February 26, 2009
Did somebody say, "bailout" ??
It appears we've put the the foxes in charge of guarding the hen house. In a story that describes President Obama's "broad indictment" of the financial services industry we learn that Congressman Barney Frank has taken up the cause of regulatory oversight.
'Among those at Wednesday's meeting at the White House was House Financial Services Committee Chairman Barney Frank. The Massachusetts Democrat has already begun working on legislation that would establish a regulator to oversee the kind of systemic risks that led to the market free fall last year.
Frank has proposed that the task be placed in the hands of the Federal Reserve.'
There's a name to keep in mind: Barney Frank. But let's skip back -- oh let's say ten years -- shall we? The date is September 30, 1999. The New York Times reports that Fannie Mae is easing credit requirements.
'In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.'
Easing credit restrictions was generally applauded. It extended the hope of home ownership to folks who might otherwise be unable to attain it, but the Times also noted that there were those who believed this was not without risk.
'In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'''
The alarm bells that went off nearly ten years ago did not go entirely unheeded. In 2003 the Bush administration pushed for much stricter oversight of Fannie Mae and Freddie Mac.
'The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.'
'After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.
''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.
''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.
The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.'
So what exactly happened to Bush administration efforts to adequately regulate Fannie Mae and Freddie Mac? We continue reading the September 11, 2003 Times article, and find that efforts to better regulate Fannie and Freddie were opposed by none other than Barney Frank.
'''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'''
But that was then. This is now. Now we are in the crisis that Congressman Frank couldn't imagine then, and now he wants to oversee systemic risk in financial markets. The horses are gone! Lock the barn! Hindsight is 20-20 but we're about nine years late. The financial turmoil predicted in September 1999 became a reality in September 2008.
'After a week of political tumult and deepening economic anxiety, congressional leaders yesterday rallied support for an historic proposal that would grant the government vast new powers over Wall Street and offer fresh help to homeowners at risk of foreclosure.
The proposed legislation, which is scheduled for a vote today in the House, would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates.'
In a casual aside the morning after President Obama's speech to congress, a local radio newscaster said it was widely believed our current economic crisis was caused by the lack of government regulation of the financial industry. Translation: The cause of our crisis is Republican preference for free market policies. Unbridled capitalism is to blame. Never mind that there is no such thing.
While there is truth to the charge that there were regulatory failures, it was not Republicans who were opposed regulatory reform. Nor were Republicans sitting on the sidelines twiddling their thumbs. They were actively trying to reduce risks posed by over-leveraged mortgage backed securities. That didn't happen.
It's depressing. Almost every time somebody from the Obama administration opens his mouth the stock market takes a hit. We watch as the "biggest government bailout in U.S. history" keeps getting bigger.
February 23, 2009
Preserving liberal psyches
Liberal psyches be preserved! It seems that elements of the mainstream press have embarked on extensive retrospective analyses that seek to trace all anti-American sentiment back to origins in Bush administration policy. A recent Pentagon report on the Guantanamo Bay military prison was ordered by President Barack Obama. In spite of its conclusion that detainee treatment meets the requirements of the Geneva Conventions, a remarkable front page story in the Washington Post tries to make the case that Guantanamo is turning otherwise likable young men into jihadists as a result of their detainment.
'Since his death, U.S. intelligence agencies have sought to determine when Ajmi became a hard-core jihadist. Was it in the late 1990s, when he came under the sway of a radical preacher while serving in the Kuwaiti army? Was it in 2001, when he allegedly joined the Taliban? Was it upon his release in 2005, when extremists back home celebrated him as the "Lion of Guantanamo"?
Or is the answer potentially more alarming: Was his descent into unrepentant radicalism an unintended consequence of his incarceration?'
In March 2008 Ajmi drove a pickup truck packed with explosives onto an Iraqi army base outside Mosul killing 13 Iraqi soldiers and wounding 42 others. U.S. military officials at Guantanamo had Ajmi pegged as a trouble maker at best, but according to the Post, his lawyerThomas Wilner says the problem was Guantanamo.
'Wilner tried to talk to Ajmi about his upcoming administrative review board hearing -- the Guantanamo equivalent of a parole board meeting -- saying it would give him an opportunity to tell the truth about what he was doing before his capture. But Ajmi wasn't interested. He wanted to talk about how he was being treated at Guantanamo, about the IRFing, about how the guards rifled through his papers.
Wilner urged him to focus on legal issues. If he wanted Shearman to keep representing him, he needed to sign a form to that effect. If he did not sign, Wilner said, he would not be able to see him anymore.
Ajmi tried to change the subject again. Wilner's interpreter, a young Egyptian American man, interjected. "This guy is just trying to help you," he said. "Can't you address him?"
Ajmi glowered. He bared his teeth. Then he threw a cup of hot tea in the interpreter's face.
Wilner ended the session, but he soon forgave Ajmi. The detainee's hostility, he believed, was a result of mental deterioration caused by his confinement at Guantanamo.'
The forces that drive suicide bombers to their explosive ends stand revealed. How fortunate that we have a savior in President Barack Obama who will end the scourge by closing Guantanamo. Suicide bombing will be soon be a distant memory. Well maybe not, but at the very least liberal consciences will be salved in the conviction that future bloody deaths from human bombs are not their fault.
But this is just one of many stories intended to place blame where the press would like it to be. Unfortunately for the Washington press, their ongoing campaign to discredit the Bush administration is running into obstacles. For one thing, it's becoming clearer by the day, that what the press considers the worst foreign policy disaster in recent American history, the invasion of Iraq, has planted the seeds of democracy and they have taken root. The recent Iraqi election has resulted a resounding victory for secular government, a rejection of Islamic religious rule, and a rejection of control by Iranian sponsored parties. The establishment of a democratic government in Iraq represents a shift in the balance of power in the Middle East, and it' has shifted dramatically in favor of the U.S.
This is not good news for Washington Post reporter extraordinaire, Thomas Ricks, who has a new book. According to Mario Loyola his new one is as wildly off the mark as his last one. (Disclosure: Aside from the excerpts of "Fiasco" that appeared in the Post, I haven't read either and it's not likely I will.) In Loyola's analysis Ricks' new book "The Gamble" promotes the conventional media wisdom on the War in Iraq. You know the drill. Democracy in Iraq is doomed to fail and would already have done so but for the dumb luck of the surge, and even that was a political failure.
'Following the Woodward method, Ricks interviewed enough people that he can quote somebody saying pretty much whatever he wants said in support of his narrative, and he puts those who gave him the greatest access in the most favorable light. Ricks had surprising access to a lot of senior people. Gen. Jack Keane, one of the signal proponents of the surge, reports being surprised at how much information Ricks already had by the time of their interview.
But in the absence of archival research, this mountain of quotations fails to communicate so many critical aspects of what happened — and of how decisions were made — that it would risk incoherence if it had to stand on its own as history. Ricks solves that problem by weaving his reportage around the most familiar propositions of the conventional media narrative: 1) Rumsfeld and his senior generals stubbornly refused to implement a proper counterinsurgency strategy and nearly caused a disaster; 2) the surge has succeeded militarily but failed politically; 3) democracy is a pipe dream in Iraq, where “lots of little Saddams” have replaced the one we toppled; 4) the Iraq war has been most of all a victory for Iran; and 5) Obama will be fighting the Iraq war long into the future, with an uncertain outcome. Each of these propositions is seriously flawed if not completely wrong.'
But there is a method to the madness in all this. The sad fact is that the media and many of liberal intelligentsia really wanted America to lose the war in Iraq. It wasn't so much the war that was objectionable as the pain of having to acknowledge that George W. Bush might have been right about it. Chicago Sun-Times columnist Mark Brown wondered aloud on February 1, 2005, shortly after the Iraqis first went to the polls, "What if Bush has been right about Iraq all along?" Brown wrote:
'But after watching Sunday's election in Iraq and seeing the first clear sign that freedom really may mean something to the Iraqi people, you have to be asking yourself: What if it turns out Bush was right, and we were wrong?
It's hard to swallow, isn't it?
Americans cross own barrier
If you fit the previously stated profile, I know you're fighting the idea, because I am, too. And if you were with the president from the start, I've already got your blood boiling.
For those who've been in the same boat with me, we don't need to concede the point just yet. There's a long way to go. But I think we have to face the possibility.
I won't say that it had never occurred to me previously, but it's never gone through my mind as strongly as when I watched the television coverage from Iraq that showed long lines of people risking their lives by turning out to vote, honest looks of joy on so many of their faces.
Some CNN guest expert was opining Monday that the Iraqi people crossed a psychological barrier by voting and getting a taste of free choice (setting aside the argument that they only did so under orders from their religious leaders).
I think it's possible that some of the American people will have crossed a psychological barrier as well.
Deciding democracy's worth
On the other side of that barrier is a concept some of us have had a hard time swallowing:
Maybe the United States really can establish a peaceable democratic government in Iraq, and if so, that would be worth something.
Would it be worth all the money we've spent? Certainly.
Would it be worth all the lives that have been lost? That's the more difficult question, and while I reserve judgment on that score until such a day arrives, it seems probable that history would answer yes to that as well.
I don't want to get carried away in the moment.
Going to war still sent so many terrible messages to the world.'
The Daily Show's Jon Stewart had similar misgivings.
'Jon Stewart, late in the Daily Show last night to Newsweek pundit Fareed Zakaria: "I’ve watched this thing unfold from the start and here’s the great fear that I have: What if Bush, the president, ours, has been right about this all along? I feel like my world view will not sustain itself and I may, and again I don’t know if I can physically do this, implode.'
Here we are four years down the road with another Iraqi election in the books, but no implosions on the left, no facing of possibilities, no worrying over whether or not Bush was right. Instead we have denial. Yes, the surge that was doomed to failure, but it "succeeded in ways that nobody anticipated." Obama's words. And that's the ticket. Nobody with a brain could possibly have figured the surge would actually work. What else could it be but luck?
So as long as things go well in Iraq, we can expect the Rickses of the world to remain locked into a cycle of "investigative" journalism and "non-fiction" literature that will explain to their self satisfaction how luck saved the situation in Iraq, after George W. Bush made such a mess of it. They will endlessly explain how anything that worked was less a result of administration purpose and planning than it was of pure chance. Or if it can't be written off to chance pundits will opine that the flowering of democracy in Iraq is really not such a good thing anyway.
Of course, it's not clear that President Obama will help them out of their liberal quandry. Sure he was as big a critic as the best of them, but the buck stops on his desk now, and talk is cheap. Easy to say invading Iraq was a mistake, but now that security has improved and Iraqis are deciding issues with ballots rather than bullets, can the liberals keep saying it's a huge mistake and do it with a straight face. Will Obama really want to risk having a democratically governed allied country disappear on his watch by pulling up stakes and leaving as he promised early on in his campaigns. As with other campaign promises, this one may also have passed its expiration date.
'WASHINGTON (AP) — President Barack Obama faces split opinions within the military on whether to make the speedy withdrawal from Iraq he championed as a candidate.
Obama's top generals in Baghdad are pressing for an elongated timetable. Some influential senior advisers inside the Pentagon are more amenable to a quicker pullout.
Obama has yet to decide the matter. But his recent announcement that he is sending thousands more combat troops to Afghanistan implies a drawdown of at least two brigades from Iraq by summer.
That does not answer the question whether Obama will stick to his stated goal of a 16-month pullout or opt for a slower, less risky approach.
Gen. Ray Odierno, the top American commander in Baghdad, favors a longer timetable for leaving Iraq. He sees 2009 as a pivotal year, with parliamentary elections set to be held in December; he doesn't want to lose more than two of the 14 combat brigades that are now in Iraq before the end of the year. And he believes the U.S. military will need to remain engaged in Iraq, to some degree, for years to come.
Odierno's boss at U.S. Central Command, Gen. David Petraeus, leans toward Odierno's view.'
Meanwhile, back on the liberal ranch, the Ajmi saga continues in Post pages this morning. Just in case anybody missed the story on Sunday.
'When Thomas Wilner learned that his client had become a suicide bomber, he said he felt physically ill. He thought of the victims, and he thought of Ajmi. "Here was this poor, dumb kid -- I really don't think he was a bad kid -- who was thrown into a hellhole of a prison and who went mad," he said. "Should we really be surprised that somebody we treated this way would become radicalized, would become crazy?"'
A Kuwaiti national was captured with al Qaeda in Pakistan after fighting in Afghanistan against the Northern Alliance. And the Washington Post thinks it's Guantanamo that turned him to jihad. It's sounds like a typical liberal mea culpa. "Yes, America is to blame, particularly the America that isn't me." There. Doesn't that feel better? It's George W. Bush, who's really to blame. That will be the media theme for the next four years, anyway. It's something liberals can swallow.
February 03, 2009
According to Power Line the recently released paperback edition of Douglas Feith's War and Decision advertises itself as a Washington Post and New York Times best seller. This in spite of the fact that both papers refused to review the book when the hard cover edition was first published.
'The MSM's decision to ignore War and Decision was understandable. Through the painstaking use of documentary evidence, Feith destroys much of the false narrative the MSM labored so hard to assign to the Iraq war and the decisions surrounding it. The MSM apparently had no substantive response. In fact, Doug said today that, to his knowledge, no one has identified a single factual inaccuracy in the book. Under these circumstances, from the standpoint of the liberal MSM, the best approach was simply to ignore the book. Meanwhile, lefty bloggers limited themselves, as usual, to invective.'
February 01, 2009
Nearly two years ago the media and the lefty blogosphere were hooting over John McCain's claim that a recent visit of his to a Baghdad market was proof that security had improved in Iraq's capitol city.
'Yesterday, Sen. John McCain (R-AZ) told CNN that that President Bush’s escalation in Iraq is going so well, “General Petraeus goes out there almost every day in an unarmed humvee.” On Monday, he told radio host Bill Bennett that there “are neighborhoods in Baghdad where you and I could walk through those neighborhoods, today.”
This morning, during an interview with McCain, CNN’s John Roberts rebutted McCain’s assertions, stating, “I checked with General Petraeus’s people overnight and they said he never goes out in anything less than an up-armored humvee.” He added that a new report by retired Gen. Barry McCaffrey “said no Iraqi government official, coalition soldier, diplomat reporter could walk the streets of Baghdad without heavily armed protection.”'
The message of course: Security has not improved, will not improve. That message was officially blessed a couple of weeks later when Senate Majority Leader and Democrat Harry Reid said the war was lost. Lefty reporters and bloggers were positively giddy over McCain's comments.
That was two years ago. A few days ago an Iraqi student posted this:
'I finished my exams last Wednesday; the teachers brought very hard questions, but did fine. I was planning to have 2 lectures everyday during the midyear holiday, but my grandparents, and everyone urged me to take a break, relax and spend the holiday in Baghdad, after I thought about it, I decided to take their advice, and have a break, I rally deserve one after 9 months of continuous studying so that I don't get bored later.
So in the first day of my holiday I traveled to Baghdad, the road was really good except the two hours we stopped before we reach Baghdad because of the crowded road as the cars must be inspected before we reach Baghdad gate..
I am having a pleasant time here, Baghdad is much safer than mosul, we can go out, wear what we love without fear, walk and enjoy the warm weather, I love Baghdad and I wish I can stay here forever!'
My, how things have changed. Iraqis went to the polls yesterday to vote in their provincial elections. It's hardly what you would call big news, though.