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Those Who Deceive Must Be Revealed!




Saturday, April 10, 2010

Covering Their Fannie

From Investors Business Daily

Covering Their Fannie


Financial Crisis: The Angelides Commission finally asked Fannie Mae and Freddie Mac what drove them to overinvest in risky subprime loans. But it didn’t like the answer and changed the subject.

Former officials with the mortgage giants testified that they loaded up on subprime loans and securities to meet “government-mandated housing goals” for low-income borrowers with typically weak credit.

“We were balancing against our HUD housing goals,” former Freddie CEO Daniel Mudd told the panel. And as a result, the agency’s underwriting “standards slipped.” Added former Fannie official Robert Levin: “HUD increased their goals,” and the billions in subprime securities “contributed greatly to affordable housing objectives.”

Of course, that was the last thing the Democrat-led panel handpicked by Nancy Pelosi to investigate the financial crisis wanted to hear. So it quickly steered the focus back on Wall Street and the “desire to increase profitability.”

Phil Angelides, the panel’s Democrat chair, even tried to put words in witnesses’ mouths by suggesting that what they really were worried about was competing with Wall Street for a share of the mortgage-backed securities market.

He also got a federal regulator to say that “arrogance and greed” pushed them into higher-risk products. Another regulator did not fully cooperate, however.

Former Federal Housing Finance Agency Director James Lockhart said that the HUD credit quotas had “increased so rapidly” that it was almost “mathematically impossible” for Fannie and Freddie to comply with them. But they had no choice. “They would have incurred the wrath of Congress if they missed those goals,” he noted, not to mention penalties by HUD.

Now taxpayers are on the hook for their collapse. Their bailout is expected to cost at least $400 billion — more than double the 1990s bailout of the entire savings and loan industry.

Who put them up to such risky investments? The Clinton administration.

Starting in 2000, HUD required Fannie and Freddie to position fully half their mortgage portfolios in high-risk, low-income loans — despite a spike in subprime foreclosures at the time. The “affirmative-action” credit quotas, raised higher still by Bush’s two Hispanic HUD secretaries, drove the mortgage giants into the subprime market — and eventually into financial insolvency.

“HUD was pressing you to continue to make more investments in these affordable housing loans,” former Reagan Treasury official Peter Wallison, the one panel member who dared to raise the issue, quizzed the Fannie and Freddie witnesses.

For the Angelides Commission to insist on blaming the private sector is intellectual dishonesty at its worst. The evidence is clear that the subprime bubble was fueled by government-mandated overinvestment in high-risk, low-income areas greenlined by Washington social engineers and bank regulators.

Angelides’ commission is supposed to be modeled on the panel that examined the causes of the 9/11 attacks. But it’s shaping up to be more like the Pecora Commission, created in the wake of the Great Depression to put Wall Street on trial for market “excesses” and justify major new banking regulations that lasted for decades.

While Wall Street no doubt contributed to the feeding frenzy, Washington chummed the waters by giving Fannie and Freddie affordable-lending credits for subprime securities. The primary culprits in this crisis are in Washington, and so far they’ve gotten off scot-free.

If former HUD secretaries aren’t called to testify about the pressure they applied to Fannie and Freddie to make politically correct loans, and subjected to the same grilling as bankers, the hearings will prove a farce.

And the American public will never get to the bottom of what wiped out trillions in household wealth. Worse, we may repeat the mistakes that led up to the crisis.

SEIU assaults union supporter in hospital cafeteria

Tuesday, April 6, 2010

Obamalateral Disarmament

National Security: Aiming at a world where nuclear weapons are obsolete, the administration's nuclear posture review leaves a world without American nuclear weapons and the backbone to use them.


After his stunning bombing of Pearl Harbor in 1941, Japanese Adm. Isoroku Yamamoto lamented that all that had been accomplished was to awaken a sleeping giant and fill him with a terrible resolve.
Under policies announced by the Obama administration, a devastating chemical or biological attack on this country might merely awaken our very own Hamlet and fill him with a terrible sense of angst.

We have said before that rather than strive for a world without nuclear weapons, we should strive for a world without enemies willing to use them against us. Our retaliatory power should be unquestioned, as should be our willingness to use it. President Reagan called this proven and successful policy peace through strength. It has been replaced by a hair-splitting policy of nuance.
The U.S. is now promising not to use nuclear weapons against non-nuclear states that are in compliance with the Nuclear Non-Proliferation Treaty, even if they attack America with biological or chemical weapons or launch a paralyzing cyberattack.

This is good news for our enemies to know — they can wipe out much of New York City, but as long as their signature is on that piece of paper, their capital is safe from becoming a pile of irradiated rubble. We are not making this up.

In this nuclear posture, which can best be described as slouching in a recliner, we renounce the development of any new nuclear weapons, thus ensuring the aging of our nuclear deterrent into obsolescence and irrelevance.

Friday, April 2, 2010

Obama's Phoney Baloney Offshore Drilling Announcement

Thursday, April 1, 2010 STRATFOR.COM Diary Archives


Obama's Offshore Drilling Announcement

U.S. PRESIDENT BARACK OBAMA ANNOUNCED WEDNESDAY that areas of federal offshore territory in the Atlantic Ocean, eastern Gulf of Mexico and Alaskan Arctic would be available for oil and natural gas drilling. The announcement follows a 2008 decision by Congress to end a two-decade-long moratorium on offshore drilling. While the president opened new areas for drilling, he delayed leasing in the Chukchi and Beaufort areas until 2012, and closed off Alaska’s Bristol Bay and the west coast offshore. Most of the newly opened areas are unexplored — and the rest explored 25 years ago — so with initial environmental studies, leasing, exploration and production all to be done, it may be decades before the energy gets to market.

To justify the move, Obama appealed to energy security, calling attention to American dependence on foreign sources of oil and the security challenges that go with it, including an abiding interest in Middle Eastern regional affairs that has occasioned economic shocks and military conflicts. Yet the recoverable reserves from the territories is not yet known, therefore the direct benefit to energy security cannot be measured. Of course, part of Obama’s goal is to use offshore drilling as leverage to generate greater support among his political rivals for his policies on cutting U.S. carbon emissions and promoting alternative energy development. But it remains to be seen whether these policies will become law — not to mention whether they will achieve the desired outcomes.
From the foregoing it would appear that Obama’s announcement was at best ambivalent, and at worst a dud. Nevertheless STRATFOR sees in the administration’s move the potential for a domestic political shift that could become geopolitically relevant.

“Part of Obama’s goal is to use offshore drilling as leverage to generate greater support among his political rivals for his policies on cutting U.S. carbon emissions and promoting alternative energy development.”

In modern U.S. history, once a president is beleaguered by opponents, his only option — if he is to achieve any objectives — is to appeal to his core constituency. Without a supportive base, no president can retain the allegiance of his own party in Congress, whose members are rarely keen on sacrificing their jobs for the benefit of another politician’s legacy. Moreover, no amount of fair weather fans, middle-of-the-road voters or defectors from the other camp can make up for the gaping loss created by an alienated core. Obama’s predecessors were put on the defensive early in their terms — Bill Clinton after seeing Congress flip in his second year, and George W. Bush after the victory in Iraq faded and a long insurgency erupted — forcing them to abandon grander schemes and contract their ambitions into the scope of what the base demanded.

This pattern suggests that Obama now stands at a critical juncture. The passage of his health care bill counts not only as a key victory for his domestic agenda, but a major boon for his core supporters on the left. The president has achieved the first requirement to solidify his power, winning him room for maneuver in pursuit of other goals. In other words, with his base appeased, Obama has the opportunity to broaden his coalition, to reach out to centrists or right-wingers open to his overtures. The window is small. Campaigning is already underway for the 2010 midterm elections, which have the potential to either catapult or hobble the remainder of Obama’s first term.
Expanding the potential for domestic offshore energy exploitation is exactly the kind of move that, however it ultimately shakes out in relation to domestic oil production and energy security, lends Obama credibility as a president capable of leading by broad consensus. But domestic offshore drilling alone, especially in the limited scope announced Wednesday, will only go so far — and far be it from STRATFOR to blow this development out of proportion, given the wide range of other challenges that still threaten to throw the administration off track. What grabs our attention is any American president that has the chance of expanding support beyond his base. Such a president gains a rare advantage when it comes to driving foreign policy — one that none has enjoyed since Ronald Reagan. America is already the leader of the global system, and an administration that does not have to worry much about its standing at home has far more freedom to pursue American interests abroad.