondo covering the many puncture wounds has rendered ObamaCare illegitimate.





Via KT: The Ole Miss Rebels have been without a mascot since the apparently slavery era-invoking Colonel Reb was banished from the scene back in 2003. 7 years is an awful long time for a proud institution like the University of Mississippi to be without a mascot and all that results in either insipidness or genius depending upon your viepoint.



Us? Seeing the leader of the rebel alliance knocking back a few cold ones with campus co-eds at The Grove before the game would be awesomely surreal. And what's not to like about that?

Summer time reading

The 10th and final installment of Walter Russell Mead's essay: "The Top Ten Things We Learned From the Global Economic Meltdown".

10. The politicization of economic governance is dangerous business.


The economic system we’ve built depends heavily on a small number of global financial firms who necessarily enjoy close links to national governments. Because of their power and their wealth (and also because they are sometimes ‘too big to fail’), these firms can potentially control the laws that govern their behavior and the regulators who enforce them. In the United States there has been a lot of attention paid to the close relations between current and former executives at Goldman Sachs and the Clinton, Bush and Obama administrations. The finance-government nexus in the US has its counterparts in other countries as well. These close connections, and the obvious danger of conflict of interest, have gotten a lot of attention — as well they should.

But the problem of regulatory capture is much greater and more deeply entwined with our current economic structure than this one case. The rise in the economic importance of the state during the twentieth century–however necessary and in many ways benign this role may have been at various points along the way–inevitably brings politicized governance and regulation in its wake in ways that make bubbles, panics and crashes both more destructive and more likely.

To take one important example, when government workers make up a substantial portion of the electorate, they can influence their own wages and pensions by voting as a bloc. They can — and they do. California, Illinois and Greece have a lot in common.

But even this is just the tip of the iceberg. The increased economic role of the state naturally and inevitably multiplies conflicts of interest and creates moral hazard. American housing policy, widely and correctly blamed as a major contributing factor to the crisis of 2008, was an outstanding example. The combination of interest groups — consumers who wanted cheap loans and rising house prices, banks who wanted a safe and profitable business model, contractors and other businesses with a stake in the home-building industry, cities and towns whose tax bases increase with rapid growth, advocates for the poor who wanted to improve the access of marginalized groups to the Great American Wealth Machine of home ownership — put them all together and there was an irresistible political force driving the United States real estate market and the financial system into more and more dangerous territory. The housing bubble wasn’t an accident; it was the result of decades of national policy and we worked very hard and spent lots of money to make that bubble as big and as dangerous as it turned out to be.

“Vote yourself a farm!” was a slogan of those who campaigned for the Homestead Act that gave free farmland in the west to anyone willing to settle it. Farm subsidies from the Homestead Act through price supports helped cause the Dust Bowl catastrophe and the great agricultural depression of the 1930s by encouraging over-investment in farming and the creation of marginal farmsteads. The crash was more brutal because government support had inflated the bubble past what would otherwise have been its ‘natural’ size.

“Vote yourself a home!” has been our national motto for the last fifty years and today Americans are as addicted to the home mortgage deduction (and the even less justifiable deductions for second mortgages and home equity loans) as Greeks are to early retirement and government employment. Political popularity makes the policies harder to change — but no less damaging and destructive.

There is no easy way out of these problems. Global markets need sophisticated firms and large firms can manage risks and survive shocks that smaller ones can’t. Civil servants do not and should not lose the right to vote when they take government jobs. The decision to favor home ownership on social and political grounds is one that politicians can properly make, and there is a lot to be said for policies that have helped millions of American families acquire substantial equity over the years.

Yet it is clear that the mix of democracy and capitalism is a dangerous if necessary brew; after decades in which we failed to think the costs and risks through, we are now suffering the consequences of policies that create dangerously perverse incentives in both political and economic spheres. Reducing damaging but popular forms of state intervention in the economy while ensuring the state retains the authority and the ability to provide the effective legal and regulatory frameworks without which no modern economy can flourish is the fiendishly difficult and delicate task which Europeans and Americans alike must now undertake.

(italics, ours)

Don't count on this Wall St. reform bill to come anywhere close to striking that fine balance. We hate to look like Know Nothings but really... what more do you need to know about this particular piece of legislation than the fact it was written by Chris Dodd and Barney Frank?

Look for crony capitalism and "corporatism" once hated by that near-extinct animal known as "liberal" to become further entrenched by this bill.

Our blog buddy, Harrison, has a nice round-up of quotes and goings ons from Frank and Dodd that will only prove our point, here.

P.S. The image we have been using for this series is an allegorical painting by Hendrik Gerritsz Pot circa 1940 depicting Tulip Mania which many believe to be the first speculative bubble.

Legislative analysis made easy

Weary lawmakers wrapped up their work minutes before sunrise. "It's a great moment," said a teary-eyed Sen. Christopher J. Dodd (D-Conn.), who as chairman of the banking committee led the effort in the Senate. "It took a crisis to bring us to the point where we could actually get this job done."

One of the last motions Friday was to name the bill after the two chairmen, Dodd and Rep. Barney Frank (D-Mass.), who had shepherded the legislation through the House over the past year. At 5:07 a.m., they agreed unanimously that it would be known as the Dodd-Frank bill, and the sound of applause echoed down the empty hallways.

We would sincerely like to thank the banking committee for having the graciousness to not have us waste our time in searching for the bribes, kickbacks, swindles, exemptions and general putridness in a bill for the fact of the convenience of its namesake.

Tales from Bailout Nation Pt. XXV

The indespensible Heritage Foundation does their usual fine work in making the dense and complex understandable because in the case of the Wall St. reform bill and like members of Congress who will be voting on it, we have no intention of reading it.

But in the interest of public service and being all-around good Joes, here it is in .pdf.


Reasons to hate:

1. Creates a protected class of “too big to fail” firms. Section 113 of the bill establishes a “Financial Stability Oversight Council,” charged with identifying firms that would “pose a threat to the financial security of the United States if they encounter “material financial distress.” These firms would be subject to enhanced regulation. However, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk. As American Enterprise Institute scholar Peter Wallison wrote, “Designating large non-bank financial companies as too big to fail will be like creating Fannies and Freddies in every area of the economy.”[1]

2. Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is “in danger of default” and whose failure would have “serious adverse effects on financial stability.” This determination is subject to review in the courts only on a “substantial evidence” standard of review, meaning that the seizure must be upheld if the government produces any evidence in favor of its action. This makes reversal extremely difficult.

3.Creates permanent bailout authority. Section 204 of the bill authorizes the Federal Deposit Insurance Corporation (FDIC) to “make available … funds for the orderly liquidation of [a] covered financial institution.” Although no funds could be provided to compensate a firm’s shareholders, the firm’s other creditors would be eligible for a cash bailout. The situation is much like the scheme implemented for AIG in 2008, in which the largest beneficiaries were not stockholders but rather other creditors, such as Deutsche Bank and Goldman Sachs[2]—hardly a model to be emulated.

4. Establishes a $50 billion fund to pay for bailouts. Funding for bailouts is to come from a $50 billion “Orderly Resolution Fund” created within the U.S. Treasury in Section 210(n)(1), funded by taxes on financial firms. According to the Congressional Budget Office, the ultimate cost of bank taxes will fall on the customers, employees, and investors of each firm.[3]

You can read the rest of the 14, here.

We blogged about #4 months ago. This is the idea floated originally by Barney Frank that would punish good behavior and reward bad behavior. We don't know about you, but we don't think we'd cotton to having a portion of our salary set aside to cover the poor performance of a co-worker.

We suppose we shouldn't be surprised that this good/bad response mechanism has been central to the entirety of Bailout Nation, whether it's bailing out poor performing auto manufacturers or financial institutions, or enticing people to stay in bad home loans.

Perhaps, we were already there, but Bailout Nation has cemented the notion of rewarding the bad at the expense of the good as the prevailing paradigm of this country aided, abetted and enforced by the federal government.

Quote of the day

Barney Frank on his quest to fashion legislation that would restrict the pay of Wall St.’s financial institution’s execs:

Mocking the idea that firms would move overseas if their compensation were too heavily regulated, Frank, aware that the UK is also moving to restrict pay, said, "By the time they're through, they're going to have to go to Mars to escape the determination to restrict."

This speaks less to Wall St. desire to “escape” Congressional mandates and more to Frank’s complete demogoguing of the issue and his near-maniacally obsessive pursuit to dictate what private enterprises can pay their people.

We’re in the best of hands.

Chris Dodd: (Still) #1

Judicial Watch has compiled their 10 most corrupt politicians of 2009 and Chris Dodd, the prohibitive favorite coming off his title-winning campaign last year, claims his 2nd straight crown this year.

This marks two years in a row for Senator Dodd, who made the 2008 "Ten Most Corrupt" list for his corrupt relationship with Fannie Mae and Freddie Mac and for accepting preferential treatment and loan terms from Countrywide Financial, a scandal which still dogs him.

In 2009, the scandals kept coming for the Connecticut Democrat. In 2009, Judicial Watch filed a Senate ethics complaint against Dodd for undervaluing a property he owns in Ireland on his Senate Financial Disclosure forms. Judicial Watch's complaint forced Dodd to amend the forms.

However, press reports suggest the property to this day remains undervalued. Judicial Watch also alleges in the complaint that Dodd obtained a sweetheart deal for the property in exchange for his assistance in obtaining a presidential pardon (during the Clinton administration) and other favors for a long-time friend and business associate. The false financial disclosure forms were part of the cover-up. Dodd remains the head the Senate Banking Committee.

So, to one of the bright lights in the most ethical Congress ever, we salute you, Senator Dodd!

Rounding out the Top 10:

Senator John Ensign (R-NV)
Rep. Barney Frank (D-MA)
Secretary of Treasury Timothy Geithner
Attorney General Eric Holder
Rep. Jesse Jackson, Jr. (D-IL)/ Senator Roland Burris (D-IL)
President Barack Obama Oh, my
Rep. Nancy Pelosi (D-CA)
Rep. John Murtha (D-PA)
Rep. Charles Rangel (D-NY)

It should be noted that this list is in alphabetical order and Chris Dodd really isn’t #1 but we couldn’t resist the convergence of a great photo op and him being listed first. To prevent any confusion in future years, perhaps we could advise the Senator to stay off this list altogether. As someone who’s taken an oath to uphold the law and represent the people, that’s probably not asking too much.

Tales from Bailout Nation Pt. XXI

(scheduled post warning: author not responsible for stale content or fishy aroma)


The President has given access to his “ideas that stink” generator to Barney Frank and you just know that combination will yield something stupendous.

The concept Frank is working on would be to shield us taxpayers from pouring any more of our tax dollars into the financial institution bailout black hole. Sounds good so far, right? You are probably thinking that Frank is crafting legislation for stricter oversight of these institutions or possibly a tweak to bankruptcy laws that would allow for a softer landing for investors of failed financial institutions. If you thought any of that you would be wrong.

You see, the bailout gravy train is going to continue but the bailouts will be propped up by… wait for it, the other financial institutions.

Under the proposal, future rescues of large institutions would be paid for by other big firms. The proposal says that any financial company with assets of more than $10 billion would have to contribute to the rescue of a failed firm. The legislation emerged after community banks lobbied to ensure that small institutions would not have to pay for future bailouts.

You read that correctly. The outfits that are making money and are on sound financial footing will be forced at the butt of Barney’s gun to fork over cash to their under-performing competition.

In one fell swoop, Barney has simultaneously encouraged further risky behavior by the bad actors in the financial world as he is effectively eliminating the punishment for poor performance and has dis-incentivized strong performance by penalizing it.

We cannot imagine anything actually being more counter-productive to a healthy banking/finance industry.

We’re scouring our thesaurus to come up with language that would adequately describe what a complete ignoramus Frank is and we are failing… miserably.

Quote of the day

“I don't want the folks who created the mess to do a lot of talking... I want them to get out of the way so we can clean up the mess. I don't mind cleaning up after them, but don't do a lot of talking."

For reals?

Sweet!
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Bye.
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Later.

Tales from Bailout Nation Pt. XV

From the files of “you just can't make up this stuff”...

Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said.

In March, Fannie Mae (FNM.N)(FNM.P) said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent, the paper said. Freddie Mac (FRE.P)(FRE.N) is due to implement similar policies next month, the paper said.

In a letter to the CEO's of both companies, Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner warned that a 70 percent sales threshold "may be too onerous" and could lead condo buyers to shun new developments, according to the paper.

Cue feigned shock and indignation because the real thing left the station months ago. “It is what it is” as the saying goes because, as it is, from porkulus, to cap and trade, to health care reform and to the management of the housing/mortgage crisis, the 530 some-odd people currently acting as our elected national legislators resemble less an effective law-making body and more a flailing, shrieking, clawing group of individuals fully engaged in pro-creational activities that bear no coherent results.

Barney Frank would like to have a gander at your pay stub

The Administration, while actively pursuing constraints on executive compensation for firms that have received TARP funds has shown amazing restraint in not wanting to meddle in the affairs of firms that have not been bailed out. And shouldn’t you be expressing your eternal gratitude towards that nod to rampant laissez-faire capitalism?

Congress, however does not share the Administration’s sentiment that there are aspects of the private sector in which they should not be meddling… after all, the most ethical Congress in history is doing such a bang-up job managing their own affairs, wouldn’t you agree?

Here’s vice madam of the House, Barney Frank:

"I do differ with the administration in that hope springs eternal and their position seems to be that if we strengthen the compensation committees we will do better.”

Compensation committees… Sounds suspiciously like they would be staffed in similar fashion and given the same directives as Maoist “committees for public safety.”

After all, it’s for your own good

...for the other shoe to drop

Crony capitalism is a pejorative term describing an allegedly capitalist economy in which success in business depends on close relationships between businesspeople and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.

'Extortion',

outwresting, or exaction is a criminal offense which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection.

Well, that didn’t take long…

Rep Barney Frank (D-Mass.) won a stay of execution on Thursday for a General Motors plant in his district that the automaker had announced it would close.

No other lawmaker has managed to halt the GM ax. As chairman of the House Financial Services Committee Frank oversees the government's bailout program, known as TARP. Frank's staff said the lawmaker spokes with GM CEO Fritz Henderson on Wednesday and convinced him to keep the Norton, Mass. plant open for at least 14 months.

"I greatly appreciate General Motors' willingness to take into consideration the wider needs of the company and especially the community," Frank said in a statement. "Keeping the facility open for this extra time gives workers a chance to look at other opportunities, while at the same time continuing to provide for their families."

Quantum of Smack

We live for stuff like this:

After Rep. Barney Frank, D-MA, admitted he feared a Supreme Court ruling on homosexual marriage because “that homophobe Antonin Scalia has too many votes on this current Court“, the associate justice called on all Americans to “have patience with Rep. Frank as he struggles with his heterophobia.”

“Barney Frank, accustomed as he is to putting like with like, apparently fears things that are hetero…meaning different,” Mr. Scalia said. “Under our Constitution, the judicial and legislative branches are not homo — meaning the same. If the people want to create law about issues not mentioned in the Constitution, they have the power to do so through their elected representatives. The judiciary is a different branch, with different enumerated powers.”
Mr. Scalia refused to speculate about “whether Rep. Frank’s heterophobia is genetic or simply a lifestyle choice, but in either case,” he said, “it demonstrably weakens the constitution and harms society in general.”

Justice Scalia, we are worthy... we are not worthy.

Witch-hunter-in-Chief

We’re trying to figure out just who the most odious person on the planet is right about now. It’s between Chris Dodd and Barney Frank. Actually, at this point, it’s not even close. Dodd may be one big fat liar and an elected official possessing of zero shame, scruples or morals but he doesn’t stand a chance against Barney Frank who is employing fascist tactics in his “moral” crusade against Wall St. fat cats. A moral crusade to solve the very mess he helped create.

Despite receiving death threats, Frank wants the identities of those AIG employees, past and present, who are receiving the bonuses that Congress approved and who have a household income of $250,000 or above. (Just what is it with $250,000? It’s become some sort of socio-economic Mendoza Line with this Congress and Administration. From here on out, this 250K income threshold will be known as the Obama Line.)

Congress approved the bonuses, the President signed off on it but now all that is somehow unacceptable and Congress is going to prove to the public they can be just as much of a pitch fork-wielding mob as a Klan meeting.

So in the spirit of democratic give and take here’s Barney’s address at 274 Grove St. in Newton, Mass. And here’s a look at his compound on Google. Time for some tree-trimming, Barney.

We fully recognize we’ve probably been spending too much time on this issue when we could be talking about something much more socially redeeming like March Madness and the ACC’s 3-4 record and the Pac-10’s 5-1 record thus far, but what we have seen the past few days with respect to a Congressional targeting of specific people for fiscal retribution and public ridicule when no guilt has ever been established is unprecedented in our lifetime.

We’ve got a President who seems willing to just let Congress run amok in the most reckless of manner and who lacks the balls to stand up to them and worse, appears willing to exploit this very reckless and dangerous behavior for his own political gain.

Yep. We’re in good hands.

Tales from Bailout Nation Pt. III

Troubled OneUnited Bank in Boston didn't look much like a candidate for aid from the Treasury Department's bank bailout fund last fall.

The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.

Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP.

Now, who do you suppose might have been behind this totally unexpected gift of largesse from the TARP program? Think Massachusetts. Think big shot of the House Financial Services Committee but most of all think Congressman that was at the epicenter of this financial meltdown in the first place.









Yep, you got it.



Our old pal Barney Frank who was instrumental in crafting the TARP bill language included a narrowly-worded provision aimed at helping this particular home-state bank.

Additionally, Frank lobbied on behalf of OneUnited to its federal regulator who with other regulators are charged with providing data and recommendations to the Treasury Department where the final decision on who does and does not get the “golden tap on the shoulder”.

There is virtually zero transparency in this program and the Treasury Dept. won’t divulge the mechanisms by which they determine the outlay of TARP money.

Dear readers, allowing for a momentary suspension of reality, please tell us how the proposed $825 billion Great Stumble Sideways stimulus package will be administered in any other fashion. We truly believe President Obama does want the GSS to be doled-out in a completely open and judicious fashion but his noble vision that would do Tom Joad proud just doesn’t square with the reality of patronage, power-mongering and outright corruption that exists on Capitol Hill.

And for those of you who believe that many on the Hill, particularly in leadership positions, don’t think of Obama, despite the (D) that they share, as just some piker that can be rolled, you’ve got another thing coming.

Quote of the Day

“At a time of great crisis with mortgage foreclosures and autos, he says we only have one president at a time. I'm afraid that overstates the number of presidents we have. He's got to remedy that situation.”

(emphasis ours)

That from "Brothel" Barney Frank (D-Mass.) on President-elect Obama’s prudent decision to resist the desires of his ardent admirers both in the press and on Capitol Hill and remain President-elect until later on next month.

Yeah, Barney’s one of the most odious members of Congress but good smack is good smack and we wanted to reach out across the aisle to recognize this instance of sly oratorical brilliance.

Line of the Day

"They sound like pimps complaining about the prevalence of STDs among prostitutes."



- Jonah Goldberg on Congressional leadership that should've been minding the lending and finance stores but weren't. Full article which we may have more on, here.

Bonus line (because we're givers): "When a reporter for Forbes magazine asked a Treasury spokesman last week why Congress had to lay out $700 billion, the answer came back: "It's not based on any particular data point." Rather: "We just wanted to choose a really large number."