Citibank

Tim Bishop’s Phone Center Folly

by Bill O'Connell on December 27, 2011

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Tim Bishop has submitted legislation to punish firms that use overseas call centers. He is desperate. He needs an issue that he hopes will sneak him past the electorate into office for another two years. Outsourcing worked for him last time, so he is trying to put lipstick on that pig and pass it off as bold, new thinking. What I am thinking is when is Tim Bishop ever going to represent the people who actually live in his district?

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Democrats: Free Market Capitalists-No, Crony Capitalists-Yes

by Bill O'Connell on December 3, 2010

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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?

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Tim Bishop Comes out Swinging, But is it at Himself?

by Bill O'Connell on September 16, 2010

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Bailouts

I’ve seen Tim Bishop’s new ad to help re-elect him to Congress.  He glares into the camera and says “no more bailouts.”  Having voted with the Democratic leadership (Nancy Pelosi) more than 97% of the time, who is Tim Bishop running against, himself?  Is this another “I voted for the bill before I voted against it?”

  • Tim Bishop voted for TARP. 
  • Tim Bishop voted against repealing the rest of TARP and returning the money to taxpayers. (HR 4173 [Roll Call 967]. The House defeated an attempt to repeal the Troubled Asset Relief Program and lower the national debt limit)
  • Tim Bishop voted for the bailout of GM and Chrysler rather than letting them go through bankruptcy. 
  • He voted yes on a bill to modify bankruptcy rules to avoid mortgage foreclosures.  A fellow Democrat who also voted in favor of the bankruptcy bill said, “Rep. PETER WELCH (D, VT-0): Citigroup supports this bill. Why? They’re a huge lender.”  Wow, Tim Bishop is really tough on those Wall Street banks. 
  • Tim Bishop voted for the stimulus package that cost more in one year than the entire War in Iraq and has failed.  Unemployment is almost 10% when we were told the stimulus would cap it at 8%.  The administration keeps telling us about “jobs saved,” something that no one can measure, but they don’t tell us how many jobs were actually created which is a statistic that can be measured.  Why?  (Hint: 3 million jobs have been lost since stimulus signed)

 

So the guy who helped give us all these bailouts is now talking tough that he is protecting us from bailouts.

Credit Cards

His ad then goes on to say how he is protecting consumers and their credit cards.  One of the features he voted for is to cap the interest rate on credit cards at 16%.  Well that sounds good, but what is so magical about 16%?  Why not 17%, why not 12%?  Wait a minute, New York State used to have a cap on credit card interest rates of 12%, but then we got the Jimmy Carter economy where interest rates skyrocketed.  What happened then?  Major banks with credit card operations in New York state moved to other states that had no limit.  I worked at Citibank shortly thereafter, and they picked up their operations and moved them to South Dakota and Nevada.  New York lost thousands of jobs.  So what Mr. Bishop wants to do is place a limit at the federal level so those tricky people in South Dakota and Nevada can’t steal jobs from New York.  So instead, if we get another Carter economy, those jobs will go overseas.  But wait, doesn’t his commercial say he will create jobs here, not overseas?  What it proves is that Tim Bishop doesn’t understand economics and free markets, which he opposes.

Does Tim Bishop know what he’s talking about, or just waiting for the next instructions from Nancy Pelosi?

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The Regulators are Dead, Long Live the Regulators

by Bill O'Connell on June 28, 2010

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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.

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Cram This

by Bill O'Connell on January 13, 2009

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With Citibank caving in on the subject of cramdowns, we are all about to take it in the neck.  What the cramdown is, is where a bankruptcy judge can re-write the terms of a mortgage, including lowering the principal on the loan, in effect, “cramming” the loss down the banks throats.

Now I’m no fan of the banks making loans to people who shouldn’t have gotten them, but it has been a long standing principle that in a foreclosure, the bank gets the house, if you can’t pay.  If the loan is structured right, that is, a good down payment then this presents good security for the bank.  In return, banks have traditionally been able to offer lower rates on mortgages than on many other kinds of loans.  However, if you change the rules of the game, such that banks no longer have that kind of security, what is any rational banker going to do?  That’s right, raise the interest rates.

So any banker writing a mortgage in the future, will have to weigh that some day in the future his security could be taken away at the stroke of some legislator’s pen.  While it is true that, Sen. Schumer’s proposed deal is only on loans in place at the time of the legislation and only if the bank and the consumer tried and were unable to negotiate different terms, it still hangs over the mortgage industry.  A banker today, will have to consider that in the next thirty years of the mortgage I am about to write, there may be another serious economic downturn, and in that downturn, some legislator may decide to do this again.  Therefore, I’ll add 1/4% or 1/2% to the rate to cover it, on every mortgage I write from this day forward.

Let’s recap.  Government programs (Fannie, Freddie, Community Reinvestment Act, Clinton’s Justice Department, HUD) push very hard on banks to make loans to marginal lenders.  The housing bubble bursts causing financial crisis and government rides to the rescue so that we can pay more for mortgages forever.

And we keep electing these people.

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