If you are not a progressive, it is generally not surprising when the government institutes some wonderful new “reform” on top of the last reform that didn’t work, and unintended consequences come along for the ride.  The free market tends to correct these disturbances quickly, but laws are rigid things and don’t adapt without passing more legislation or getting the courts to perform the surgery.

So it should come as no surprise that the 2009 Credit CARD (Card Accountability Responsibility and Disclosure) Act, passed to protect Americans from those evil profit seeking credit card companies, is now creating a booming business for loan sharks.  Gee, that’s so much better for the little guy.  Here’s how it works.

Credit decisions are based on risk versus return.  The higher the risk, the higher the price (interest rate) to compensate for that risk.  If the card issuers cannot price that risk appropriately, they don’t issue the card or the reduce the credit limit.  So if you are a working class stiff who carries a credit card, not because you are a spendthrift, but in case of emergencies your benevolent government has stuck it to you again.  Say this individual is faced with a situation where their car breaks down and they have to fix it so that they can get to work.  Since their credit card was just cancelled, what do they do?  One of their few options is to use a service like payday loans.  The interest rate on these loans can be 200%, 400%, even 900%. If that service doesn’t work there is always pawn shops and loan sharks. Isn’t it great that these folks won’t be gouged by 30% interest rates from credit card companies?  You ain’t seen nothing yet.  Just wait until the Consumer Financial Protection Bureau opens its doors.

The liberty of making choices is stolen from another group of Americans, with the panjandrums in Washington passing down edicts from on high.  The free market would quickly supply the credit that is needed and price it competitively.  These financial “fixes” that leave monstrosities like Fannie Mae and Freddie Mac untouched make nice sound bites, but in reality take options away from hard working Americans.  It is time to leave us alone.

That’s my opinion; I’d like to know yours.  Please comment below.

Barney Frank, in an interview with CNBC’s Maria Bartiromo, made the bold statement that, “heirs who now inherit, they haven’t done this on their own, they haven’t worked hard, that’s a pure gift to someone who was lucky enough to be related to someone or be friendly with someone who left them money.”  So Mr. Frank concludes that they are not entitled to that money.  So tell me what is the argument that government should get nearly half of it?  How did they earn it?

Well, it is not about earning it, is it?  It is about wealth redistribution.  It is as if you were successful enough to buy a ten thousand square foot house and when you die, instead of your wife and children being allowed to continue living in their home, their neighbors get free use of forty-five hundred square feet of the house.  Is that moral?  But the government needs the money.  Barney Frank needs the money because the debt is so high.  How did it get that way?

Barney Frank told us time and again that Fannie Mae and Freddie Mac were sound and that no taxpayer dollars would ever be used to bail them out.  Now with the potential risk of $400 billion or more in losses at the two mortgage giants, Barney needs more money to fix what he insisted wasn’t broken.

Just because estates exist doesn’t mean Barney gets a piece of the action.  Those who earned it paid taxes on those earnings.  When they saved some of that money, they paid taxes on the interest.  If they invested in companies that paid dividends, first the company paid taxes on the income and then the individual paid taxes on the dividends.  At the end of their life, Barney Frank gets a fourth bite at the apple?

When this subject was debated this morning on Fox, liberal commentator Ellen Ratner, cheerily offered that “there’s a five million dollar deduction, there’s a five million dollar deduction” as if that somehow changed the moral calculus.  Yes, I robbed you, but geez didn’t I leave you cabfare?  What an ingrate you are.

The American Dream partly consists of giving your children a better start than you had.  To help them go further than you went and to see their children prosper as well.  Where in the American Dream is the desire for more government, bigger government, more wasteful government that can’t live within its means?

The government has gotten too deep into the game of giving stuff away.  The root of the current crisis is the government trying to help people who couldn’t afford a mortgage buy homes.  Stop trying to give stuff away.  Give not, take not.

That’s my opinion; I’d like to know yours.  Please comment below.

The latest news on the economy is not encouraging: a mere 39,000 jobs added and the unemployment creeps ever closer to 10% at 9.8%.  In spite of this, or apparently ignorant of it, the lame duck House voted yesterday for another whopping tax increase on the most productive among us. Yes, yes, they will beat the class warfare drums about tax “cuts” for the rich, when what they are voting on is not a cut at all, but either leaving things the way they are or raising taxes.  With the recovery barely showing a pulse, it is not the time to take money out of the hands of free market capitalists and put it in the hands of the government.  Who do you think can pull the economy out of the doldrums, entrepreneurs or government bureaucrats?

The “We’re For the Little Guy Myth”

We learned yesterday that Peter Orzag, the former White House Budget Director, may be taking a job at Citibank.  You remember Citibank, they got $45 billion in a taxpayer bailout.  The actual job is unimportant.  What is important for Citibank is having a guy on the payroll who can call the White House and they’ll take his call.  They guy who replaced him as budget director, Jacob Lew, worked at Citibank from 2006 to 2009. 

How about some more cronies?  There is former Treasury Secretary under Clinton, Robert Rubin who became an executive-committee chairman at Citigroup.  Treasury still owns 11% of Citi stock.  As Obama raked in the campaign cash from Goldman Sachs, we have Timothy Geithner’s replacement as head of the New York Fed, William Dudley, was a former chief economist at Goldman Sachs.  Former Democrat senator and Governor Jon Corzine was a previous chairman of Goldman Sachs.

But don’t worry the Democrats are looking out for the little guy.  They ignore Fannie Mae and Freddie Mac in the financial regulations overhaul and hand the bill to the little guy.  They bail out GM and Chrysler, turning over the bulk of the company’s ownership to the unions and hand the bill to the little guy.  TARP money goes to foreign banks to cover their losses and they hand the bill to the little guy.

Crony Capitalism Reality

The reality is that Progressives like crony capitalism.  After all, how can they possibly mount effective political campaigns without money?  From the little guy?  Forget it.  They make deals with big business.  They protect the big guys from competition from the free market capitalists and the big guys pour money into Democrat coffers.  Think of all the money that flowed into Wall Street.  Why?  Because they were “too big to fail”.  How many small and mid-sized banks were shuttered?  Since 2008 there have been 314 bank failures in the U.S., only 18% of those had assets of over $1 billion. 

The big guys can take enormous risks and if they pay off they make enormous profits and personal wealth for their management.  But if the risks don’t pay off, do they go out of business?  Hardly.  They go to the government with dire predictions of a collapse of the economy unless the government steps in and when it does, the bankers get their big bonuses and the little guy gets stuck with the bill.

Meanwhile Back at the Fed

If the Democrats are not trying to destroy the economy through fiscal policy, then they give monetary policy a try.  Take a look:

httpv://www.youtube.com/watch?v=PTUY16CkS-k

The New Congress

The Republicans are ready to take control of the House in January and narrow the majority of the Democrats in the Senate.  They have stumbled badly before when they were in the majority, but in their four year timeout, it appears they have learned something.  They seem to be on the right track and we hope they remain so.  We’ll be watching.

President Obama met with leading Hispanic legislators Robert Menendez, Nydia Velázquez, and Luis Guitierrez.  It is believed they were there to discuss language being added to a Pentagon policy bill at the behest of Harry Reid, who is desperately trying to hold on to his seat by energizing the Hispanic vote to come out for him on November 2.  The language would provide a path to citizenship to any illegal alien who came to this country before the age of sixteen, stayed here five years, complete high school and either served two years in the military or completed two years of college. 

Of the twelve or so million illegal immigrants in this country now, I wonder, how many either meet these qualifications or are very near to doing so?  This won’t get them to the voting booth on November 2, but it is meant to appeal to all others who support amnesty.  At the same time, if this passes those who benefit from the bill will be reminded constantly that it was those wonderful Democrats who pulled this stunt off and expect to be repaid with their votes in all future elections.

Let’s walk this through.  A person comes here, perhaps with their family perhaps not, before the age of sixteen.  Requirement number one is that he or she graduates from high school.  Okay, so they go to a public school that is funded by taxpayers.  Next requirement is that they spend two years in the military or two years in college.  For the military, which is also a taxpayer funded job, there are risks, not the least of which is putting your life on the line, but it also provides additional training.  From my perspective anyone who is not a citizen of the United States but is willing to die to defend it, is alright in my book and has earned the right to become a citizen, but come here legally, okay?  The alternative option is to complete two years of college.  That seems a much tougher option because we all know how much college costs.  Or has that changed too?

As part of ObamaCare, that’s right ObamaCare the massive takeover of healthcare in this country, it also made Sallie Mae (Student Loan Marketing Association) the sole provider of government backed student loans, pushing banks out of this business.  Another government takeover and another Government Sponsored Entity (GSE).  Can you name two other GSEs?  That’s right Fannie Mae and Freddie Mac for which you are already on the hook for $140 billion.  But back to our story. 

What does this have to do with illegal immigration?  Well, Sallie Mae backed student loans are guaranteed by the government.  If the student ultimately fails to pay the loan, in the past, the government protected the banks by making sure they got repaid.  Now by pushing those pesky banks out of the way, who might aggressively try to collect the money, if the government extends a student loan to an illegal immigrant and the immigrant doesn’t pay it, oh well, you and I can pick up the tab, get it?  Voila! Free scholarships for illegal aliens to help them stay out of the military, complete their two year college requirement, be eternally grateful to the Democrats who gave them this pathway to citizenship, and you get the bill for public school, and college or the military. 

They break the law to come into this country, you pay to give them an education, grant them citizenship and so they can become loyal Democrats who will vote for more government to take away your liberties and transfer wealth from you to them.  Sounds like a plan.  I’ve got a better plan and it begins on November 2.  Throw the bums out and repeal all the trash they left behind.  Better yet, you can tell them now, “Don’t even think of putting this in the Pentagon bill and if you do we want the Republicans to block it.” What do you think?

Revised GDP numbers suggest that going down is exactly what the economy is doing.  The government revised second quarter GDP growth from 2.4% down to 1.6%.  Even Paul Krugman is saying the stimulus didn’t work, but his solution is to drive the country into bankruptcy faster.  Krugman’s complaint was that the stimulus wasn’t big enough.  He also believe we should,” use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families.”  Fannie and Freddie have already sucked $160 billion out of the Treasury and Mr. Krugman wants to back up and re-inflate the housing bubble.  Talk about failed policies of the past, sheesh!

The solution to the jobs issue is private industry.  The problem is that this is the most anti-business government in memory.  Business is the target of the administration’s ire, tax policies, health care policies, cap and trade schemes, repeal of the Bush tax cuts, card check, financial regulation, have I left anything out?  So business is sitting on its hands.  No matter how much cash it may be accumulating it does not want to take any steps, like expanding, until the full weight of all these choking policies are understood and priced out or until the Democrats are run out of the Congress and the anti-business sentiment is lifted there.

So let the Joe Biden show continue.  The man who says he know little about economics and proves it with every speech will go on telling us how the stimulus is working exactly as planned.  President Obama will continue to take a new vacation about every 90 days and we will cross our fingers that there is something left to recover when we recover our government from these inexperienced, clueless dolts.

Steven Slater tells off a plane load of Jet Blue customers, grabs a couple of beers, pulls the emergency chute and dramatically exits the plane, his job, and his career.  He is soon hailed across the Internet as a hero.  People walk away from home equity loans saying, “I’m not going to be a slave to the bank.”  Challenge after challenge to any reference to God in the public square as part of an effort to drive faith underground.  Our is government telling us that the only way we can survive is by a government handout.  We cannot make it on our own.  If you wonder why we are heading in the wrong direction as to 70% of your fellow Americans believe, perhaps we should give morality a closer look.

The story on Mr. Slater is unclear.  He says one thing, witnesses say another.  It will eventually get sorted out, but let’s assume for a moment that Mr. Slater is correct in that a passenger’s behavior set him off.  In a more moral society, Mr. Slater could have done one of two things.  One, he could have taken a deep breath, held his tongue and just written it off to that passenger having a bad day.  He would have won the admiration of those who watched him behave with self-control and dignity.  Or, two, he could have asked the pilot to inform the authorities to meet the plane on the ground because an unruly passenger defied the instructions of the flight crew.  That passenger would have been arrested on the ground and would be facing federal charges.  But instead Mr. Slater took the route of immediate gratification.  He got on the intercom and told off the whole plane, grabbed a couple of beers from the beverage cart, triggered the emergency escape chute and then like a giddy child went down the slide and ran home.  A moment’s thrill of control followed a world of grief.  Was his moral compass broken or pointing in the wrong direction?

Shawn Schlegalis a real estate agent in Arizona.  Since moving there in 2005 he bought several houses with each one financing the next.  He is currently in default for $94,873 and is basically saying tough luck, I’m not paying.  The lender got a court order garnishing his salary, but that was eighteen months ago and he hasn’t heard anything since.  “The case is sitting stagnant,” he said. “Maybe it will just go away.”  While I don’t have a great deal of sympathy for any bank that would approve this chain of financing, I don’t know if the lender was aware of what the home equity loan was for, but it is Mr. Schlegal’s attitude that disturbs me.  He made the decision to do this and he feels it is not his fault.  True he will be impacted if he tries to borrow again in the near future, but he doesn’t seem to care.  This is reinforced by the commercials flooding the airwaves advising consumers how they can walk away from their credit card debt.  How about selling the flat screen TVs and sports cars you purchased on the plastic, and pay it back?  Meanwhile our government continues to use your taxes to help people who are over their head pay their mortgages.  Why do you have to pay your mortgage and theirs?  You were responsible, they were not.  The very concept of such a program would have been baffling to the Founding Fathers.

Our current government reinforces the idea of Americans as imbeciles.  The mortgage companies took advantage of you, they were predatory lenders, while it was government programs that told the predators to get busy.  We have to have more home ownership, we have to help people achieve the American Dream, so Andrew Cuomo at HUD, Barney Frank, Chris Dodd and the good folks at Fannie Mae and Freddie Mac who made millions on pushing these products, all pushed these government programs on more people, encouraging them to buy houses they couldn’t afford and when the bubble burst they pointed the finger at everyone but themselves.  They believe the American people are helpless idiots who cannot fend for themselves and if by some accident someone does succeed, it is the government’s responsibility to take as much of what they earned by the sweat of their brow and give it to the simpletons they claim to be responsible for.  That is a racist, sexist, class warfare point of view that unless our Ivy League educated elites give us our daily instruction, we will shrivel up and die.  It is anything but the American Dream.

We see efforts to ban the Pledge of Allegiance because it contains the phrase “under God”; to ban the display of the Ten Commandments in court houses; the ban of religious displays on publicly owned land; and to ban prayer in any form at school graduations, football games or other gatherings.  While atheists, a small percentage of the population, do not believe in God, why is another person who believes in God so offensive to them that they can’t bear hearing it?  But as faith is driven further and further from the public square, boorish behavior becomes more and more acceptable.  There is something to be said about eternal damnation curbing one’s baser appetites than responding to the statement, “You want me to stop it?  Make me.”  There is something to be said for fulfilling one’s obligations because it is the right thing to do, but the right thing to do does not come from living in the here and now.  That is self-gratification.  Doing the right thing comes from a set of morals that say, “Character is what we do when no one is watching.”  Those who believe in a God believe someone is always watching.  Perhaps John Adams said it best:

“We have no government armed with power capable of contending with human passions unbridled by morality and religion.  Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net.  Our Constitution was made for a moral and religious people.  It is wholly inadequate to the government of any other.”

The Dodd-Frank Act that in a mere 2,000 pages sought to put the control back in financial regulation skipped right over Fannie Mae and Freddie Mac the Government Sponsored Enterprises that were at the heart of the fiscal crisis and are bleeding red ink.  Focusing instead on those evil bankers on Wall Street the Dodd-Frank Act really put those guys in a box, until Goldman Sachs slipped its fetters faster than Houdini.  So who’s buried under the pile of rubble that is the latest masterpiece of our massive government, Betsy Jensen.  Who is Betsy Jensen?

Betsy Jensen is a farmer in southwest Minnesota.  She and her family grow wheat and soy beans.  She doesn’t have a mortgage, so she didn’t cause the housing bubble.  But she does use derivatives to control the risk in farm prices which can be rather volatile.  For example, a bushel of wheat went for $18.69 in February of 2008 whereas it was selling for $3.49 in July of 2010.  A farmer has to buy their seed and fertilizer at the beginning of the growing season and they don’t sell their product until the harvest.  If prices fluctuate wildly during that interval, it isn’t hard to imagine what that can do to your business, let alone your sleep patterns.

So where do derivatives come in?  Farmers like Betsy can negotiate a guaranteed price for their grain with their customers.  Betsy risks missing out on some profits if the prices go up as they have recently (45%) due to fires in the wheat producing region of Russia, but she also is protected against a price drop, for similar reasons beyond her control.  She recently negotiated a price of $7.15 per bushel and with that knowledge, she can manage her farm business and sleep a little more peacefully.  For her purchases she can also use derivatives to buy fuel and fertilizer, where the latter has seen price fluctuations of $435 to $685 per ton.  Then along come Barney Frank and Chris Dodd, a couple of career politicians who never worked in the private sector.

The Dodd-Frank Act says it is unlawful to enter into swaps (derivatives) “in excess of such amount as shall be fixed from time to time” by the Commodities Futures Trading Corporation (CFTC).  That doesn’t sound like a free market to me.  What if, in Betsy’s example, the CFTC didn’t get around to raising the amount on wheat above $5 per bushel?  Betsy couldn’t arrange to sell it for $7.15.  What if the grain elevator couldn’t turn around and sell Betsy’s wheat for the 45% increase in price due to the Russian fires?  Do you think with a cap on the upside they might not be willing to pay as much for Betsy’s wheat?

From Dodd-Frank to Bill O’Reilly we hear about the evils of speculators.  O’Reilly used to rail against the speculators when gas prices were rising toward $5 per gallon.  The evil, greedy speculators were driving up the price of gas!  But little mention was made of speculators when the price of gasoline fell back down?  Did the speculators retire?  Go on vacation?  The reality is that speculators don’t care if the price goes up or down, they only care it moves in the same direction on which they are betting.  They can drive the price down just as fast as they can drive it up.  But they are useful, not evil.

Speculators bring liquidity, that is, money to the market.  Betsy Jensen estimates that about one-third of the purchasers of wheat contracts are traders who never take physical control of the product.  But by adding their view and their money to the market they keep prices from fluctuating wildly.  If these traders are banned then, as she put it, one-third of her customers would disappear.  With one-third fewer customers the price swings will increase rather than decrease.  Remember, a trader who does not take delivery of the wheat can make money on small swings in the price and is likely to get in or get out on smaller moves and thus change the market price accordingly.  If only those who take physical possession of the product are in the market, then other factors such as transport, storage, spoilage, must be factored into each transaction and the price swings will be wider and wilder.

But Betsy said it best, “I may not be able to manage Mother Nature, but I can manage my risk with derivatives.”  If only our government would get out of her way and let her do so.

Republicans have to learn to stop fighting by the Marquis of Queensbury rules, while Democrats, bite, kick, pull hair, scratch and hit below the belt.  Yes, Christ told us to turn the other cheek, but he also overturned tables, formed a whip out of cords and drove the money changers from the temple.  In other words, sometimes you have the hit the bully hard between the eyes before he learns to stop being a bully.

So if the Republicans regain control of Congress in November, they should open the new Congress in January with detailed hearings on what happened to Fannie Mae and Freddie Mac and don’t pull any punches.  By that I mean if they need to put Andrew Cuomo in the witness chair, even if he is the governor of New York, which he probably will be, then they should do so.  It’s time to stop playing patty-cake.

For all the hoopla of the Dodd-Frank Act, Fannie Mae and Freddie Mac were left out of the new regulations.  Oh, we’ll get to those later.  Okay, let’s get to them with the Republicans in charge.  Let’s expose how it was our government that got us into the housing mess and let’s do this before the Democrats re-write history and paper over their culpability in the greatest financial crisis since the Great Depression.  It’s time to put the big lie to “it’s all Bush’s fault and Republican policies.”

The papering over has already started by none other than Franklin Raines the former head of Fannie Mae who received bonuses of over $90 million while at the helm of Fannie Mae and was also charged with cooking the books that helped him receive those bonuses.  He reached a settlement with the SEC and gave back about $1.8 million from the profits in the sale of Fannie Mae stock and gave up $5.3 million in future benefits related to his pension.  But he essentially kept the rest, what the Wall Street Journal called a “paltry settlement.” 

Mr. Raines claims the demise of Fannie Mae and Freddie Mac, to which taxpayers have already coughed up $145 billion, was due to bad credit decisions made after he left the firm.  To put it in his own words:

 “The Journal had been warning for years that the on-balance sheet portfolios of Fannie and Freddie would lead to their demise. Mr. Carney suggests that excessive leverage was the culprit. Unfortunately, neither of these were involved. Nope. Just bad credit judgments. Decisions made, by the way, while operating under close regulatory scrutiny.”

According to the Wall Street Journal “What he doesn’t say is that Fan and Fred had a political and legal mandate to support low-income housing.”  To meet this mandate which had increasing goals each year, Fannie and Freddie had to cast a wider net to find these borrowers and the wider they cast the net the lower their standards had to be.  Thus more creative types of mortgages were created to lower the bar such as, interest only loans.  This scheme would continue to work as long as housing prices kept rising but that could not go on forever.  When the music stopped a lot of people were left standing without chairs and we all lost.  People’s credit ratings were destroyed, mortgage securities were worth far less than face value, people walked away from houses, and taxpayers were forced to pick up another “too big to fail” enterprise.  By the way, where in the Constitution does it authorize the federal government to get involved in helping people buy houses?

The secret veil put in place by the main stream media has been lifted.  With the Internet and the bloggers and cable television and talk radio, the main stream media can no longer keep information that does not comport with their agenda hidden from the American people.  The American people are energized and informed but that may not last long after the election, if we don’t continue to engage them.  Uncovering the true “swamp” that is our federal government and draining it should begin by letting the sun shine in.  So let’s do away with the good ol’ boy politics of not rocking the boat when you gain control so that they won’t rock the boat when they get it back.  If we don’t have a new class of non-incumbents who are willing to go to Washington and clean it up, really clean it up, we need to get rid of them and put new people in their place.  If that means replacing Republicans with better Republicans or Democrat incumbents with better Democrats, so be it.  We have to end the process of only being able to choose between two pathetic life time politicians who have never lived in the real world.

The Sherrod incident is the latest in a long line of shoot from the lip misfires from the Obama administration, from the president on down.  Here is a review of some of the more egregious of them:

• President Obama, without waiting for the facts says the Cambridge, Massachusetts police department “acted stupidly,” in an incident involving African American  professor Henry Louis Gates.  A picture from the “beer summit” shows the president confidently striding toward the cameras while in the background Sergeant Crowley takes Professor Gates arm to help him negotiate the stairs, as Professor Gates walks with a cane.  Racist?
• With 13 dead Americans at the hands of terrorist Nidal Hasan, Janet Napolitano comes out and claims, “The system has worked really very, very smoothly over the course of the past several days.”  A few days later she would eat those ridiculous words.
• Not to be outdone by herself, after another terrorist attempt on our soil in Times Square, Secretary Napolitano quickly came out to label the attempt a “one-off” and the suspect a lone wolf.  As the investigation picked up steam there were all sorts links to terror groups in the Middle East.
• When the president of Honduras tried to override term limits and become the next Hugo Chavez, the Honduran government enforced its laws against the changes that its president was trying to illegally implement.  The Obama administration immediately labeled the legitimate actions of the democratically elected Honduran government a coup.  Hillary Clinton’s State department cancelled the visas of all members of the Honduran Supreme Court.  Not to be intimidated by Chavez, Castro, or Obama, Honduras stood its ground.  The Congressional Research Service looked at the Honduran Constitution and the actions of its government and found that the government acted properly and within the law.
• When Arizona reached the end of its rope and could not get the Obama administration to enforce the law on the border, they passed a law to give their police greater flexibility to determine the legal status of people stopped for another police matter.  The Obama administration immediately called the law unconstitutional.  When asked if they read the massive 10 page law, that’s right 10 pages, both Attorney General Eric Holder and Secretary Janet Napolitano (yes, her again) both said they hadn’t read it before declaring it unconstitutional.  This administration pushes through legislation running thousands of pages each and they can’t find time to read a ten page law before condemning it.
• Department of Agriculture employee Shirley Sherrod gave a speech to the NAACP where she spoke about her transformation from having a racial bias in a decision she made 24 years ago, to today where she tries to treat all individuals regardless of race.  Only the first part of the story was headed toward the airwaves, the part about her past discrimination, and before the news hit the air she was fired by the Obama administration.  Had they watched the whole tape before acting, they wouldn’t be swimming in apologies right now.

Is this just the lack of experience or does the Obama administration need adult supervision?  They jump to these wild conclusions and then end up backtracking days later.  After eighteen months in office you would think they would have learned by now how to govern.

Another case without as quick a trigger is the passage of the Dodd-Frank financial reform bill.  After taking office President Obama appointed a commission, the Financial Crisis Inquiry Commission to investigate the root causes of the crisis.  A prudent person might say, let’s hear what the commission finds out and then write legislation to address those root causes.  With months more to go before that commission’s work will be done, we have another 2,000+ page bill coming out of Congress and signed by the president to put new regulations in place on the financial services industry.  Why the rush?  Wouldn’t it be better to fix the real problems rather than what Chris Dodd and Barney Frank think are the problems and let them paper over their own culpability in the creating the crisis?  Why were Fannie Mae and Freddie Mac excluded?  In one of the hearings before the commission an argument was made that AIG did not have to be bailed out, that there were measures in place to ride out the crisis and that in the long run their policies would be fine.  Whether that is true or not, will have to wait for the final report, but the “just don’t stand there, do something,” mentality is disconcerting.  I certainly hope we are never faced with another Cuban Missile Crisis with this team in place.

As written about extensively here, government regulators have failed us in so many ways that to continue the practice of putting more control in the hands of government is lunacy.  To wit:

• The financial crisis, although typically blamed on Wall Street greed, was due in large part to government agencies and programs (Fannie Mae, Freddie Mac, HUD, Community Reinvestment Act, National Homeownership Strategy) that opened the door through which Wall Street followed.
• The oil spill in the Gulf happened after regulators either signed off on waiver applications from BP or just didn’t enforce the regulations on the books
• Anywhere from $60 billion to $100 billion is stolen from Medicare/Medicaid every year and our government can’t seem to stop it
• First time homebuyer tax credit was claimed, to the tune of $9 million, by incarcerated felons.

But the current administration insists that government must get bigger to tackle our nation’s problems and must tax us more to do so.

Senator Chris Dodd and Representative Barney Frank were at the heart of the financial debacle, claiming that Fannie Mae and Freddie Mac were in sound financial shape.  Meanwhile Senator Dodd was getting a sweetheart mortgage from Countrywide as a “Friend of Angelo” Mozillo, the CEO of Countrywide.  Now we are to believe that Senator Dodd and Representative Frank have ridden to the rescue and have crafted the solution we have all been waiting for, just don’t ask about Fannie and Freddie, they aren’t included in this master work.

The Federal Reserve will now have more power to regulate banks, after failing to monitor what was going on at Citibank and having the government step in because they were “too big to fail.”  The Treasury stepped into to bail out some banks and let other financial firms like Lehman Brothers to go under, will now have more power to determine which financial institutions are sound and which ones are not and step in to take control without allowing the bankruptcy courts to get involved.  The SEC which was asleep at the switch, or too busy watching porn on taxpayer purchased computers,  when the Bernie Madoff scam was delivered to them wrapped in a bow, will now have more power to decide how easy it will be to allow union pension funds to place their candidates on boards of directors.

The new legislation, which does nothing really new, runs to 2,000 pages (did you expect something less?) and leaves much of the details to the regulatory agencies themselves to fill in the blanks.  And never to miss an opportunity to slip a new tax into the mix there are $19 billion in new taxes to pay for this new regulatory oversight.

So when regulators fail, the government’s response is not to look at government’s role in creating the original problem, but to blame any private interests and add more regulations that will increase the scope and power of the government, take away your liberties, and do nothing to fix the original problem.  When the next crash comes, and it will, these same folks will say, “oh, dear, how did this happen?”  They will blame any private interests that are anywhere near the problem, absolve government agencies of all blame, and layer on more regulations.

The only way to fix this problem is to make sure these same folks are not around in the future and to cut the government down to size.