Conservatives in the media have used the occasion of Rep. Barney Frank's retirement announcement to rehash old theories of how he, through his support for Fannie Mae and Freddie Mac, caused the subprime bubble and subsequent meltdown. In fact, Wall Street -- not affordable housing programs -- was the primary cause of the financial crisis.
Hoft:"Frank's Fingerprints Were All Over The 2008 Financial Crisis." From Jim Hoft'sGateway Pundit, in a post headlined "Barney Frank --Politician Behind Financial Crisis -- WillNot Seek Re-election":
Barney Frank will not seek re-election.
The Political Ticker reported:
Massachusetts Congressman Barney Frank, a16-term Democrat, will announce Monday he does not intend to seek re-electionin 2012, according to a statement from Frank's office.
Frank's fingerprints were all over the 2008financial crisis.
Last month Newt Gingrich suggested thatprison would be a good place for Barney. [Gateway Pundit, 11/28/11]
BigGovernment's Pollak Calls "Housing Crisis" One Of Frank's "Most DamagingLegacies."From a post by Breitbart.com editor-in-chief Joel B. Pollak at AndrewBreitbart's Big Government:
Frank finally apologized for his role in thehousing bubble that led to the financial crisis of 2007-8 and set the stage forthe worst recession since the Great Depression. Frank had shielded Fannie Maeand Freddie Mac from regulation, which in turn encouraged banks and buyers toembrace unstable mortgages. These were repackaged and sold as securities whoseinstability was masked due to their implicit government guarantees.
That's not actually what happened today,though it is what should have happened long ago.
Barney Frank is also a quick wit--all too rare on the left--andwill be remembered well for being the first openly gay member of Congress,among other achievements. Yet his most damaging legacies--the housing crisis, the financial "reform" that bears his name,and the hyper-partisanship to which he eagerly contributed--outweigh Frank's positive contributions. Howunfortunate that his constituents did not eject him much sooner. [BigGovernment, 11/28/11]
HotAir's Allahpundit Calls Frank "Man Who Helped Destroy Economy." From a Hot Air postby Allahpundit headlined "Video: Man who helped destroy economy moving on tobetter things":
Of all the losers to have passed throughCongress, how many can say they played a major role in precipitating a globaleconomic catastrophe? It'll take a lot of media whitewash to obscure thatlegacy, but I'm sure they're game: The ratio of political eulogies today thatmention his wit and intellect to those flagging his boosterism for Fannie andFreddie is running about five to one from what I've seen. As Ted Kennedy'scareer so beautifully illustrates, if you're a sharp-tongued fightin' liberalfrom deep blue Massachusetts, there's no wrong so terrible that it can't beforgiven. Carte blanche, Elizabeth Warren. [Hot Air, 11/28/11]
Fox'sStephen Hayes: "Housing Crisis" Will Be "First Line" In Frank's "PoliticalEpitaph."From Fox News' Special Report with Bret Baier:
CHRIS WALLACE (guest host): Frank's admirerssaid he was brilliant, obviously as you can see there funny, sharp, did a lotof good things, according to them. His critics say that he contributedespecially I think to the terrible problems with the mortgage -- failedmortgage giants Fannie Mae and Freddie Mac, and he addressed that criticismtoday. Let's take a look.
FRANK (video clip): Since Paulson used thepowers that were in the bill that I initiated and put them intoconservatorship, there have been no losses. The losses that you read about arepayments for things that happened before that, and since 2008 they have done apretty good job on housing and have not caused any losses. So yes, I was latein recognizing the problem, but it was when I was in the minority.
WALLACE: Is he being too easy on himself?
HAYES: Well, certainly he is. I mean, he wasnot only late in recognizing the problem, he did many things, perhaps with goodintentions, to help create the problem. He was pushing lax lending standards.He was doing all the kinds of things that set the stage for private entities totry to come in and try to compete with Fannie and Freddie in a way that I thinkled to the financial crisis of 2008. There's a moment in Gretchen Morgenson'sbook Reckless Endangerment where she describes a reporter going up toBarney Frank after a speech in March of 2005 and asking the questions, youknow, what about the possibility that you may be pushing people into mortgagesthat they can't afford and what would the consequences be, and he said rather flippantly,as he was wont to do, we'll deal with that problem if it happens. Well, this isthe kind of legislating with the best of intentions and not thinking of thelong-term consequences that will make the first line in Barney Frank'spolitical epitaph be the housing crisis. [Fox News, Special Report withBret Baier, 11/28/11]
InvestorBarry Ritholz: Narrative That Fannie/Freddie Caused The Crisis Is "The Big Lie"Of Financial Crisis. FromThe Washington Post:
Wall Street has its own version: Its Big Lieis that banks and investment houses are merely victims of the crash. You see,the entire boom and bust was caused by misguided government policies. It wasnot irresponsible lending or derivative or excess leverage or misguidedcompensation packages, but rather long-standing housing policies that were atfault.
Indeed, the arguments these folks make failto withstand even casual scrutiny. But that has not stopped people who shouldknow better from repeating them.
Congress did radically deregulate thefinancial sector, doing away with many of the protections that had worked fordecades. Congress allowed Wall Street to self-regulate, and the Fed the turneda blind eye to bank abuses.
The previous Big Lie --the discredited belief that free markets require no adult supervision -- is the reason people have created a new falsenarrative. [The Washington Post, 11/5/11]
FinancialCrisis Inquiry Commission: Fannie, Freddie "Were Not A Primary Cause" OfCrisis.From the majority report by the Financial Crisis Inquiry Commission:
We conclude that these two entities contributed to thecrisis, but were not a primary cause. Importantly, GSE [government-sponsoredenterprises, i.e., Fannie Mae and Freddie Mac] mortgage securities essentiallymaintained their value throughout the crisis and did not contribute to thesignificant financial firm losses that were central to the financial crisis. [Financial Crisis Inquiry Commission, Conclusions Of The FinancialCrisis Inquiry Commission, accessed 11/28/11]
FormerLehman Brothers CEO Richard Fuld: Fannie And Freddie Played "DeMinimis" Role In His Firm's Problems. From Slate:
At Monday's hearing, Rep. John Mica, R-Fla.,gamely tried to pin Lehman's demise on Fannie and Freddie. After comparingLehman's small political contributions with Fannie and Freddie's much largerones, Mica asked Fuld what role Fannie and Freddie's failure played in Lehman'sdemise. Fuld's response: "De minimis." [Slate, 10/7/08]
EconomistGreg Mankiw: Fannie And Freddie Were "Only One Element" In Crisis. In a New York Timesop-ed, former Bush economic advisor and Harvard professor N. GregoryMankiw wrote:
Many members of Congress were worried lessabout financial fragility than about expanding access to homeownership.Moreover, lobbyists from these companies assured Congress that there was noreal problem, while the sheer complexity of these institutions made it hard forlegislators to appreciate the enormity of the risks.
I recount this story not because Fannie Maeand Freddie Mac were the main cause of the recent financial crisis -- they were only one element -- but because it shows the kind of problem we'llencounter on a larger scale as we reform oversight of the financial system. [TheNew York Times, 3/28/10]
McClatchy:"Federal Housing Data Reveal That Charges" Against Fannie And Freddie "Aren'tTrue."From McClatchy Newspapers:
Commentators say [a government push to makehousing more affordable to Americans of more modest means is] what triggeredthe stock market meltdown and the freeze on credit. They've specificallytargeted the mortgage finance giants Fannie Mae and Freddie Mac, which thefederal government seized on Sept. 6, contending that lending to poor and minorityAmericans caused Fannie's and Freddie's financial problems.
Federal housing data reveal that the chargesaren't true, and that the private sector, not the government orgovernment-backed companies, was behind the soaring subprime lending at the coreof the crisis.
Subprime lending offered high-cost loans tothe weakest borrowers during the housing boom that lasted from 2001 to 2007.Subprime lending was at its height from 2004 to 2006.
Federal Reserve Board data show that:
- More than 84 percent of the subprimemortgages in 2006 were issued by private lending institutions.
- Private firms made nearly 83 percent of thesubprime loans to low- and moderate-income borrowers that year.
- Only one of the top 25 subprime lenders in2006 was directly subject to the housing law that's being lambasted byconservative critics. [McClatchy, 10/12/08]
McClatchy:During Bubble Years, "Private Investment Banks --Not Fannie And Freddie -- Dominated TheMortgage Loans That Were Packaged And Sold." From reporting by McClatchy:
Between 2004 and 2006, when subprime lendingwas exploding, Fannie and Freddie went from holding a high of 48 percent of thesubprime loans that were sold into the secondary market to holding about 24percent, according to data from Inside Mortgage Finance, a specialtypublication. One reason is that Fannie and Freddie were subject to tougherstandards than many of the unregulated players in the private sector whoweakened lending standards, most of whom have gone bankrupt or are now in deeptrouble.
During those same explosive three years,private investment banks -- not Fannie andFreddie -- dominated the mortgage loans thatwere packaged and sold into the secondary mortgage market. In 2005 and 2006,the private sector securitized almost two thirds of all U.S. mortgages,supplanting Fannie and Freddie, according to a number of specialty publicationsthat track this data. [McClatchy, 10/12/08]
Financial CrisisInquiry Commission: Fannie And Freddie "Followed Rather Than Led Wall StreetAnd Other Lenders In The Rush For Fool's Gold." From the majority report by the FinancialCrisis Inquiry Commission:
The GSEs participated in the expansion of subprime and other riskymortgages, but they followed rather than led Wall Street and other lenders inthe rush for fool's gold. They purchased the highest rated non-GSEmortgage-backed securities and their participation in this market added heliumto the housing balloon, but their purchases never represented a majority of themarket. Those purchases represented 10.5% of non-GSE subprime mortgage-backedsecurities in 2001, with the share rising to 40% in 2004, and falling back to28% by 2008. They relaxed their underwriting standards to purchase or guaranteeriskier loans and related securities in order to meet stock market analysts'and investors' expectations for growth, to regain market share, and to ensuregenerous compensation for their executives and employees -- justifying theiractivities on the broad and sustained public policy support for homeownership.
The Commission also probed the performance of the loans purchasedor guaranteed by Fannie and Freddie. While they generated substantial losses,delinquency rates for GSE loans were substantially lower than loans securitizedby other financial firms. For example, data compiled by the Commission for asubset of borrowers with similar credit scores -- scores below 660 00 show thatby the end of 2008 GSE mortgages were far less likely to e seriously delinquentthan were non-GSE securitized mortgages: 6.2% versus 28.3% [Financial CrisisInquiry Commission, Conclusions Of The Financial Crisis Inquiry Commission,accessed 11/28/11]
McKinsey:"Other Economies Around The World Are Feeling The Effects Of Their OwnReal-Estate Booms And Busts." McKinsey & Company, a global managementconsulting firm, published the following chart, showing the run-up in housingprices spanned the entire developed world. From McKinsey Quarterly:
A global view of the housing bubble
Although the current crisis started with thebursting of the US housing bubble, other economies around the world are feelingthe effects of their own real-estate booms and busts. From 2000 through 2007, aremarkable run-up in global home prices occurred (see exhibit). But that trendhas reversed abruptly. In 2008, the value of US residential real estate fell 10percent; the global average fared only somewhat better, declining by almost 4percent. We estimate that falling home prices erased more than $3.4 trillion ofhousehold wealth in 2008. And because home prices are slow to correct, the currentslide may persist for some time, which could depress global consumption.
[McKinsey Quarterly, 10/09]
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There was a time when most of us believed Newt Gingrich's political career was over. After numerous ethical charges and moral shortcomings, he was driven from the House of Representatives (and his job as Speaker) by the members of his own party. And when your own political party turns it back on you it usually means you political career is over. In fact, most people (including myself) were surprised when Newt tossed his hat in the presidential race this year.
Few people gave Newt a chance of actually getting the nomination -- especially with all the skeletons he has in his closet. But while all the other candidates (Michele Bachmann, Rick Perry, Herman Cain) all took their shot at beating Mitt Romney for the nomination, Newt just kept plugging along in single digits. Now only five weeks from the start of the primary season, the teabagger base of the Republican Party is still not willing to accept Mitt Romney but they are running out of alternatives.
There is only one candidate left standing if the teabaggers can't accept Romney -- Newt Gingrich (since the campaigns of Huntsman and Santorum are just a joke and Paul is too much a maverick for the teabaggers). And amazingly, it looks like the teabaggers (who like to call themselves "values" voters) are now willing to overlook Newt's ethical and moral skeletons and give him their support. It shows the depth of their antipathy for Romney.
For days now the polls have shown that Gingrich has caught up with Romney, and even passed him is some polls. This is now verified by a new poll (taken of 499 Republican voters on November 27th with a margin of error of 4 points). Poll Position numbers are as follows (and note that the difference between Gingrich and Romney exceeds the margin of error now):
That's a pretty significant lead. But does Newt Gingrich really have a path to the nomination? It now looks like he might. It's become pretty obvious recently that Romney is not going to win in Iowa. The best he can hope for in that state is second or even third place. That means he is going to have to do very well in New Hampshire to regain some momentum and demonstrate he is still a leading candidate.
Polls recently had Romney doing exceptionally well in New Hampshire. He had a significant lead over all the other candidates. But that might have changed this last weekend. The state's largest newspaper, The Manchester Union Leader, has now officially endorsed Newt Gingrich, and will be running daily articles to support his candidacy. Now a newspaper endorsement may not mean much in some states (here in Texas it would have about as much value as a cold cup of coffee), but this is not just some state -- it is New Hampshire.
And respected campaign analyst Nate Silver says the endorsement of The Union Leader could well be a game-changer. He says that traditionally that endorsement means an 11 point jump in the polls for the candidate endorsed. If even a few of those points come from voters that were supporting Romney, it could mean Gingrich has a chance to do well in New Hampshire. And if Gingrich wins New Hampshire, or just finishes a close second, that could take the wind out of Romney's sails.
The next state in line to vote would be South Carolina -- where Southerner Newt Gingrich would have a natural advantage over Romney. By the time the race got to a Romney state, he might have dropped so far behind that he starts losing supporters.
Does Gingrich have a real path to the nomination? Yes. The Union Leader endorsement has opened the gate to that path. Now the only question is can Newt trod that path without tripping?
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Political Cartoon is by David Fitzsimmons in the Arizona Daily Star.
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Well, apart from the violence and the craziness, it looks like retailers had a good "Black Friday" this year. Initial figures show that shoppers spent more this year than they did last year on the official first shopping day of the holiday season. This is also born out by a Gallup Poll on self-reported Black Friday Spending. Here are the results of that poll for the last four years:
In a normal year that would be very good news for retailers. That's because in the past (during better economic times) a good Black Friday was a pretty reliable predictor of good sales for the entire holiday season. And the pundits are predicting that's exactly what it means for this year too. But I have to believe retailers are viewing that prediction with their fingers crossed, because this is not a normal year.
The question is whether the sales on Black Friday were just the start of something good or an anomaly. Did the people rush out on that day to get the best bargains they could find because they have little to spend this year (thanks to high unemployment and the recession), or was it the start of sustained buying by the general public?
There are some other figures in that same Gallup Poll which show the huge Black Friday sales could be an anomaly and buying will not be sustained throughout the season. In 2009 about 37% of the population thought economic conditions were getting better, and in 2010 that figure rose to 39%. But this year people are significantly more pessimistic, and only 24% think economic conditions are getting better.
The pundits might be right. It might be a very good season for retailers. I hope so, because a high demand could encourage both retailers and the factories that produce those retail goods to do some hiring. But I'm not yet ready to believe it. I think that a month from now we'll look back on another disappointing season for sales. I do hope I'm wrong though. The country could use a little good news.
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Political Cartoon is by Jim Morin in The Miami Herald.
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Herman Cain was riding high in the polls for a while last month, and it looked like he might be able to make a credible run for the Republican presidential nomination. But that was before people started to learn about his sexual proclivities. A whole string of women came forward to detail the sexual advances Cain had made toward them. And while that would have been bad enough, we learned it was much worse since he tied jobs and advancement to those women complying with his sexual advances. That turned it into sexual harassment, and in at least one case -- sexual assault.
Those revelations put a serious crimp in Cain's presidential aspirations, and he began to plummet in the polls -- not as far as Perry fell, but far enough to take him out of contention. I think Cain thought it would all die down and he could build his support back up. And things were beginning to die down -- until yesterday.
Yesterday an acquaintance of Cain's, a woman named Ginger White, said she and Cain had a sexual affair for 13 years. Cain admitted he knew the woman, and even said he'd considered her to be a friend. But he denied the affair had ever happened. Denial is evidently his first line of defense. Then Cain's lawyer pipes up and said if it did happen it was a private consensual act between two adults -- not sexual harassment -- and therefore was nobody's business but Cain's.
The lawyer would be right except for one little thing -- Cain wants to be president of the United States. And since he wants to be president, the public has a right to know about his morality and his loyalty -- and he doesn't seem to have a lot of either. If Cain will sneak behind his wife's back and have a 13 year sexual affair with another woman (after promising to be faithful in his marriage vows), would he keep the promises he made to be elected president?
I know Cain probably thinks he is being picked on by the press (because he's black or Republican or conservative or whatever), but that's just silly. Just ask John Edwards, Mark Sanford, Anthony Weiner, or many other politicians of both parties -- the people just don't like a candidate who can't be faithful to his wife. And there's far too much smoke around Cain now for there not to be a fire.
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Political Cartoon is by Nick Anderson in the Houston Chronicle.
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Adele - Someone Like You[...]
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