September 28, 2008
Lipstick On A Pig
$700,000,000,000 worth of lipstick.
I have read through the draft of the bank bail-out legislation and not only does it so nothing to change the underlying problem - it enshrines the policies that lead to the credit melt-down we are experiencing now.
Here are the relevant portions of the draft (all emphasis mine):
This bill is designed to stabilize and perpetuate the current status quo. If you want to know why, just consider that the Chairman of the Senate Banking Committee is Chris "Friend of Angelo" Dodd. Who in the last decade collected more donations with ties to Fannie Mae and Freddie Mac than any politician in Washington.
I don't think there is much chance of stopping this bill from passing both houses and being signed into law. The quotes above are from an early draft. I have every faith that the final legislation will be far worse.
I have read through the draft of the bank bail-out legislation and not only does it so nothing to change the underlying problem - it enshrines the policies that lead to the credit melt-down we are experiencing now.
Here are the relevant portions of the draft (all emphasis mine):
Section 103. Considerations.
In using authority under this Act, the Treasury Secretary is required to take a number of considerations into account, including the interests of taxpayers, minimizing the impact on the national debt, providing stability to the financial markets, preserving homeownership, the needs of all financial institutions regardless of size or other characteristics, and the needs of local communities. Requires the Secretary to examine the long-term viability of an institution in determining whether to directly purchase assets under the TARP.
Section 107. Contracting Procedures.
Allows the Secretary to waive provisions of the Federal Acquisition Regulation where compelling circumstances make compliance contrary to the public interest. Such waivers must be reported to Congress within 7 days. If provisions related to minority contracting are waived, the Secretary must develop alternate procedures to ensure the inclusion of minority contractors.
Section 109. Foreclosure Mitigation Efforts.
For mortgages and mortgage-backed securities acquired through TARP, the Secretary must implement a plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs. Allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Requires the Secretary to coordinate with other federal entities that hold troubled assets in order to identify opportunities to modify loans, considering net present value to the taxpayer.
Section 110. Assistance to Homeowners.
Requires federal entities that hold mortgages and mortgage-backed securities, including the Federal Housing Finance Agency, the FDIC, and the Federal Reserve to develop plans to minimize foreclosures. Requires federal entities to work with servicers to encourage loan modifications, considering net present value to the taxpayer.
Section 124. Hope for Homeowners Amendments.
Strengthens the Hope for Homeowners program to increase eligibility and improve the tools available to prevent foreclosures.
I'm neither a lawyer nor an expert at interpreting legislative language, but I see all that adding up to a continuation of the federal government using the banks and the mortgage industry as a massive welfare program. Section 107. Contracting Procedures.
Allows the Secretary to waive provisions of the Federal Acquisition Regulation where compelling circumstances make compliance contrary to the public interest. Such waivers must be reported to Congress within 7 days. If provisions related to minority contracting are waived, the Secretary must develop alternate procedures to ensure the inclusion of minority contractors.
Section 109. Foreclosure Mitigation Efforts.
For mortgages and mortgage-backed securities acquired through TARP, the Secretary must implement a plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs. Allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Requires the Secretary to coordinate with other federal entities that hold troubled assets in order to identify opportunities to modify loans, considering net present value to the taxpayer.
Section 110. Assistance to Homeowners.
Requires federal entities that hold mortgages and mortgage-backed securities, including the Federal Housing Finance Agency, the FDIC, and the Federal Reserve to develop plans to minimize foreclosures. Requires federal entities to work with servicers to encourage loan modifications, considering net present value to the taxpayer.
Section 124. Hope for Homeowners Amendments.
Strengthens the Hope for Homeowners program to increase eligibility and improve the tools available to prevent foreclosures.
This bill is designed to stabilize and perpetuate the current status quo. If you want to know why, just consider that the Chairman of the Senate Banking Committee is Chris "Friend of Angelo" Dodd. Who in the last decade collected more donations with ties to Fannie Mae and Freddie Mac than any politician in Washington.
I don't think there is much chance of stopping this bill from passing both houses and being signed into law. The quotes above are from an early draft. I have every faith that the final legislation will be far worse.
Posted by: Stephen Macklin at
08:29 PM
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