A little publicized political story, if played out to the satisfaction of California Democrats (read: Progressives), would not only set the stage for a politically motivated raid on the US Treasury, it would afford President Obama, his administration and political operatives plausible deniability in any “coincidental” benefit to Mr. Obama’s re-election campaign. And if you don’t think that has David Axelrod, Valerie Jarrett and David Plouffe salivating, you haven’t been paying attention for the past three years.

According to a report by TheHill.com:

“A long list of California Democrats is urging President Obama to name a new housing regulator using a controversial recess appointment.

“In a letter to the president, more than two dozen House members said the temporary head of the Federal Housing Finance Agency (FHFA), Edward DeMarco, simply hasn’t done enough to help struggling homeowners avoid foreclosure. The lawmakers are pushing the president to name a permanent director ‘immediately.’

“‘FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners,’ the lawmakers wrote. ‘Installing a permanent director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy.’”

Okay, let’s first examine the FHFA. According to their website:

“The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing & Economic Recovery Act of 2008. The Act gave FHFA the authorities necessary to oversee vital components of our country’s secondary mortgage markets – Fannie Mae, Freddie Mac and the Federal Home Loan Banks…FHFA’s mission is to provide effective supervision, regulation and housing mission oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market…”

The reason the California congressional delegation is pushing for a permanent replacement for Mr. DeMarco has little to do with the well-being of California’s citizens whose mortgages are both underwater or in foreclosure. It has everything to do with 2012 being an election year. The California delegation’s letter to President Obama urging the so-called “recess appointment” of a new FHFA director presents as a gift to the Obama re-election effort. I say “so-called recess appointment” because the US Senate is in pro-forma session and it is unconstitutional for the president to make recess appointments when either house of Congress is in session. I and the rest of the Conservative and Republican rank-and-file are still waiting for congressional Republicans to do something about the initial round of “recess appointments.” Of course, one needs a spine to stand-up to a bully, so we probably shouldn’t hold our collective breath.

(more…)

The Political Class has honed a dangerous skill, building the perfect undetectable fraud machine. Americans need to learn to spot these scams for their own protection and realize that the perpetrators can come from either political party and often work in cahoots with attorneys or big business.

Think about three seemingly unconnected news stories, all examples of costly or dangerously indictable fraud machines…

• The economic collapse of 2008 was caused in part by relaxed mortgage rules that allowed borrowers to get a home loan without a down payment or even proof of income in some cases.
• In the Pigford settlement, claimants were able to get $50,000 checks by asserting without proof that they had “attempted to farm.”
• In a move strongly supported by the NAACP and other liberal advocacy groups, the Obama Department of Justice just stopped South Carolina’s plan to put in place some minimal ID requirements for voting. Currently voters in a number of states don’t need to show any photo ID or other identity checks in order to cast a ballot.

All three stories are examples of systems that have been intentionally set up with such low standards that they invite fraud. But ingeniously, they have also been set up in a such a way that makes them almost critic-proof because the lack of standards makes detection of fraud nearly impossible. When the system is questioned, the defenders, creators and beneficiaries then point to the lack of “proof” of fraud as a reason to keep the status. Thus, a self-perpetuating fraud scheme is kept alive as long as possible.

Make no mistake, these scams are costly….

(more…)

From the Associated Press:

The Federal Reserve is running out of options to try to boost a slumping economy and lower unemployment. So policymakers are expected to reach 50 years back into their playbook for their next move.

Most economists expect the Fed to announce a plan Wednesday to shift money in its $1.7 trillion portfolio out of short-term securities and into longer-term holdings.

The plan could lower Treasury yields further. Ultimately, it could reduce rates on mortgages and other consumer and business loans, too.

(more…)

“ATMs don’t destroy jobs,” tweeted Davd Burge of the Iowahawk blog in response to Obama’s now-infamous “Today Show” explanation of unemployment. “Politicians who treat the country like an ATM destroy jobs.”

But actually it wouldn’t be so bad if politicians merely treated the American economy like an ATM, even if they made fairly large withdraws. What’s really killing jobs is the red tape that causes a massive slowdown by jamming the gears of the advanced, multi-functional machine that is the free market.

The “Ten Thousand Commandments” of federal regulations, as my Competitive Enterprise Institute colleague Wayne Crews calls them in his annual study, costs the U.S. economy billions of dollars a year.  And some regulations even put outright bans of the very activities politicians say they want businesses to engage in.

Since the financial implosion and banks bailouts, the Obama administration and other politicos have been hectoring lenders to make loans to small business. Yet some financial institutions that haven’t even asked for a bailout and are desperately seeking to make more small business loans are statutorily barred from doing so.

These are the credit unions.

(more…)

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Download Podcast | iTunes | Podcast Feed

In today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the Ben Bernanke’s latest comments, the huge foreclosure mess, and Mitch Daniels’ call for new taxes, including a VAT.

We’re brought to you as always by BigGovernment.com and Stephen Clouse and Associates. We’d also like to let you know that we’ve set up a standalone site at CoffeeandMarkets.com for easier browsing of our past broadcasts.

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Bernanke Makes Case for Further Fed Moves to Boost Economy
Foreclosure Crisis Slams Into Banks
Mortgage Lenders Committed Fraud: Rep. Waters
Daniels open to VAT, oil tax hike

The financial reform bill is finally in its home stretch in the Senate, but Americans have yet to fully engage on the issue.  In fact, in recent weeks as I’ve worked with various grassroots leaders across the country to discuss the bill, its impacts on our economy and on us as American citizens, I must admit, it’s probably the first time I’ve ever found myself frustrated at the progress of activism.

It’s a complex issue, and let’s face it, not exactly an exciting one either.  But that’s precisely what the left is counting on.  So, whenever I find myself feeling frustrated that others might not share my same level of fervor on the issue, I remind myself of its complexity and lackluster appeal.  And then, I proceed directly to the source – the bill itself.

I hone in on a few key points in three categories that resonate with most activists I know:  Big Labor, Big Government, and Big Brother.  Put those together in the context of Big Banks, and they spell out big disaster.

As the left goes on demonizing Wall Street and big bankers on one hand, Democratic lawmakers on the other hand are busy making sweetheart backroom deals with them up on Capitol Hill, promoting their legislation to the public as “consumer protection.”  But really, such measures are nothing more than payback to the likes of three-way mortgage entitlement partnership stronghold of the Bank of America, Center for Responsible Lending and Fannie Mae.

Meanwhile Democrats and Obama allies like Organizing for America are also using the issue as a shameless fund-raising opportunity.

The banks actually SUPPORT this bill – so don’t let that “Main Street Not Wall Street” message fool you, no matter which side of this issue you’re on.

(more…)

Ben Bernanke is Time’s person of the year, Howard Dean takes up arms against the Senate health care bill, and Megan McArdle says we all have a moral obligation to pay our mortgages, whether it makes financial sense or not. We’ll discuss all that and more on today’s edition of Coffee and Markets, a daily podcast from The New Ledger on politics, policy and the marketplace with Francis Cianfrocca, brought to you by BigGovernment.com.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Download Podcast | iTunes | Podcast Feed

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Heartland: Dean Opposes Health Care Bill
AmSpec: Dean Wants to Kill Bill
Bloomberg: Bernanke is Time’s Person of the Year
McArdle: New Breed of Deadbeats

Francis adds: I couldn’t agree more with McArdle, because (contrary to popular opinion) I believe deeply in traditional moral norms. But I also believe in pointing out the macro consequences of such behavior.

She’s pointing out macro consequences of a different kind with her story about Memphis. But that just made me think of Argentina and Mexico, the poster children for sovereign moral hazard. These countries (and others) have a history of stiffing global banks every few years. Do they end up like Memphis? Of course not. Bankers always come around offering more later.

The whole country won’t become like Memphis, not with Congress and the Administration pursuing a reflate-even-at-the-cost-of-moral-hazard policy, and with the Fed tacitly supporting that policy. If people who can afford to pay off mortgages on inflated property values continue to do so, then they will have shouldered the collapse of the housing bubble. McArdle implicitly believes this is a good and right outcome. I don’t disagree in the slightest, but it does mean that we’re facing years of economic underperformance.

President Obama says he’s going to have a “serious talk” with bankers today to pressure them to provide more credit. Why? Well, because if you’re upside down on your house and want to take advantage of low rates, your bank is just as likely to say, “eh, no thanks, we’ll just keep making money.” We’ll discuss this and more on today’s edition of Coffee and Markets, a daily podcast from The New Ledger on politics, policy and the marketplace with Francis Cianfrocca, brought to you by BigGovernment.com.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Download Podcast | iTunes | Podcast Feed

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

TNL: Want to Refinance? Tough Luck Pal
Business Insider: Citi’s TARP Repayment Bilks Taxpayers
Bloomberg: Obama to Have “Serious Talk” With Bankers
NYT: Refinancing Woes Mount