The Dodd Financial Bill: Thursday on the Jim Vicevich Show

Your calls plus … David John from The Heritage Foundation. John is the Senior Research Fellow in Retirement Security and Financial Markets. Listen here tomorrow.

David John is one of five experts who “exert more influence” on the Social Security debate than anyone else in Washington – and he is The Heritage Foundation’s lead analyst on issues relating to pensions, financial markets and institutions, banking regulation, asset building, and Social Security reform.

Join us as we get to the bottom of the “Dodd Bill” that would regulate financial institutions and hand more power to the White House to determine just who is too big to fail. Here’s what John has written.

There are many valid reasons to be angry with bankers, and supporters of Senator Chris Dodd’s (D-CT) latest rewrite of his financial regulatory bill, the Restoring American Financial Stability Act, have mentioned them all. Americans have heard all about greedy bankers, huge bonuses, shady accounting practices, and outright greed. But the reason for this rhetoric is nothing less than an attempt to seize control of the financial services industry and to micromanage it.

Republicans are pushing back but Democrats are pushing hard for the “Restoring American Financial Stability Act”.

Obama, speaking briefly to reporters before the closed meeting began, said he was “absolutely confident that the bill that emerges is going to be a bill that prevents bailouts. That’s the goal.”

Treasury Secretary Timothy Geithner later said that the cost of taking down large failing financial institutions will be borne by big banks, not taxpayers. The House and Senate bills call for funds, financed by large financial institutions, to cover the costs of liquidating firms deemed too large to go through bankruptcy proceedings.

Get the real story tomorrow morning at 11am.

Frank demands lender ease mortgage requirements

Isn’t this how we got into the mortgage mess? Democrats in Congress are asking Fannie Mae and Freddie Mac to relax mortgage standards again.

Read more

Expect new credit card fees now that Obama is involved

The Obama administration and many in Congress – including our good friend Sen. Chris Dodd (D-Conn.) – are pretty disgusted at the contracts that are in place between credit lenders and credit card holders. The exorbitant fees and interest rates are just too much, and the federal government is planning regulatory legislation to stomp out the mean big-business practice.

In short, people who were provided credit they should not have received can not pay their bills right now due to the economy., so therefore, stop the banks from making any profit from those people. The issue is that the banks need to make a profit, so if the government steps in, the banks will need to find other sources of income.

What you’ll see happen is banks refusing to provide credit cards to those with lower credit scores and they will probably reduce benefits (cash back, airline awards, points…) and bring back or increase yearly fees.

The government will not refer this new banking practice as a “loophole” that must be closed since it is designed to “screw the rich.”

Hot Air has more and a poll up. This again is one of those situations where if you do the right thing on a month-to-month basis, you’re going to have to pay more in the future.

If you pay off your bill monthly, you must be rich and can afford to pay more. If you don’t pay your bills, spend more than you can afford, the government will come in to squeeze banks into giving you a better deal. If the banks do not do the bidding of Congress and the Executive branch, they will get crushed by those in power.

So for those of you who pay your monthly credit card bills on time and within the grace period, how do you feel about this? My emphasis in bold.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

I use a credit card for convienence, and I’m known for accepting new cards if I can get free money over time, but I play the game correctly and pay it off so I pay zero interest. Provide me with a better deal and I’ll pay cash every time.

Troubled Waters – another Democrat banking queen scandal

Nancy Pelosi famously told us she intended to run the most ethical congress ever

Never mind William Jefferson (D-La.) and his tin-foil wrapped lucre.  Forget Ways and Means Chairman Charles Rangel (D-N.Y.) evading his taxes.  Gloss over Barney Frank (D-Mass.) and the Fannie Mae failure.

We can now add a new name to the Wall of Fame — Rep. Maxine Waters (D-Calif.). From the New York Times:

“Representative Maxine Waters, Democrat of California, requested the September meeting on behalf of executives at OneUnited, one of the nation’s largest black-owned banks. Ms. [Waters’] husband, Sidney Williams, had served on the bank’s board of directors until early last year and has owned at least $250,000 in stock in the institution. Treasury officials said the session with nearly a dozen senior banking regulators had been intended to allow minority-owned banks and their trade association to discuss the losses they had incurred from the federal takeover of Fannie Mae and Freddie Mac. But Kevin Cohee, OneUnited’s chief executive, instead seized the opportunity to plead for special assistance for his bank, federal officials said.”

What does the Treasury Department have to say about this?

““It is upsetting to me,” said Jeb Mason, then the deputy assistant secretary for business affairs at Treasury, whose office helped set up the meeting. “This is something that was potentially politically explosive and embarrassing to the administration. They should have at least let us know.”

Apparently, the representative from California “forgot” to share that her husband was a former board member of the bank and held hundreds of thousands of dollars of OneUnited stock.  No comment has been forthcoming from Rep. Waters office.  She has also declined to answer the questions of either New York Times or the Wall Street Journal regarding this matter, although it would seem to be safe to say that her comments from January that she did not know how OneUnited  got a slice of the bank bail-out.  I think most pertinent question would be why they got the money:

“The aid surprised some bank analysts because the bailout was intended for healthy banks, and OneUnited was then considered to be in precarious condition. In addition, it had been harshly criticized by regulators in 2007 for failing to give a sufficient number of loans to lower income residents in Miami, while favoring wealthier customers there. And the F.D.I.C. sanctioned the institution in October 2008 for “unsafe or unsound banking practices,” including excessive compensation for Mr. Cohee. The bank had provided him with a 2008 Porsche SUV and maintained his $6.4 million beachfront compound in Santa Monica. Calif., with views of the Pacific and a spa and pool.”

Intervening with the Treasury on the behalf of a mismanaged bank — a bank in which the Representative has a vested interest — probably wasn’t the reason that voters sent Ms. Waters to Washington.

Editors Note: Rep. Waters is highlighted in Michelle Malkin’s syndicated column today. Gateway Pundit has a quick run down of three members in the most ethical Congress evvvvahh. Hot Air also on it.

The systematic destruction of our financial system

When Obama came to power we were promised full transparency. I was personally promised transparency by John Larson. During a forum that John Larson held on January 29, 2009. I asked him what happened to the transparency with the TARP (as at the time $78 billion was not accounted for). He blamed the Bush administration and promised transparency going forward.

I was told that he would have his staff find out where the FED has placed $1.2 trillion dollars which they are not disclosing. That is a LOT of money. A LOT OF MONEY!!! Do you not understand this people!!! Demand transparency NOW! Efforts by Bloomberg have been denied, even though they have filed a freedom of information act request.

Where is the money? We hired our legislators to attend to these affairs. They are failing miserably. Where did the money go. Tell us NOW. Stop blaming the Bush administration. Did Bush shred all documentation? Can’t you look into the archives and see where the money went? Does $1.2 trillion dollars just disappear? Tell us where the money is NOW. I am personally fed up with the continued lies as you SYTEMATICALLY DESTROY OUR FINANCIAL SYSTEM.

I say systematically destroy our financial system because that is exactly what is happening. I am pretty sure that it is WAY too late to fix this financial system. As our leaders keep buying shares of companies and claim that you are not nationalizing these institutions you are carefully and calculatedly pushing our country into a funnel that empties into ONE, nationalized bank. A bank so large that it could never be re-privatized. The whole time you will tell us that this is the only option. Yes dear government, it is the only option because that is how you have designed this crisis.

Now go ahead and say that I need to put my tin-foil hat on. I will present the evidence that I have and you decide. I have many more examples but I present just a few here.

The first evidence that I present is the dismantling of our consumer protection laws over the last 20 years.

  1. Usury – At one time in this country we had laws that would prevent usury. Usury is the charging of excessive interest on money borrowed. In 1980 a bill was passed that gave the FEDERAL RESERVE greater control over banks and usurped each states rights to establish usury laws. You now have payday loans and credit card companies charging %28 + APR on revolving debt. How is this NOT usury?  Where is the protection? Over the last few years, laws have been proposed to protect consumers but obviously the interest is in helping the banks and clearly destroying our financial system.
  2. Bankruptcy – In 2005 a bill was passed with the words “Consumer Protection Act” in the title. This bill did anything but protect the consumer. This law limits the debt that a person can just walk away from and it seems that this law created some unintended(actually probably intended) consequences. As consumers accumulate debt and become overwhelmed by finance charges they get in over their heads. They were then sold consolidation loads to manage the debt. In many cases they accumulated more debt and were then unable to repay it. If the debtor tries to file for bankruptcy they can no longer walk  away from the debt. In some cases the debtor then buys a home equity loan and subsequently defaults, and helped with the crisis that we have today. The inability to walk away from the debt encourages the lender to over extend the debtor who eats the debt up like a puppy eating candy till he pukes. I agree that it is incumbent on consumers to protect themselves. However there are times where the government needs to protect people from themselves. ( I can’t believe that I just said that)
  3. Relaxed mortgage lending and guarantees. I remember buying my first home in 2001. Everyone and their brother were trying to sell me a loan and they were all guaranteed by FHA. I believe that it was 3% down and I was in a home.  I owned a business that was having a little trouble as the economy was tanking. I was offered a re-finance at a lower rate with no income verification where I could take money out of the transaction and keep in mind I only put 3% down.  This was a tempting proposition but logically I knew that this was simply too good to be true. And it was. I recall Bush on  television about a year later bragging about the highest percentage of home ownership in the history of our country. But at what cost? Home prices were heading out of the stratosphere and it was obvious that borrowers whom by all past measures could NEVER afford the payments were getting loans left right and center. This is nothing to brag about Bush!  Legislation was in implemented to completely screw these borrowers. As the subprime mortgages were given out like candy where were the legislators? Were they proposing legislation requiring some realistic mortgage lending requirements. NO, this would have been the logical thing to do to PREVENT a housing bubble, which obviously needed to be done. Instead they were passing legislation to encourage this destructive behavior and encouraging the creation and growth of this bubble.
  4. Policy that continues to destroy – This crisis exists because of excessive lending for the 2nd time in the history of this country our consumer debt to GDP ratio is 1:1. That’s right our GDP is equal to that of our consumer debt. Want to guess when the last time that happened? The only other time that condition existed in the past was in 1929. So how do these economist propose that we get out of this mess? They are proposing that we borrow and spend our way out of this. If they had their way every man woman and child would borrow a million dollars and go on a spending spree. If you keep doing what you’ve been doing your going to keep getting what you’ve been getting. ANY other expectation is INSANE.

Hopefully by now you are getting the point. If not let me spell it out. This is the systematic destruction of our banking and economic system. This type of incompetence does NOT happen by mistake, I just don’t think that this perfect storm of destruction can happen as a matter of circumstance.

You may be asking why would anyone want to destroy our banking/economic system? Just follow the money. The logical end to all of this is the creation of a single nationalized bank. A bank so large that it could NEVER be re-privatized, there is just not enough money in the world to re-privatize it.

Of course this entity will be owned by the current “owners” of the Federal Reserve. This would give them greater control of the siphoning of money from our country to these world bankers.

Dodd’s Dangerous Dance. Plus Dodd vs Kudlow?

Instapundit continues to blaze the web trail tacking everything and all Dodd and we are more than happy to help get the word out. You can catch it here.

Like any Washington survivor who senses that the political tide is shifting, Dodd knows he must swim with it or sink in its wake.

And for Dodd, the danger of drowning is quite real. He’s up for reelection in 2010, and he has seen his poll numbers drop dramatically since a report last year about his alleged special mortgage deal from Countrywide Financial.

“Dodd actually is a vulnerable incumbent right now,” said Gary Rose, chairman of the government and politics department at Sacred Heart University in Fairfield, Conn. “This is an effort on his part to once again re-establish himself as a man of the people.”

Absolutely … As we mentioned on the show, who doesn’t own three homes, two of which we know are or were valued at about a million bucks. But my favorite part is this ….

But can Dodd make that turn and still count on the support of financial services firms — or at least those that still exist — to keep pumping money into his campaign coffers?

Plus: The Courant is reporting CNBC’s Larry Kudlow might challenge the Countrywide Kid … how about that?

The Experts

You’ll be stunned to learn that “Frontline” … bought and paid for with your tax dollars … and soon your stimulus money … has reportedly put together a documentary on the economic collapse that will air tomorrow night on PBS. The kicker is the expert list. Only two Congress people were interviewed.

Mr. Dodd and Representative Barney Frank, Democrat of Massachusetts,are the only members of Congress interviewed in the piece, which is a weakness. Many voters hold Republicans and Democrats equally responsible for oversight failures. “Frontline” holds these politicians up as reliable, unbiased witnesses, but some viewers may feel they don’t deserve that trust.

These two people are experts all right. They blocked the regulations that the Bush administration proposed for Fannie Mae and Freddie Mac, not to mention looked the other way as banks like Countrywide made billions in irresponsible mortgage loans to anything that moved, no questions ever asked. Thanks once again to Instapundit.

Here’s the video that PBS won’t air .. for fear of losing their funding.


Simply Giddy

Congresswoman Maxine Waters on This Week discusses the possibility of nationalizing some banks. She says, no doubt in defference to Senator Graham, “but not yet”. Disturbing. But wait there’s more. Read more

Just in time to buy the banks – Video Added

It looks like the man so smart he couldn’t figure out his taxes will be confirmed as Treasury Secretary. Too bad. Tim Geithner also happens to be one of the “brain trusts” behind the current financial TARP program. You know, the one that’s been trying to bolster bank balance sheets. Soon … he will be asking for more money … and for what?

bank-mkt-cap-200901You might find the following chart posted by Cody Willard at Fox Business interesting. It shows what banks were worth in 2007 when they were riding high on the real estate wave and credit swap craze … it also shows what they are worth now. And begs the question … why did they stick with the smoke and mirror balance sheet so long? Why not shed some of those assets when they still had value? Click the graphic to see the full size chart.

Update: (Steve) Posted is a new version of the same original chart from the Neil Hume at Financial Times. It still shows bank market capitalization comparison between the second quarter of 2007 and Jan. 20, but this version includes a normalized view, so it is easier for readers to compare relative shrinkage, as Hume calls it. In other words, Citibank = massive hit, JP Morgan = not as bad.  /steve

Chat room and Blog contributor Dave suggested it might be time to post that shocking revelation from Fox News … you know … the one that says the Feds have actually pumped more money into the banks (specifically BOA) than its worth.


Not sure what the next move is … but my guess is complete government control of America’s capital system. Doomed I tell you. We lose our free market system because of the recklessness of others … and we end up paying for it.

Update: BTW … the podcast with Cody Willard is up on the WTIC site … great interview today.

The weed of socialism…

…bears bitter fruit.  From the UK TIMES, by Iain Martin:

They don’t know what they’re doing, do they? With every step taken by the Government as it tries frantically to prop up the British banking system, this central truth becomes ever more obvious.

The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic.

Ironically, this is the sort of government some folks we ought to have…