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Author Topic: Thoughts on McCain, Gramm, Clinton & Enron  (Read 836 times)
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WhiskeyGirl
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« on: July 14, 2008, 09:54:08 PM »

The Imploding American Economy & John McCain’s Very Own Terrorist In Pinstripes

July 14th, 2008 by SHAUN MULLEN, TMV Columnist

Quote
Having been chided last week by Phil Gramm as a whiner afflicted by “a mental recession” as one of millions of Americans who are struggling to keep their heads above water while the U.S. is sucked ever deeper into the worst economic downturn since the Great Depression, it was grimly satisfying to see Henry Paulson standing on the steps of the Treasury Building yesterday afternoon and announcing yet another massive taxpayer bailout, this one for the Fannie Mae and Freddie Mac mortgage giants.

It was a bittersweet moment to be sure, and one that John McCain and his toxic campaign co-chair and chief economic adviser no doubt fail to appreciate.

Quote
This is because Gramm, as a U.S. senator and wheeler-dealer extraordinare, is the man most responsible for the repeal of Depression-era banking regulations that have led to today’s economic turmoil, much of it triggered by the rapacious and arguably criminal actions of Wall Street investment banks.

Quote
Paulson’s actions, necessitated by the flight of private mortgage capital, makes the feds responsible for most mortgages, as well as student loans, at a time when the Iraq war and other politics-over-policy actions, including feel-good stimulus checks, have plunged the U.S. even deeper into debt and ravaged the dollar.

Even at this stage of the game, President Bush is confronted with a crisis that he and many of his economic advisors still do not understand, cannot admit the full gravity of and are pretty much clueless when it comes to long-term solutions that do not step on the toes of the fats cats who have oiled the Republican money machine for the last 15 years. As it is, even the most sanguine economists are saying that dozens of bank failures in the coming months is not outside the realm of possibilities.

Quote
Gramm was the biggest of the big guns behind the 1999 repeal of the banking regulations — the Gramm-Leach-Bliley Act — which was officially called The Financial Services Modernization Act. (Don’t you just love the name!)

Quote
One of many consequences of the repeal was that a year later the Swiss bank UBS gobbled up brokerage house Paine Weber. A year after that, Gramm settled in as a vice chairman of UBS’s new investment banking arm and has since energetically lobbied Congress, the Federal Reserve and the Treasury Department on banking and mortgage issues.

This has included rolling back state rules that sought to stem the rise of predatory tactics used by lenders and brokers that led directly to the subprime mortgage meltdown.

Quote
In 2002, as the full extent of the Enron scandal was emerging, The New York Times called Gramm “a demon for deregulation” as one of the chief engineers of the stealthy approval of a bill that exempted energy commodity trading from government regulation and public disclosure.

Meanwhile, Gramm’s wife Wendy was paid over $1 million in salary, stock options, dividends and other goodies from 1993 to 2001 as an Enron board member, but of course was deaf, dumb and blind to the energy company’s rampant cooking its books with the acquiescence of the late unlamented Arthur Andersen accounting company.

The result was economic ruin for thousands of families.

read more here -
http://themoderatevoice.com/politics/bush-administration/21047/the-imploding-american-economy-john-mccains-terrorist-in-pinstripes/

Considering the pain and suffering that Gramm’s masterwork has caused ordinary Americans, it is not hyperbolic to say that he is a terrorist, he just doesn’t wear funny looking headgear and carry a Kalashikov.
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WhiskeyGirl
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« Reply #1 on: July 14, 2008, 10:03:55 PM »

Fannie Mayhem: A History

July 14, 2008

• Fannie Mae Ugly 07/12/08 – Investors continued to flee Fannie Mae and Freddie Mac almost as frantically as the political class tried to reassure everybody there was nothing to worry about.

• The Price of Fannie Mae 07/10/08 – It's time Americans understood the price they could soon pay for the Beltway's confidence game with these high-risk "government-sponsored enterprises."

• Too Political to Fail 04/21/08 – Fannie Mae and Freddie Mac aren't held to the same standards of accountability as everyone else.

• Fannie Mayhem 11/20/07 – Chuck Schumer is lucky Congress ignored his idea that Fannie Mae and Freddie Mac should ride to the rescue of the housing market.

• Fannie More 10/23/07 – Barney Frank and Chuck Schumer have come up with a proposal that would increase the risk to taxpayers from Fannie Mae and Freddie Mac.

• Fannie to the Rescue? 09/29/07 – Fannie and Freddie went up the Hill to fetch a pail of money.

• Freddie Krueger Mac 05/10/07 – Just when you think they're defeated, Fannie Mae and Freddie Mac arise in Congress to kill any attempt to clean up their dangerous habits.

• The Fannie Tax 04/12/07 – Democrat Barney Frank and the Bush Administration seem to have found common ground on new rules for Fannie Mae and Freddie Mac. Naturally, there's a catch.

• Memo to Fannie 06/14/06 – A joke in Washington these days goes like this: "What's the difference between Enron and Fannie Mae? Answer: The guys at Enron have been convicted."

• Freddie's Friends on the Hill 04/27/06 – The Federal Election Commission sheds some light on how Freddie Mac rewards its friends.
 
• Fannie Mae's House 10/25/05 – Every Congressional session can be counted on to produce its share of bad bills. But the "reform" bill for Fannie Mae and Freddie Mac is in a class of its own.

• Fannie's Friends on the Hill 05/09/05 – Congress finally seemed ready to protect taxpayers from Fannie Mae and Freddie Mac. Then Republican Mike Oxley decided to ride to their rescue.
 
• Fannie Turns a Page 12/23/04 – Fannie Mae – a slick, semiprivate firm operating with the patronage of politicians – is the kind of institution one still expects to find in a country like France.
 
• Fannie the Centaur 12/17/04 – Understanding their half-man, half-beast nature is crucial to fixing Fannie Mae and Freddie Mac in the wake of their recent financial scandals.
 
• Fannie Mae Liberals 10/14/04 – There were many moments of high entertainment during the House hearings on Fannie Mae's creative accounting. But our favorite was the Mister Magoo performance given by Barney Frank (D., Massachusetts).
 
• Fannie Mae Enron? 10/04/04 – The company was cooking the books. Big time.
 
• Fannie Uncovered 09/23/04 – The housing-finance giant has been engaging in some accounting funny business.
 
• Fannie's Risky Business 02/25/04 – Alan Greenspan puts his credibility behind the cause of reforming Fannie Mae and Freddie Mac.

• Christmas for Fannie Mae 12/23/03 – The Federal Reserve Board releases a new staff study about the impact of taxpayer subsidies for Fannie Mae and Freddie Mac.

• White House Fannie Pack 11/11/03 – White House chief economist N. Gregory Mankiw dares to tell the truth about Fannie Mae and Freddie Mac. The mortgage giants were not amused, which means we're getting somewhere.

• Fannie Takes the Hill 10/09/03 – When the House of Representatives can't get even a modest regulatory bill out of committee, the dangers of Fannie Mae become clear in reality.
 
• Speaking Truth to Fannie 03/12/03 – The president of the Federal Reserve Bank of St. Louis warns of a potential crisis arising from Fannie Mae and Freddie Mac.

• Fan and Fred Get the Business 02/19/03 – The year has not started auspiciously for the two mortgage-finance behemoths.
 
• Fannie Mae's Risky Business 09/23/02 – We've been suggesting that Fannie Mae was exposed to too much interest-rate risk. All of a sudden investors seem to agree with us.
 
• Fannie Capitulates, Sort Of 07/15/02 – Fannie Mae and Freddie Mac end months of resistance, stonewalling and downright crankiness and agree to register their common stock with the Securities and Exchange Commission.

• Fannie's Inside Info 07/01/02 – Even in this post-Enron world, Fan and Fred do not provide as much information about these securities as private mortgage lenders do.
 
• Inside Fannie 03/19/02 – Fan and Fred don't function like other companies. They're allowed to pile up debt, implicitly guaranteed by taxpayers, without being held to even the minimum of corporate governance standards.
 
• Frantic Fannie 02/28/02 – Companies taking on so much risk and debt, and backed by taxpayers, ought to be more transparent in what they tell the world.
 
Fannie Mae Enron? 02/20/02 – Fan and Fred look like poorly run hedge funds: lots of leverage and snarkily hedged risk. Does the word Enron ring any bells?

If you go to this link, you may click on these historical articles.

http://online.wsj.com/article/SB121599777668249845.html?mod=googlenews_wsj


interesting reading...
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It doesn't do any good to hate anyone,
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LouiseVargas
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« Reply #2 on: July 15, 2008, 12:15:21 AM »

Thank you for your post.

I do remember when my mother (a CPA) said Fannie Mae and Ginnie Mae are safe investments. I don't know about Freddie Mac. She held mortgages and second mortgages.

I was driving home today when it suddenly hit me that if mortgage companies are in trouble, the ramifications are enormous. Houses / condos / small communities are being built and no one will get financing to move in.  What happens next? Will the new buildings fall to squaters who lost their financing and can't live in their houses?
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WhiskeyGirl
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« Reply #3 on: July 15, 2008, 11:25:55 AM »

Who was responsible for ensuring that the Freddie and Fannie were being well taken care of?  Who was looking out for taxpayer interests?  Democrats and Republicans, where have they been for over ten years?

I look back at all the things that were 'deregulated' or 'modernized' and it looks like a big ripoff for taxpayers.  Some of these regulation/safeguards were put into place during the Depression era after the collapse of the financial markets.  I think sound financial practices are timeless.  Get rich quick schemes only work for the few on the receiving end.

It seems to take a few years, but in the end the taxpayer seems to be left holding and paying to refill an 'empty bag' that was previously filled with money.

Energy
Banks/Savings & Loans
Freddie/Fannie
Retirement Funds
Real Estate

What are the upcoming 'bags' for consumers?  A few that I've see -

healthcare
insurance
Social Security
401K, other retirement vehicles

What happened to elected officials looking out for citizens?  Working for the common good to ensure that people didn't get ripped off?

jmho
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WhiskeyGirl
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« Reply #4 on: July 15, 2008, 10:50:34 PM »

Quote
Americans may be losing faith in free markets
Things are hard all over the financial landscape, and politicians and experts are now looking with favor at more, not less, government involvement in the economy.


By Peter G. Gosselin
Los Angeles Times Staff Writer

July 16, 2008

WASHINGTON — (snip)

Spurred by the continued housing crisis, turmoil in financial markets, spiking oil prices, disappearing jobs and shrinking retirement savings, the nation and its political leaders have begun to sour on the notion that the current market system is the key to a fair, stable and efficient society.

"We're at a hinge point," said William A. Galston, a senior fellow at the Brookings Institution in Washington who helped craft President Clinton's market-friendly agenda during the 1990s. "The strong presumption in favor of markets, which has dominated public policy since the late 1970s, has been thrown very much into question."

(snip)

...A remarkable 84% of Americans are convinced that the nation is on the "wrong track," according to a recent Gallup poll.

...Washington had to ride to the rescue of two government-chartered mortgage giants -- Fannie Mae and Freddie Mac, which hold or guarantee nearly half of the nation's $12 trillion in mortgage debt -- after investors all but extinguished the pair's market value amid fears that slumping home prices would push them into insolvency.

Meanwhile, federal regulators seized IndyMac Bancorp, a $32-billion mortgage lender based in Pasadena, in what regulators called the second-largest bank failure in U.S. history. ...

The fact that experts keep pushing back the date when conditions may improve and the failure thus far of any national leader -- including either of the major-party presidential candidates -- to offer a convincing vision of how America will make its way back to sustained prosperity suggest that the current crisis will probably be very different from other recent economic bad patches.

(snip)

"If the pendulum swung away from government toward much greater confidence in markets during the last generation, the pendulum is clearly swinging back again now," said Daniel Yergin, whose 1998 book with coauthor Joseph Stanislaw, "The Commanding Heights," chronicled the worldwide spread of the free-market credo.

(snip)

The price for a gallon of regular unleaded gasoline has nearly doubled in the last year, while that for a barrel of crude oil has more than doubled, cutting short Americans' love affair with gas-guzzlers and driving the nation's trucking, auto and airline industries into deep trouble.

(snip)

But the price run-ups seem out of whack with demand, which has increased only about 1% worldwide. The mismatch has fueled suspicion among many Americans and their political leaders that the third financial bubble of the decade -- after tech stocks and housing -- is underway, this time in energy.

Both presidential candidates have fingered market speculators, rather than the forces of supply and demand, for helping drive up prices.

At a recent hearing, Rep. John D. Dingell (D-Mich.) cornered the federal official whose agency regulates the market where oil futures are traded. "How is it that the market isn't working to the benefit of the consuming public?" the lawmaker demanded.

(snip)

At least half a dozen measures have been introduced in Congress to limit speculation or to tax oil company profits.

(snip)

In large part, the rise in house prices and the recent plunge grew out of an almost unregulated corner of the mortgage market -- the one for riskier loans. As with fuel, "the message that Americans are getting is that something went wrong with the markets and you got hurt," said economist Robert E. Litan of the Brookings Institution and the Kauffman Foundation of Kansas City, Mo.

"With energy, it's the speculators. With housing, it's predatory lenders or crummy credit-rating agencies or stupid banks. We're not ready to throw out markets altogether," he said, "but we want government to do something about the excess."

(snip)

Americans entered the new century convinced that "we had a new economy built on services and information technology that would let us win globally," said Harvard economist Robert Z. Lawrence.

"The whole premise of globalization in the year 2000 was that it worked well for us and the other developed countries but that the developing countries would need help," he said.

(snip)

"We've seen unprecedented growth in the developing countries, while the developed countries are being led into a slowdown by the United States," Lawrence said. "We've found out that instead of services and information technology, it's all about oil and other commodities" that are not the nation's strong suit.

Finally, when it comes to investment, especially for retirement, recent years have brought unsettling disappointments as the stock market has failed to regain and maintain the peaks that it reached in 2000. An investor who put a dollar in a broad market index fund early in this decade not only would have made no money by today but would have lost a little of his initial amount.

That's a far cry from the 1990s, when people told pollsters they expected to make 15% annual gains indefinitely.

(snip)

As UC Davis' Rauchway pointed out, the devastating panics and depressions of the late 19th century eventually resulted in the progressive reforms of the early 20th century and, later, the New Deal of the 1930s.

Today, Americans are not ready to throw out markets altogether, said economist Litan, but "what people may be demanding is New Deal lite."

read the rest of the story here -

http://www.latimes.com/news/nationworld/washingtondc/la-na-losingfaith16-2008jul16,0,4131187.story?page=1
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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