Tag: Subprime mortgage crisis

The Definition of Insanity

Is government housing policy:

Recent steps by federal regulators make it clear: low down-payment loans, a feature of the housing market’s boom, are coming back.

On Monday, Federal Housing Finance Agency Director Mel Watt announced that mortgage-finance companies Fannie Mae and Freddie Mac would start backing loans with down payments as low as 3%.

And on Tuesday, three federal agencies approved a loosened set of mortgage-lending rules, removing a requirement for a 20% down payment for a class of high-quality loan known as a “qualified residential mortgage.”

Loans with little to no down payment were a common feature of the lax lending practices that were prevalent during the housing market’s bubble years.

Yes, my friends. Not content with easy mortgages wrecking the economy and destroying what little wealth the poor and middle class had accumulated, our government is back for more.

Why on Earth would they want to do this? McArdle:

Because, I think, most of us still haven’t managed to shed the idea that buying a house is a good way to get some unearned bonus wealth. Too many people managed to do just that for too many years. We think of 2008 as an aberration, rather than reversion to the mean. And that’s a costly mental error.

The long, steep increase in American home prices from 1946 to 2008 was driven by a whole lot of trends that are hard to repeat: the invention of the 30-year, fixed-rate, self-amortizing mortgage, which allowed people to pay more for a house by lowering the monthly payments. The securitization revolution, which lowered mortgage risk by bundling the loans into large, diversified portfolios, thereby lowering rates. Rising inflation, which pushed up the price of houses. Falling inflation, which lowered interest rates and monthly payments still further and allowed people to pay even more for those houses. The credit-scoring revolution, which allowed banks to offer loans to more people, increasing demand for the existing housing stock. And in dense coastal areas, you also had the rise of NIMBY zoning laws, which made housing scarcer and therefore more expensive.

The problem is, these things have already happened. Most of them cannot happen again — interest rates can’t really go much lower.

Out government is consumed with the idea that home ownership is the path to wealth for the poor and lower middle class. But nothing could be further from the truth, as the last decade proved. The housing bubble hurt the wealthy … a bit. But it completely burned what little wealth existed in the lower quintiles of our society.

The reason is that houses aren’t a great investment. They’re a good investment … if you have a stable income and employment situation and can manage money well. They’re a stable investment … if you have some equity. But people are besotted with idea of real estate as the gate to wealth.

Low down-payment loans are especially dangerous for people trying to climb the economic ladder. They can allow people to make a quicker entry into housing. The danger, however, is that a house with low equity is a highly leveraged investment. If you make a down payment of 3% and housing prices fall 3%, 100% of your equity goes up in smoke. The reason so many people ended up in underwater mortgages with negative wealth was because they had such a thin margin of equity.

But … they never learn. This will happen again and they still won’t learn. The people running our government and their cheerleaders in places like the Center for American Regress will continue to believe that there is a alchemical formula for creating middle-class wealth out of thin air. I guess you have to believe in something when you think that businesses don’t create jobs.

Meet the New Standards, Same as the Old Standards

Well, knock me over with a feather:

The government is establishing new rules for mortgages that will make it harder for some borrowers to qualify but that are designed to prevent the kind of risky lending that nearly caused the housing market to collapse during the financial crisis.

The Consumer Financial Protection Bureau on Thursday will roll out the first of several far-reaching changes to the nation’s mortgage market, limiting upfront fees and curtailing practices such as interest-only payments that can leave homeowners stuck with unsustainable loans. The agency also will set standards for how much income a consumer must have to obtain a mortgage.

To obtain a qualified mortgage, a borrower cannot have a debt burden that amounts to more than 43 percent of income. That may make it more difficult for people with lower incomes to qualify. In real estate markets such as Washington, where prices are high, prospective buyers could run up against the cap as they stretch their finances to purchase homes.

In return for complying with the standards, a bank would be immune from most lawsuits. However, I’m sure that, if another collapse happens, the government will bail out the banks who don’t play by these rules as well.

Gee. It’s almost like someone realized that simply handing out sacks of money to anyone who walks in the door isn’t such a hot idea! After years of pushing banks to lend, lend, lend, the government is finally asking them to do what they should be doing anyway.

The pressure on banks to make stupid loans in the last decade were simply enormous. You had the CRA, the implicit guarantee of Fannie Freddie and the enormous pressure from the CDS and CDO markets to produce more tradable mortgages and damn the fundamentals. You then had a bailout which took only the downside risk of bad lending practices.

So having thrown all their weight — through CRA, Fannie/Freddie and bailouts — toward encouraging banks to make riskier and riskier loans, the Feds are now stepping in and saying, “Hey, you shouldn’t make risky loans! Ha-ha! Glad we finally reigned in you capitalist idiots. Why if it weren’t for us, you’d forget to lock your vaults at night.”

Here’s a prediction: these standards will pass. And in a few years, the government will start pressuring banks to make risky loans again. They will do this because securities brokers have lobbyists too. They will do this to promote home ownership, even among those who can’t afford homes. They will do this for “fairness”. But whatever the excuse and whichever party is in power, they will do it.

Because the mantra of the Nanny State always holds: whatever is not forbidden is mandatory. And preferably both.

I told you we where going to get it even worse…

And it looks like the social engineers do not plan to disappoint. Remember when I pointed out that the same politicians that created the environment that caused the housing collapse demanding to be the ones to fix the evil lenders was certainly not fixing anything and likely to make it worse? Well, I hate to be right on this, but I am:

Just days before Christmas, the Obama administration gave Bank of America a big lump of coal, levying a hefty $335 million dollar fine on the company for discriminating against minorities in its lending practices.

Supposedly Countrywide, a mortgage company bought by Bank of America in 2008, had not given out enough low interest rate loans to minorities from 2004 to 2008.

Look, I have no skin in the game if B of A gets hammered, and I certainly dislike Country Wide with a passion because Mozilo and Dodd are butt buddies, but the problem that caused the economic disaster the left blamed on everyone but their social engineering policies, and which have been prolonged, because of 3 years of idiotic Keynesian policies that have done nothing but funnel trillions of tax payer dollars to democrats and their friends, are still there.

What the large fine reveals is that President Obama hasn’t learned anything from the recent financial crisis.

What the president sees as discrimination in awarding a mortgage, lenders saw as wise business decisions.

If a borrower can’t afford a down payment, Obama appears to view charging a higher interest rate as discrimination. Lenders also think that they shouldn’t treat borrowers whose sole source of income is welfare or unemployment insurance, the same as those applicants who have a job. But Obama, again, appears to view this as discrimination.

There is obviously a problem with no down payments: if the price of the house falls so that it is worth less than the loan, people will default and walk away. Similarly, when unemployment insurance or welfare runs out, borrowers might find they can’t keep paying their mortgage.

The Equal Credit Opportunity Act the Obama administration used to impose this fine was exactly what helped cause the mortgage crisis by forcing lenders to make risky loans that they didn’t want to make.

Does that Equal Credit Opportunity Act sound familiar? I mentioned in my long discussion with the people that told me government was the solution, not the problem, while ignoring that government forced lenders to throw pearls to swine despite the obvious problems. I guess the people that told me I was wrong now have some crow to eat. And so soon! Exhibit A, people. There will be more because the social engineers will be damned if they give up trying to breed Unicorns.

B of A just got hammered for Country Wide wanting to charge high risk lenders more or not seeing welfare as reasonable source of income on applications. What do you think the impact of the government bitchslapping a lender into giving high risk lenders money to buy a house will do to the market yet again? And that 2000 page monster Dodd & Frank put together will do nothing but make it more costly and the impact deeper. Think the LSM will tell anyone this was a bad move? Or do you think they will make it look like Team Blue is again helping the little guy out? Heck, will they even report it? Yeah, I thought so.

Damn, I hate to be right. What’s the definition of insanity again? To do the same dumb thing over and over, fail, and still expect that the next time will make it work? And no, there is no appology needed from the usual suspects that told me the problem was the evil banks, and not the stupid social engineering assholes in government and their insane policies….

FM and FM Reloaded

A couple off weeks ago, the SEC indicted a number of executives from Fannie Mae and Freddie Mac for fraud. A detailed look at the indictment is here. Money quote is a long one, but I think you have to read it:

The SEC’s complaint against the former Fannie Mae executives alleges that, when Fannie Mae began reporting its exposure to subprime loans in 2007, it broadly described the loans as those “made to borrowers with weaker credit histories,” and then reported — with the knowledge, support, and approval of Mudd, Dallavecchia, and Lund — less than one-tenth of its loans that met that description. Fannie Mae reported that its 2006 year-end Single Family exposure to subprime loans was just 0.2 percent, or approximately $4.8 billion, of its Single Family loan portfolio. Investors were not told that in calculating the Company’s reported exposure to subprime loans, Fannie Mae did not include loan products specifically targeted by Fannie Mae towards borrowers with weaker credit histories, including more than $43 billion of Expanded Approval, or “EA” loans.

Fannie Mae’s executives also knew and approved of the decision to underreport Fannie Mae’s Alt-A loan exposure, the SEC alleged. Fannie Mae disclosed that its March 31, 2007 exposure to Alt-A loans was 11 percent of its portfolio of Single Family loans. In reality, Fannie Mae’s Alt-A exposure at that time was approximately 18 percent of its Single Family loan holdings.

The misleading disclosures were made as Fannie Mae’s executives were seeking to increase the Company’s market share through increased purchases of subprime and Alt-A loans, and gave false comfort to investors about the extent of Fannie Mae’s exposure to high-risk loans, the SEC alleged.

In the complaint against the former Freddie Mac executives, the SEC alleged that they and Freddie Mac led investors to believe that the firm used a broad definition of subprime loans and was disclosing all of its Single-Family subprime loan exposure. Syron and Cook reinforced the misleading perception when they each publicly proclaimed that the Single Family business had “basically no subprime exposure.” Unbeknown to investors, as of December 31, 2006, Freddie Mac’s Single Family business was exposed to approximately $141 billion of loans internally referred to as “subprime” or “subprime like,” accounting for 10 percent of the portfolio, and grew to approximately $244 billion, or 14 percent of the portfolio, as of June 30, 2008.

There’s a handy-dandy chart included. The two GSE’s claimed they had about $14 billion in subprime exposure. The SEC is alleging that the actual exposure was $360 billion. I know this must be shocking to the Left. We all know that government and its supported enterprises only lie when Republicans want to start a war. But there it is in black and white.

It has become an article of faith that Fannie and Freddie did not cause the financial crisis and the allegation they did is all part of a big Republican government hating lie (read here, here and here). And, to some extent, I agree. They didn’t “cause” the problem. But those analyses were based on numbers from FM-squared that turned out to be complete and total fabrications. Now, I agree that the financial crisis had multiple and complex causes. But even Krugman will have to admit that, at the absolute minimum, the GSE’s throwing hundreds of billions into subprime mortgages was adding serious fuel to the fire. FM2 may not have caused the crisis, but they made it a hell of a lot worse. And, seriously, what planet do you have to live on to have claimed, even before this came out, that the agencies guaranteeing half of the mortgages in the country had no culpability for the bubble?

But here’s the thing: let’s allow that FM2 were more of a “me-too” player, coming late to the subprime party. When you think about it, that’s almost worse. They couldn’t even time a bubble properly. They were the last sucker in the ponzi pyramid that was our national housing market. They gambled hundreds of billions — a bet the taxpayers ended up having to stand for — at the worst possible time. And saps like Krugman think they’re a model for healthcare?

And even if you don’t blame FM2 for the financial crisis, we can blame them for over a hundred billion in bailouts. We can blame them for paying for $100 million in executive salaries. We can blame them for lying their asses off by a factor of 25 in how exposed they were.

This isn’t a little deal. As Joe Biden would say, this is a Big Fucking Deal. But do you see the media screaming about it? Do you see a tenth of the outrage we see when some Wall Street asshole gets a $10 million golden parachute? Do you see all the FM2 defenders acknowledging that they were lied to? FM2 lost tens of billion of our money trying to buy into housing right before it collapsed. Shouldn’t that piss off someone on the Left?

They admit they wanted it to fail!

And that’s because they think they profit from that failure. Barney Frank, he who with another crook, Chris Dodd, was instrumental in the last housing market collapse, and, whom i remind you all demanded to “fix it”, and thus, have set us up for an even bigger one in the near future, admits that the super committee, that many like me have pointed out was set up from the start to fail by the left, failing, was good for democrats.

Video, with green lefty propaganda advertisement when I watched it, follows.

The question begs to be asked: “Why does it always feel like every time democrats “win” anything, that the country loses big?” This committee was set up to fail from the start because the left wants both to destroy the military and, at a minimum, keep the current spending levels. After all, it has allowed them to steer trillions of dollars to their base, lobbying community, friends, chosen businesses, and of course, campaign coffers, and they know that without all that money they would end up dead.

Not “If”, but “When”.

As I have pointed out, we are sooner than later going to have another economic disaster, because the politicians that caused it not only didn’t fix it with a massive expansion of their power to influence which companies are protected by government and which ones can be taken down, and only made it worse, and others seem to agree. In fact it seems even the LSM now is feeling forced to report on that.

“There is definitely going to be another financial crisis around the corner,” says hedge fund legend Mark Mobius, “because we haven’t solved any of the things that caused the previous crisis.”

What problem is that you ask? Well, it’s those shitty mortgages that never should have been issued, to people that were not qualified and thus couldn’t pay them back, which where issued, under threat of losing your FDIC insurance if you did not comply, as part of a 3 decade long attempt at social engineering a collectivist utopia.

Through quantitative easing efforts alone,” says Euro Pacific Capital’s Michael Pento, “Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS).”

Think about that for a moment. The Fed’s entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone, junk that the banks needed to clear off their own balance sheets.

“As the size of the Fed’s balance sheet ballooned,” continues Mr. Pento, “the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.

“Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out.”

Get that? Our government now owns some $2.7 trillion of debt, much, if not all, of it bad debt, and has a measly $52 billion of capital behind it, leaving it leveraged by a ghastly 51–to–1 debt to asset ration. What is left out, to give you some perspective of how fucking insane and bad this is, is the fact that the Dodd-Frank bill capped banks at a 15-to-1 ratio. Our government carries more than three time the debt rated against their assets!

Worse yet, is the obvious fact that Dodd-Frank did nothing to deal with the fundamental problem that caused all this: being forced by government to give loans to unqualified people. The bill basically ignored this completely so the politicians could keep the same social engineering lending requirements that caused the problem in the first place, around. So in the current clime where there is pressure to make banks loan again, as soon as banks actually meet that 15-to-1 ratio, they open themselves to being forced to do more of the same or risk being accused of discriminating. And the whole game starts all over.

Now couple all of that with the horrible state of affairs of the European banking system, which is basically using buckets to drain water from a sinking ship with a gash the size of the one inflicted on the Titanic by an iceberg, and you can see that things look bleak. That’s why we get things like:

“Unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen,” the New York-based rating company said yesterday in a statement. Even as U.S. banks have “manageable” exposure to stressed European markets, “further contagion poses a serious risk,” Fitch said, without explaining what it meant by contagion.

Here is the scary part. None of the Eurocrats in Brussels have the foggiest idea on how to solve this. Don’t be fooled into thinking otherwise. All they are doing is more of the same Keynesian nonsense in an attempt to keep the doomed EU together. The French and German banks are stuck between a rock and a hard place, because they have so much money lent to the troubled members of the PIGS – Portugal, Italy, Greece, and Spain – that any one of those not paying back 100% of what they owe will send them into the abyss. And those that are honest don’t even believes that Greece, where the people have gone bonkers because they now have to wait till they are 60 to retire or are being told they will get less “free stuff” and are up in arms, can pay a fraction of what they owe, back. Those that play the odds favor the EU falling apart. The fall of the big European nanny state is going to hammer us.

Running out of other people’s money, sucks, but we better wake up to that reality or Team Blue, which thinks that they can recreate Greece here, but somehow magically without all the trouble that comes with that socialist utopia, will seal our doom. Maybe that’s the plan anyway. Nobody can be as inept as these people have been and continue to be on purpose, and survive this long. The universe can’t be that cruel.

FHA Is Next

Oh, come on. Admit it. You’re not surprised:

Concerns are rising that the Federal Housing Administration could run out money if the economy doesn’t recover soon, raising the risk the agency would seek a taxpayer bailout for the first time in its 77-year history.

Since the mortgage crisis erupted five years ago, the FHA has played a critical role in housing finance as private lenders retreated. It backs about a third of all new mortgages originated for home purchases, up from around 5% in 2006.

But, as the FHA prepares to release its annual financial report next week, a forthcoming study by Joseph Gyourko, a real estate and finance professor at the University of Pennsylvania’s Wharton School, estimates that the FHA faces around $50 billion in losses in the coming years.

The FHA could potentially push these loses back to the originators of the loans. And frankly, I wouldn’t mind if they did, since the banks have so far suffered little in the way or moral hazard. But this was as predictable as it was inevitable. When the housing industry collapsed, FHA stepped in to try keep the loans flowing. They massively expanded their portfolio and everyone who wasn’t a media idiot knew thy were taking on too much.

We may have no choice about bailing them out but we should do what we should have done with Fannie and Freddie: use it as an excuse to ditch the agency.

Under President Obama & the democrats….

WaPo points out that data gathered shows that Wall Street firms — independent companies and the securities-trading arms of banks — have earned more in the first 2 1/2 years of the Obama administration than they did during the eight years of the George W. Bush administration. Why is this happening?

Behind this turnaround, in significant measure, are government policies that helped the financial sector avert collapse and then gave financial firms huge benefits on the path to recovery. For example, the federal government invested hundreds of billions of taxpayer dollars in banks — low-cost money that the firms used for high-yielding investments on which they made big profits.

Stabilizing the financial system was considered necessary to prevent an even deeper economic recession. But some critics say the Bush administration, which first moved to bail out Wall Street, and the Obama administration, which ultimately stabilized it, took a far less aggressive approach to helping the American people.

That bolded section is pretty-speak, a bullshit attempt to soften the real problem because it doesn’t favor the leftists big-nanny-staters, for the Frank-Dodd bill was written in such a way that those kissing the right people in government’s asses and paying them off with enough lucre in the form of campaign contributions then could not just get oodles of tax payer money, but also make a veritable killing. And the fools keep blaming the banks and capitalism. In the mean time the crony capitalists are raking in money while those that claim to be the 99 percent rail at the wrong people.

“There’s a very popular conception out there that the bailout was done with a tremendous amount of firepower and focus on saving the largest Wall Street institutions but with very little regard for Main Street,” said Neil Barofsky, the former federal watchdog for the Troubled Assets Relief Program, or TARP, the $700 billion fund used to bail out banks. “That’s actually a very accurate description of what happened.”

Neither the Bush administration nor the Obama administration, for instance, compelled banks to increase lending to consumers, known as “prime borrowers.” Such a step might have spurred spending and growth, although generating demand for loans may have proved difficult in the downturn.

Right, because as we saw before, “compelling” banks to do things, like lending money to people that were so high risk that a default was a “when” not an “if”, never ends badly. These fuckwads miss the point: both TARP and the Dodd-Frank bill were about increasing the power of the political class. And tax payers paid for it.

A recent study by two professors at the University of Michigan found that banks did not significantly increase lending after being bailed out. Rather, they used taxpayer money, in part, to invest in risky securities that profited from short-term price movements. The study found that bailed-out banks increased their investment returns by nearly 10 percent as a result.

Guess which bill gave them permission to do this kind of investments? And which bill required banks to keep an inordinately large amount of cash on hand rather than do anything with it too, leading to less lending amongst things. Which one added a massive layer of bureaucracy & costs, while cutting their profits? And which one is now going to cause more trouble. Don’t:

Some of Wall Street’s success has moderated in recent months, with bank stock prices down and layoffs on the rise. This mostly has reflected the renewed slowdown in the U.S. economy this year and the European debt crisis buffeting global markets.

Representatives of the financial industry say regulations in last year’s Dodd-Frank legislation, which Obama pushed for and signed, also have crimped bank profits. But many analysts think the law will make the financial system more stable. The legislation, for instance, requires banks to maintain a greater capital cushion to withstand losses during bad economic times. The measure also created a regulator whose sole purpose is to police lending to ordinary Americans.

Stable indeed. Less loans, and loans are risky in a collapsing economy, are sure to make the lending industry more stable. Less profits means the consumer pays more for services that before might even have been labeled “free”. And there are far more regulations yet to come which all will have onerous effects and create special needs to go beg politicians for exclusions/exceptions. For the right price, of course. But don’t lose focus. The point is these guys are making a killing right now under Team Obama’s rules.

Compensation at these firms also has bounced back. Financial firms paid about $20.8 billion in bonuses for work done in 2010, according to research by the New York state comptroller. In New York City, the average Wall Street salary last year grew 16.1 percent, to $361,330, which is more than five times the average salary of a private-sector worker in the city.

By contrast, millions of Americans continue to face economic difficulties. That is fueling broad public anger at Wall Street and has given rise to the “Occupy” protest movements nationwide.

And yet, it is these very crooks that are helping Wall Street rake in the money, for a nice cushy fee, that now pretend they are standing firm against Wall Street raking in all that money. And the morons are all falling for it. Helps to have outlets like WaPo fluff up the facts – Wall Street has made more money thanks to Obama in 2 ½ years than they did the previous 8 under evil BoosChimpyMcHitler – like they did in this bullshit piece. The data doesn’t lie though: the rich fat cats are making out better under Obama than they did under Bush, and they are doing it in a down economy. And the rest of us are hurting worse and being told to pony up more money. No amount of smoke can hide that.

Blow the Houses Up

This is the first of two posts, one on housing, one on banking. I’ll post the second one shortly.

Just when you thought it was safe to get back into the financial waters our dumbass government decides to resurrect the housing bubble — or at least try to.

First, there is the effort to maintain the high limit on conforming loans — that is, the loans that Fannie/Freddie will backstop. The upper limit on these loans recently declined from $730k to $625k (preferably on its eventual road to $0). But the Senate has passed an extension of the high limit under the apparent impression that poor people need the lower interest rates that come with conforming loans to buy their million dollar homes. Fortunately, the House is less keen on this idea.

And yet, it only gets better! Here comes Johnny Isakson (R-Real Estate Industry) with the SAVE Act. What the hell is the SAVE Act? I’m glad you asked.

The SAVE Act would require lenders to take into account, when underwriting the loan, potential savings from various energy savings features of the house. If a new appliance reduced your electric bill, Congress would require that the lender allow that ”savings” to used to bid for a higher priced house. The impact of the bill would be to allow for even higher debt-to-income ratios on the part of borrowers, as if high mortgage to income payments has had nothing to do with the mortgage crisis we are in.

Perhaps worse the bill would also direct appraisers to include energy savings into the value of the house. Sadly this is anything but “sensible accounting”. As any decent appraiser knows, a house is worth what someone will pay for it, not what the value of various improvements are. That’s why most residential appraisals are based upon comparable sales, and not simple cost or revenue accounting (marginal theory of value, anyone?).

My desk has a dent from me banging my head on it every time I read these stories. Is this not what got us into this mess? Complicated loans that no one understood that were predicated on the idea that housing prices would go up? Now we’re getting complicated loans that no one understands predicated on the idea that “green technology” will make houses more valuable. My developer in Texas trumpeted green building methods. It was nice but it didn’t make us pay more for the house. My current house is about as green as a black steer’s tuckus on a moonless prairie night, but I still bought it because the neighborhood was perfect. If green housing is worth more to buyers, the market will tell us.

No one in Congress is qualified to run the housing market. They need to stop pretending they can before they fuck things up even further.

Ain’t that a bitch?

Guess who so far has ended up being the biggest beneficiary of the Dodd-Frank financial regulation law? For those of you not familiar with Dodd and Frank, here is some background. Chris Dodd was a senator from my state, Connecticut, and one of the instrumental people behind the previous laws and government push to force lending to high risk people in his political career, ending up as the banking committee chairman (better to rob us blind!) right at the time the crisis happened. His meddling, in the name of “social justice”, but always while larding his friends and donors with government largesse, made him an instrumental player in setting the stage for the practices that led to first the housing and the following economic collapse back in 2007/2008. Dodd also was the guy that put regulation in the “must have” bailout plan to protect the big wigs and their bonuses at AIG. He was mired in one scandal after another, and basically decided not run for reelection in 2010, opting instead IMO to go steal people’s money doing something else.

Barney Frank, is a representative from Massachusetts. In addition to having the distinction as the only congress critter that dated a guy that run gay prostitution ring from their shared residence, he was also the head architect behind the scandalous and criminal repackaging of high risk loans, to make them palatable, through the government owned and run, but mysteriously categorized as private sector entities, Freddie Mac/Fannie Mae, and a key player in protecting Freddie & Fannie from any serious scrutiny – another one of his lovers was put in charge of running one of those – by accusing those pointing out the problem of being racists, until the whole house of cards came tumbling down.

As a reward for their roles in the horrible crisis and economic collapse it cause, these two where allowed, well they demanded, to be given the reigns of power, to produce the new series of regulations which they told us would prevent another crisis like the one their previous involvement caused. As expected, they didn’t do anything to end either the idiotic practice of having governments force lending institutions to give loans to high risk people looking for a loan, or to address the massive problems at Freddie/Fannie, but created a slew of regulation in a bill with over 2300 pages of bullshit, designed to allow people in government to increase their ability and power to pick which businesses would be winners and whom the losers. In return for some large donations, of course. So, don’t be surprised that the clock is already ticking on the next economic implosion, courtesy these two morons.

But back to the original question: guess how is making out real good because of the Dodd-Frank’s financial regulation law? Well, the very people involved in writing the rules then turning into evil lobbyists, of course.

It may not prevent another bailout or protect consumers from dangerous financial products, but the Dodd-Frank financial regulation law — now one year old — has already benefited one group of people: the government officials who wrote and implemented the law before cashing out as lobbyists or consultants for Wall Street, hedge funds and big banks.
The top staff lawyers in charge of crafting the legislation in both chambers of Congress have both left Capitol Hill for K Street, as has a Securities and Exchange Commission staffer who helped implement the law. This is “private-sector job creation, Obama-style,” as blogger Ira Stoll drolly notes.

The Great Wall Street Cashout is another example of how President Obama’s agenda of bigger government — and congressional Democrats’ style of leaving the key details up to executive-branch regulators — accelerates the revolving door and breeds crony capitalism.

Dodd-Frank was supposed to prevent future bailouts, tamp down on excessive risk taking by financial institutions and, through a new agency called the Consumer Financial Protection Bureau, protect regular people from predatory lenders or harmful and complex financial products.


Seriously. Why is this news? It’s of the “Dog bites man” variety. The very regulators engaged in writing this piece of garbage leave government, become lobbyists, and then rake in the cash? Who would have thunk that!

I can’t blame these guys for pulling this stunt, but I certainly can go off on the next leftist asshole that tells me how evil capitalism or Wall Street is. These government scumbags and their games make those guys look like pikers. Remember, Wall Street, or for that matter any other business/economic power center, can only do the things people in government write laws to make them do. We got more of the same in the healthcare takeover by government bill too. If we really wanted to curtail these kinds of bad practices, what we should have done is removed the power from government, by removing as much involvement by them from the equation. Instead we did exactly the opposite. Go figure.