Oh, wait. No, not really. None of those things have really happened. I was shocked to see The Hill, a site I read regularly for its impartiality, and whose Associate Editor, A.B. Stoddard, I have admired for her intellect. The premise of the article by Peter Schroeder is this:

President Obama, with his electoral fate tied to the economy, must be pleased with the momentum he’s getting.

Just months ago, the U.S. credit rating was downgraded and Democrats worried Obama was following in the footsteps of one-term President Jimmy Carter. Maybe he will, but reports in the last week suggest manufacturing and construction are humming, and Thanksgiving saw record-setting shopping by consumers.

The icing on the cake? A jobs report Friday shaved nearly half a point off the unemployment rate. The 8.6 percent rate was down from 9 percent in October and is the lowest unemployment has stood in two and a half years. (Emphasis mine.)

“Democrats have a very good chance in 2012 and if the economy gets better that’ll help us,” said Rep. Norm Dicks (D-Wash.). “Things are looking a lot better. A lot better.”

“The icing on the cake?” Really? He is promoting this false meme that the artificially reduced Unemployment numbers put forth by the Obama Administration (and which Larry Johnson thoroughly debunks in this post, “Delusional America“)? Is it really good news for Obama that over 300,000 people have given up hope of ever finding a job again? That’s a GOOD thing? In what universe? ObamaMedia World? Evidently. I was just appalled to see a site like The Hill pushing this crock of BS for Obama and the Democrats. This wasn’t an opinion piece, after all, it was allegedly “reporting.” Reporting Democratic talking points, maybe, but not the facts, or reality. At the very BEST, the number is now at 8.9%, and even that is pushing it (according to Eric Bolling on “The Five”).

These kinds of machinations by the Democrats are really mind boggling. It wasn’t so long ago that I would have bought this crap they are selling, being a dyed in the wool Dem and all. But no longer. I simply cannot understand how the Party that claims to be SO compassionate is CELEBRATING people giving up out of despair. How is that good in ANYONE’S world?

This does seem to be the Democrats’ MO, though. This kind of hoodwinking, that is. This instance has to do with the economy, riding a wave of glee on the backs of those who have given up. My good friend, CindyIndie, sent me an article about an issue in Texas that highlights more of this double-speaking machination that seems to be SOP. This one deals with their “concern” for minority presence and leadership in politics. The title gives a hint, “Opportunity Lost To End The White-Guy Streak.” Yes, and that opportunity was lost due to an appeal by the Democrats:

For a while there, before a three-judge federal panel did some three-judge federal paneling, the good and progressive people of Travis County (long self-congratulatory about their goodness and progressivity) seemed en route to ballot-box ethnic history.

[...]

This, of course, was all about Republican self-interest and had nothing to do with wanting to break the white-man streak in Travis County. But facts are facts, and regardless of why it happened (largely to stick it to longtime U.S. Rep. Lloyd Doggett, D-Austin, a longtime white man), the map offered a solid possibility of electing an African American and two Hispanics to a five-person (up from the current three) Travis County U.S. House delegation.

To jack with Doggett, the GOP drew a Hispanic-heavy San Antonio-Austin district in which state Rep. Joaquin Castro, D-San Antonio, had a solid shot at beating Doggett in the Democratic primary. The map also brought into Travis County a multicounty, northward meandering district now represented by Republican Bill Flores of Waco.

The Travis County map also included a greatly rejiggered multicounty district in which former Railroad Commissioner Michael Williams, a black Republican, had a solid chance of winning. The other districts in the county (also multicounty districts) most likely would have continued to have been represented by Republicans Michael McCaul of Austin and Lamar Smith of San Antonio, who self-identify as white men.

So Travis County could have wound up with two white guys, two Hispanic guys and a black guy. Sure, only one of them (McCaul) now lives in the county, but hey, ethnic history is ethnic history — even if the black guy (Williams) and one of the Hispanics (Flores) are Republicans (a concept that irks some of the local good and progressive.) (Click here to read the rest.)

Well, of course it is obvious why the Democrats claimed this would affect minority representation – because we all know that Black Republicans aren’t really black, and I assume that extends to Hispanic Republicans, too. Much better to have a paternalist White Guy represent your interests – they do so well with that. Just look at Women’s Issues and how well our Congress has handled that (e.g., equal pay is still a dream).

Honestly, I don’t know how in the world the Democrats could have even made this argument to the Panel with straight faces. Maybe they didn’t. Maybe there were lots of winks, guffaws, and “dontcha knows” thrown in there. Beats me. But apparently, it is a mindset that allows them to say these things, much like this pronouncement from The Hill’s “Signs” article:

[snip] Democrats have felt the swing in momentum.

Rep. Sander Levin (D-Mich.) said the president’s chances for reelection have “improved” with the economy, while Rep. Elijah Cummings (D-Md.) says voters will see the president has things moving in the right direction.

“The economy is not where we want it to be, but it’s at least stable and slowly but surely going in the right direction,” Cummings told The Hill. (Click here to read the rest.)

Uh, yeah, just keep telling yourselves that. I suppose these folks also still believe in Santa Claus, the Easter Bunny, and the pot of gold at the end of the rainbow, which they are presumably counting on to help ease our massive debt, which is now 100% of our GDP. Yeah, sure, the economy is doing GREAT! Just peachy! Just tell all of those folks who are first time filers for Unemployment, those who dropped out, and those who have lost their homes. I am so certain they will all agree with Levin and Cummings, aren’t you? Cough, cough. Uh huh. Maybe it is time for them to take off their rose colored glasses, and try looking at reality for a change. Just a thought. What do you think?

That are going to make my head explode. First, news that the ten executives at Fannie Mae and Freddie Mac, which are still operating in the red, and which are largely to blame for the housing crisis, got BONUSES. And I am not talking little bonuses, either. Those ten mo-fos got = and you better sit the hell down and swallow whatever you are drinking – $12.79 MILLION DOLLARS. Yes, you read that number correctly.

Gosh, I hate this Administration:

The Federal Housing Finance Agency, the government regulator for Fannie and Freddie, approved $12.79 million in bonus pay after 10 executives from the two government-sponsored corporations last year met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.

The executives got the bonuses about two years after the federally backed mortgage giants received nearly $170 billion in taxpayer bailouts — and despite pledges by FHFA, the office tasked with keeping them solvent, that it would adjust the level of CEO-level pay after critics slammed huge compensation packages paid out to former Fannie Mae CEO Franklin Raines and others.

Securities and Exchange Commission documents show that Ed Haldeman, who announced last week that he is stepping down as Freddie Mac’s CEO, received a base salary of $900,000 last year yet took home an additional $2.3 million in bonus pay. Records show other Fannie and Freddie executives got similar Wall Street-style compensation packages; Fannie Mae CEO Michael Williams, for example, got $2.37 million in performance bonuses. (Click here to read the rest.)

So they got these massive bonuses for mild improvements after getting $170 BILLION of our taxpaying dollars. Are you freakin’ KIDDING me with this? Outrageous, just outrageous.

Just in case you need a reminder, check out this hearing from 2004:

Click here to view the embedded video.

Good grief, this makes my blood boil.

Next up is the Federal Government’s continued attacks on South Carolina, this time about our new Immigration law set to go into force in January. (You may recall that the NLRB went after SC for Boeing opening up a manufacturing plant here rather than in a union state, despite Boeing having plants in other states with unions, and which cost zero union jobs.)

Yes, the DOJ, that bastion of fairness and justice – cough, choke, cough – is attacking the state’s immigration law, which is similar to Arizona’s. If someone commits a crime, and the police have reason to suspect they are illegal, they can ask for proof of citizenship. If the person is illegal, the police officers will call in the appropriate immigration personnel to handle the offender. Additionally, businesses have to ensure their employees are here legally. (I thought everyone had to do that ANYWAY. I have had to prove my citizenship numerous times for positions I have taken.) But this DOJ takes umbrage with all of that, so it has filed a lawsuit against SC, naming Governor Haley as the defendant.

Now, let’s be clear – in no other country can you expect to go on your merry way if you are discovered to be there illegally. If you think you can live and work easily in another country without a visa, passport, or green card, go check it out. I’ll wait. Oh, no, I won’t because your ass will either be in jail, or on a plane home. No other country, including the two with whom we share borders, will allow you to live and work inside their country ILLEGALLY. Their laws are strict, and THEY ENFORCE THEM, unlike the United States.

The Federal government claims that this is their bastion – that’s their beef. Our governor, a daughter of LEGAL immigrants herself, Nikki Haley, said the government is not doing its job, it is not protecting our borders, it is not keeping out illegal aliens, and they are taking our jobs. Considering SC has higher unemployment than the national average, that is no small thing.

Here is more about both the law, and the complaint against it:

[snip] he government wants a judge to stop enforcement of the legislation, which requires that officers call federal immigration officials if they suspect someone is in the country illegally following a stop for something else, U.S. Attorney Bill Nettles told The Associated Press.

“The Department of Justice has many important tasks,” Nettles said. “Two of those important tasks are the defense of the constitution and ensuring equality is afforded to all.”

The law says all law enforcement officers are required to call federal immigration officials if they suspect someone is in the country illegally. The question must follow an arrest or traffic stop for something else. The measure bars officers from holding someone solely on that suspicion. Opponents railed against the measure as encouraging racial profiling.

[...]

The law also makes it a felony for someone to make fake photo IDs for illegal residents and creates a new law enforcement unit within the Department of Public Safety to enforce state immigration laws. It also makes it a felony for illegal immigrants to allow themselves to be transported.

Nettles said the law is unconstitutional and violates people’s right to due process.

I’m sorry, but none of those things sound all that egregious to me. The state wants to ensure people are living and working in the state legally, and it wants to punish those who try and get around that by making fake IDs, which I would think is illegal anyway. And this violates” due process”??

You know, if the DOJ wasn’t already such a laughing stock for the crap it has been pulling with not going after actual offenders, like the New Black Panther Party, or lying its freaking ass off over “Fast and Furious,” I might give them a tad more leeway. But they don’t deserve it. Not by a long shot.

Oh, but wait, there’s more. This is from none other than Janet Napolitano:

In a news release, Department of Homeland Security Secretary Janet Napolitano said South Carolina’s law “diverts critical law enforcement resources from the most serious threats to public safety and undermines the vital trust between local jurisdictions and the communities they serve, while failing to address the underlying problem: the need for comprehensive immigration reform at the federal level.” (Click here to read the rest.)

Oh, freakin’ spare me already. DO YOUR JOBS!!! This is just another wordy excuse for not doing what the US Constitution declares is the role of the Federal Government – to protect the country and its citizens from “invasion.” Do your damn job, and stop attacking states when they have to resort to taking care of their own borders for lack of federal action.

And speaking of the DOJ and lying its ass off over programs like “Fast and Furious,” the DOJ dumped a TON of emails on Congress the night before another hearing on this program. Yep. They have had months to do this, but waited until the very last minute to release 650 pages. Why? Well, because there was a hearing scheduled for the next day, that’s why.

But get this – not only are there more Congresspeople demanding Holder step down, but the data dump revealed the following:

[snip] The new documents, according to Iowa Republican Sen. Chuck Grassley, “indicate that contrary to previous denials by the Justice Department, the criminal division has a great deal of culpability in sweeping the previous Wide Receiver strategy under the rug and then allowing the subsequent Operation Fast and Furious to continue without asking key questions.”

“Most importantly, officials raised very appropriate questions related to Operation Wide Receiver at the same time that many of these same officials were receiving briefings on Operation Fast and Furious,” Grassley said in a statement. “It begs the question why they didn’t ask the same important policy questions about an ongoing case being run out of the same field division.” [snip](Click here to read the rest.)

Have I mentioned how much I hate this Administration?

So, sorry if this makes your head explode, too. I just had to share. I am sure there are things going on in your neck of the woods or with this government that are getting on your last nerve, too. Feel free to share that with us, too. I need an aspirin…

Meanwhile, now that Libya has made it clear that they are in a Sharia frame of mind, concerns are escalating about how things are going to turn out in the Middle East. Add to that Afghanistan saying they will stand with Pakistan against the United States, if push comes to shove. Oh, yippee. More good news from the diplomatic efforts of this Administration. Ahem.

Back here in the good ol’ US of A, seems folks are not too optimistic about the outlook of the country. In fact, over two thirds of voters feel the nation is in decline. Wow. That is pretty significant. Americans have been an optimistic bunch generally. We have believed if we worked hard enough, we could achieve great things. Now, not so much. That is a sad state of affairs, indeed.

Okay. Just getting us started. What is on your minds?

Yes, Rep. Moran made this ludicrous charge in an interview with an Arab TV station (honestly, I am having a hard time writing this, I am just so incredulous that this is his delusional rationale for the Election results. WOW.). Here is what the Representative from Virginia said:

[snip] The Virginia Democrat told Alhurra that Republicans gained 63 seats in the House “for the same reason the Civil War happened in the United States.”

“The Civil War happened because the Southern states, particularly the slaveholding states, didn’t want to see a president who was opposed to slavery,” Moran said. “In this case a lot of people in this country, I believe, don’t want to be governed by an African American, particularly one who is inclusive, who is liberal, who wants to spend money on everyone and who wants to reach out to include everyone in our society.” [snip] (Click here to read the rest.)

Can you believe this shit? Bringing up the Civil War as a justification for this absurd, obscene, ridiculous charge? What the hell is wrong with Moran?

Let me help you understand what happened in 2010, Rep. Moran. The reason for the huge shift was your party shoving a massive, costly health care law, that none of you bozos bothered to read, down the throats of Americans after we screamed our heads off telling you in every way we could we DID NOT WANT IT. It is because Unemployment in this country is still EXCEEDINGLY high, currently being touted at 9.4%, but that does not include the underemployed. It is because foreclosures in this country are expected to hit a record high in 2011. It is because the debt you and your cronies are running up just this year is $1.5 TRILLION dollars, added to the over $14 trillion we are in debt, a debt that has escalated under your party’s, and Obama’s, “leadership.”

I could go on and on, but it is clear you aren’t listening to what the people have been saying. No matter how clearly we have been telling you. This isn’t about race, this is about one party dominating the political landscape and doing what they wanted to do, and not what they people who sent them to DC wanted them to do. Seriously, using a charge of racism in the face of the reality of what is going on in our country is delusional at best. Using a charge of racism, or Nazism, as your colleague, Rep. Cohen (D-TN), did recently, is offensive, gutless, and an attempt at silencing all opposition.

With all due respect (as much as I can muster for someone who uses such a ridiculous charge), you need to look in the mirror, look at your party, look at what you are doing to this country, rather than cast aspersions. The Democratic Party has no one to blame but itself for what happened in 2010, and it has zero to do with race.

And now to the sexism portion of the post. I received a lovely email from a faithful No Quarter reader, Candy*, who wrote about the way Google organizes responses to a search on Sarah Palin. She noted that the primary results are largely negative, with only a few favorable ones tossed in here or there. I have no doubt she is right. (Photo credit: October 22, 2010, Photo by Matt Stroshane/Getty Images North America)

For instance, if you did a search right this minute, one of the very top articles is one that made me throw up in my mouth a bit. Here is the headline: “Tracy Morgan: Palin Is ‘Good Masturbation Material,’” complete with video of Morgan saying this. TNT was quick to apologize for this remark on their show, “Inside The NBA,” after they started getting emails about it, that is. But hey, still, they did apologize. One of the hosts, Ernie Johnson, did try to change the topic quickly, and to cut Morgan off, but it was already out there. Wow.

Many of us remember all too well how Google operated during the 2008 campaign. Many people complained about the bias way it presented its search results. Apparently, with some justification, as this article in Politico would indicate, “Obama-Google Connection Scares Competitors.” Uh huh, I bet. Though I would not hold my breath for any official acknowledgment, as the article makes clear:

[snip] Google says that Schmidt was acting on his own, and his politics don’t reflect the company’s official stance.

“Eric’s endorsement of Sen. Obama was a personal matter, and as a company Google was neutral in the campaign,” said Adam Kovacevich, Google’s senior manager of global communications and public affairs. “We look forward to working with the new administration and congressional leaders on both sides of the aisle to keep the Internet open and to promote economic growth.”

Obama’s transition team declined comment. [snip] (Click here to read the rest.)

Show of hands – who believes the Google guy? Anyone? Anyone? Yeah, me neither. Especially since Obama’s own team declined comment. Many of us remember having to grab snapshots of images before they got scrubbed from Google (yes, they may have gone up initially, but often got taken down). And, many of us remember Google not allowing anti-Obama blogs during the 2008 campaign. I am going to guess there may be more of the same now, especially given the close relationship between Obama and Google’s owner, Eric Scmidt.

But hey, don’t take my word for it. How about a little exercise – do a search on Google for Sarah Palin, and see what comes up. See how far you have to go to find something positive on her that does not come from, say, Fox News or American Thinker. Better yet, try to find a site for photos of her that do NOT have sexually suggestive photo-shopped pictures. Then try another search engine and see what happens. I am curious to see what you all find. Please feel free to share.

Finally, here’s a challenge for the Democrats as they gear up (or continue) the campaign for Obama for 2012: Please refrain from calling those who do not support Obama racists, or Nazis, or any of the other smears you have used against us in the past. Our opposition has absolutely nothing to do with the color of Obama’s skin, but with his policies and actions (along with the actions of many others in the Democratic Party, like Nancy Pelosi, who helped to craft Obamacare). Instead of using such highly charged rhetoric, try listening for a change at why people in this country are unhappy. Try looking at what is really going on with the economy, with the deficit, with people’s very lives. You know, what you were sent to Washington to do. Just a thought.

*Candy, thank you so much for the email. I appreciate your taking the time to write me, and appreciate your kind words. Thank you!

Here is Stuart Varney explaining it all:

Yes, you heard that right – $160 MILLION dollars we have shelled out for these folks thus far. It is in their contract. Nice.

Fannie and Freddie are STILL dragging us down, be it through paying for these executives, or continuing to lost money on mortgages. To recap, in 2008, Fannie Mae lost $58.7 BILLION dollars, and Freddie Mac lost $50.1 BILLION dollars. And we are already in the red to the tune of $145 Billion now since 2008. One can only hope that the bleeding of money from these two institutions will be stanched, and SOON. Until then, though, it is the mother of bailouts since we owe 80% of the two now. You don’t even want to know what the anticipated amount is to fix them. If you can stomach it, click here.

But I am not holding my breath that Fannie and Freddie will get their comeuppance, which is long overdue. Considering Obama is expected to assert he wants to keep his spending ways when he gives the SOTU Tuesday night, I sure don’t see him taking on these two F’s.

Speaking of Obama, why is everyone acting like his actually getting a 50% approval in a few polls is the greatest thing since sliced bread? Is this an indication of our poor performance in mathematics that we see that as a GOOD thing? Many polls still have him below 50%, which is not exactly a glowing recommendation in my book (unless someone is a meteorologist, and then being right half of the time isn’t so bad. Ahem.).

I don’t get it. But that is the meme going into the SOTU – how Obama is doing SO well. Being crappy half the time (or more) at your job is NOT a good report, people, no matter how the pundits might want to spin it. I believe that would qualify as an “F” by most (all?) academic standards. Or at least it was back when I went to school (we didn’t get the “well, even though you failed at your homework, and failed your test, we are still going to pass you because we don’t want to hamper your self-esteem” pedagogy. We had to earn our grades, had to pass our tests, had to do WAY better than 50%, if we wanted to move on. Just sayin’.)

So, we continue to be bilked by Fannie and Freddie. They will continue to get our hard earned tax paying dollars to continue to operate in the red. Obama will continue his spending, deficit increasing ways, and ALL of this is passed on to us.

Gee – and he’s getting close to 50% approval? I guess some people don’t mind throwing their money away, especially to bail out a bunch of guys who lied, lied, and lied some more. But I do. How about you?

The Wall Street-Washington incest MUST end.

This coming Tuesday, America has a chance to ring that bell, expose that incest, cleanse the system, and deliver the message loud and clear. The peal of that bell must emanate from the 4th District in the state of Massachusetts.

You do not need to read Sense on Cents to appreciate that many politicians from both sides of the aisle have badly forsaken our nation’s future with misguided and ill-advised policies over the last few decades. Many of these politicians now look to save their skins– if not their souls– by professing a newly found religion with an anti-Wall Street mantel. America, and the residents of the 4th District in Massachusetts, should not be so easily hoodwinked. These politicians, especially Barney Frank, must be held accountable and sent home.

I implore the voters of the 4th District to think long and hard and appreciate that their longstanding elected representative Barney Frank embraced the people and the policies which continue to crush our nation. Which people? What policies? Those which were centered in America’s great financial sinkhole known as Fannie Mae then led by its former CEO Franklin Raines. During my own career on Wall Street, I witnessed Barney’s bear hug of Fannie and Franklin from up close. Do not forget Barney’s desire to ‘roll the dice’ with sub-prime mortgage financing.

Many media outlets will look the other way in holding Barney accountable; I have no interest in that.

In my strong opinion, Fannie Mae was nothing more than a Washington sponsored “Enron on steroids.” Who led the charge on Capitol Hill for the ‘private profit, social loss’ housing monster? Many Democrat and Republican politicos gladly stuck their hands in the Fannie Mae gift bag, but no politician more stridently promoted the programs of Fannie Mae than Barney Frank. Recalling Barney’s work on behalf of Fannie over the years, it was readily apparent to me that he had no understanding of the risks of mispricing capital. For those involved in the private sector and focused on properly pricing risk, the reality of a career politician not appreciating the proper price of capital is not difficult to understand. Regrettably, all of America now pays the price for Barney’s shortcoming and that of so many of his colleagues. While we pay that price, we do not need to and must not suffer from that shortcoming any longer.

I am not endorsing Sean Bielat simply because Barney ran interference for Fannie Mae and its failed socialized housing program for the last few decades. No, my interest in seeing the voters of the 4th District in Massachusetts “retire Barney” is also predicated on events of the last twelve months as well. How so? Where else did Barney fail us? Let’s continue to navigate.

Barney Frank is the chair of the House Financial Services Committee. In that role, he led the charge to supposedly re-regulate Wall Street via the Dodd-Frank Financial Regulatory Reform legislation. Say what you want about that legislation, but let me remind all of America that our pal Barney did not venture close to ‘ground zero’ during this process. Really? How so? As I wrote last March 22nd in my commentary, The BIG Hole in Financial Regulatory Reform:

Why am I so skeptical that Senator Chris Dodd’s proposed Financial Regulatory Reform (for overachievers in the audience, the link connects to the 89-page proposal) will truly change behaviors on Wall Street? For the very simple reason that I have seen no highlighting of the Financial Industry Regulatory Authority within the proposed Financial Regulatory Reform. Strike you as a little odd? It strikes me that the Wall Street lobby is hard at work keeping its self-regulator, that being FINRA, right where they want it.

The fact that FINRA is not singled out by name in Dodd’s report is a HUGE red flag. Over and above that, Dodd’s proposal is nothing more than a review of the SEC’s oversight of FINRA. Why only once every three years? A review of the reviewer? That’s accountability? That’s transparency? Not in my book. In my opinion, that’s both a joke and a confirmation that the Wall Street lobby was hard at work to keep the wolves at bay!!

While my commentary last March focused specifically on Chris Dodd, the simple fact is Barney Frank walked very much in lock step with Dodd on this reform. The ultimate 2000-plus page Dodd-Frank Financial Regulatory Reform legislation barely makes mention of the Financial Industry Regulatory Authority (FINRA). Strike you as a little odd? Yes, me too. Very odd!!

Regrettably, America has come to understand that most political and financial reform is ultimately that in name only.

Neither Dodd nor Frank can say that they were not FULLY apprised of ALL the issues within FINRA. I shared all of my concerns regarding FINRA with the Project on Government Oversight early this year. POGO itself was also looking hard at the structural and practical failings of FINRA. Regular readers of Sense on Cents are well aware of my calls for increased transparency for FINRA. Those calls were echoed by POGO but they fell upon deaf ears in Washington. I wrote in my March commentary:

Perhaps Senator Dodd and his colleagues may want to review the Project on Government Oversight’s thoughts on FINRA in which they call the very concept of self-regulation for Wall Street into question. POGO’s letter to four separate Congressional sub-committees can be found here.

Neither Dodd, Frank, nor anybody else on Capitol Hill ever addressed POGO’s letter and grave concerns. That fact should be the final nail in Barney Frank’s political coffin.

Chris Dodd’s political career is over.

I implore the citizens of the 4th District in Massachusetts to do our nation an enormous service and end Barney Frank’s political career this coming Tuesday.

Sense on Cents strongly endorses Sean Bielat!!

Larry Doyle

P.S. I typically shun from this type of commentary. That said,  given the historic nature of this election and this specific race, I believe it is my civic responsibility to share my feelings and a link to my March commentary. Comments, questions, and constructive criticisms are encouraged and appreciated.

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

1. Can we now declare the HAMP (Making Home Affordable) program to be totally futile? How is it that everybody on Wall Street and in Washington is now promoting that the economy will be harmed if we forestall the mortgage foreclosure process? What the hell have the wizards in Washington been doing via HAMP and through Freddie and Fannie for the last 18 months? The simple fact is our policy makers have done everything in their power to inhibit the markets from working. Now, all of a sudden, they become proponents of free market principles? Were we born yesterday? Not here at NoQuarter.

I have continually harangued our Washington politicos for not allowing the housing market to clear, and highlighted how forestalling that process would only prolong our economic pain. We’re feeling that pain now and will be for the foreseeable future.

2. Where are we going with this moratorium?

Do the banks, mortgage servicers, and originators run significant  litigation risks for improperly foreclosing on selected mortgages? Perhaps, BUT I personally believe the smokescreen created by this process is a precursor to having Uncle Sam impose mortgage principal forgiveness as the price for settling the potential legal fiasco of improper mortgage foreclosures. Am I being overly cynical, if not outright conspiratorial, in my line of reasoning? The fact is I believe the White House has always wanted to write down mortgage principal as the mechanism to support housing. Does crafting principal forgiveness as the ‘settlement’ for alleged improprieties by the aforementioned mortgage originators become a convenient way to subvert the courts on the issue of contract law? I am not an attorney, but my gut instincts tell me we are headed in this direction. Who gets hurt under this scenario? Mortgage investors who hold the mortgages which will have some form of principal forgiven. On that note, let’s navigate further.

3. The imposition of principal forgiveness may actually be less expensive for banks and servicers than addressing the real root problem behind many mortgages. What is that problem? The fact that a lot of mortgages in our nation today were fraudulently underwritten from point of origination and were then fraudulently conveyed via mortgage securitizations. A handful of investors (including some FHLBS and Freddie/Fannie) have pursued legal actions to have these frauds unearthed and adjudicated in their favor. How would that work? The banks and originators would have to purchase the fraudulently underwritten mortgages back at par. That cost would be enormous. Forgiving principal on an original fraud will not necessarily cure the problem, BUT it does become a means of buying time or ‘kicking the can down the road.’ That, my friends, is all we have been doing for the last few years anyway, so why stop now?

In less polite terms, Wall Street and Washington have been and continue to be hard at work to continue to disguise the massive Ponzi scheme that was our nation’s economy. The moratorium on foreclosures may seem like the principals are trying to be good citizens. I view it in a decidedly different light. The principals on Wall Street and their cronies in Washington are looking for a means to write off the stranglehold of massive mortgage debt that continues to cripple our economy. These developments are merely the next leg in the great financial experiment playing out on our national stage and economic landscape.

Navigate accordingly.

Larry Doyle

I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

UPDATE: Two of them, actually. Since I am in my hometown after having seen my orthopaedist, and have to get something from my mom’s house (now my brother’s house), I have this on the jobs front. This came in on Friday, to add to the high Unemployment filings for the last week of July. There was a decline of jobs by 131,000 to add to this already disappointing (to put it mildly) news. I don’t quite understand how this keeps Unemployment steady at 9.5% since the numbers keep hovering close to half a million, but that’s just me.

And then, there is this headline regarding Michelle’s European vacation: Spanish Police Close Public Beach For Michelle Obama’s (Almost $400,000) Spanish Holiday (sorry – couldn’t find the pound sign while my 6 yr old grandnephew is jumping around). Oh, this is some story, with LOTS of photos and details, except how many aides Michelle actually has. Why can no one get that number? There’s a ton of security with her, too, as you might imagine, which costs each and everyone of us our taxpaying dollars. Gee – and you wonder why Andrea Tantaros refers to her as a “modern day Marie Antoinette…”

Original of “Must Be Nice To Jet Around On Someone Else’s Dime”: That would be Michelle Obama, of course. She and her daughter, Sasha, are currently in Spain. With plenty of their closest friends, enough to fill 60+ rooms at a swanky resort on the Mediterranean Coast.

If only this was her first vacation of the summer, and we weren’t footing the damn airfare for Michelle, her daughter, staff, and security. But that is exactly what we are doing as Lynn Sweet of the Chicago Sun Times wrote in her recent article, “Michelle Obama Could Face ‘Appearance’ Issue Over Luxury Vacation.” Uh, yeah, you could say that:

First lady Michelle Obama may catch some flak for vacationing at an expensive luxury hotel on Spain’s Mediterranean coast. By the end of the summer, Mrs. Obama will have taken eight vacation trips — including her visit to Marbella, staying at the five-star Hotel Villa Padierna with daughter Sasha and some pals. {snip}

Mrs. Obama’s U.S. Air Force jet landed at Malaga on Wednesday; she skipped celebrating her husband’s 49th birthday with him. (Daughter Malia, 12, is at overnight camp.) Mrs. Obama pays for personal expenses — as do her friends who arrived on their own — but that only covers a small part of the expense. Taxpayers pick up the tab for staff and security at the exclusive hotel and most of the expenses for the plane.

First ladies often go on vacations, with and without the president. An issue for Mrs. Obama may be how many: New York in March; Chicago, over Memorial Day; Los Angeles in June; Camp David — sort of an extension of the White House — in July; Maine in July, to highlight Acadia National Park, and now Spain. Mrs. Obama is glamorizing Spain’s coastal resorts before her Aug. 14 first family weekend visit to Florida’s Gulf Coast, to encourage tourists scared away by the oil spill. Starting Aug. 19, the Obamas will spend 10 days in Martha’s Vineyard. Click here to read the rest.

Gee, you think she might take just a LITTLE flak for her vacations? Eight this summer (okay, seven if you want to take out Camp David, but still – it’s a vacation!)?

Meanwhile, Obama himself jaunted off to Chicago to celebrate his birthday with “friends.” Hmm, do you think they let Tony Rezko out to come wish his good buddy Barack a Happy 49th? Who knows, but at least Oprah and Gayle made it for dinner with The One. Isn’t that special? Uh huh. And by that, I mean, blech.

So, two of the Obamas are playing in Spain, the other daughter is at Camp, and Barack is hanging out in his old haunts.

Meanwhile, not that it seems to matter to these people, but new Unemployment Claims made a major jump at the end of July, a bit unexpectedly. Yep, they hit a 3 month high of 479,000. And that’s not the end of it as Hibah Yousuf reported for CNN Money, “Jobless Claims up 19,000 to 3-Month High“:

“The job market is pretty muted,” said Doug Roberts, chief investment strategist at Channel Capital Research. “It’s not getting much worse, but it’s not getting any better either.”

Roberts said the monthly employment report will provide a clearer picture of trends in the labor market, but it’s clear that a long road still lies ahead of a jobs recovery.

“The government has been driving the improvements we’ve seen in unemployment so far, so as soon as it stops spending, we’ll be back to where we were before,” Roberts said.

Well, that doesn’t sound promising, does it? Not to me, anyway. And not to those who are being impacted by this economy.

So, by all means, Obamas – keep playing and partying. I am sure all of the people who are losing their jobs and their homes, too, understand the need for 8 – EIGHT – summer vacations and hobnobbing with the rich and famous. And the people on the Gulf who have lost their livelihoods surely understand the need for a break. So have your fun now. Hopefully, you’ll only have a couple more years to play on our dime.

While Franklin Raines, Leland Brendsel, Daniel Mudd, and other Fannie and Freddie execs walked out the door with tens of millions of dollars, our nation is left with a financial sinkhole that will serve as a drag on our economy for years if not generations. How and why did this happen?

Shallow, weak, and financially illiterate legislators from both sides of the aisle were bought off by their crony counterparts at Fannie and Freddie. The costs of those ‘payoffs’ are currently unknown, but will be felt for a long time.

Bloomberg addresses the reality of what will likely be the escalating costs embedded in Fannie and Freddie by writing, Fannie-Freddie Fix at $160 Billion with $1 Trillion Worst Case:

The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.

“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.

While the losses at Fannie and Freddie continue to mount, do not forget that these losses are not reflected on Uncle Sam’s balance sheet (Fannie and Freddie are in receivership). The fact is Washington at large and the Obama administration specifically do not now have, nor have they ever had, the political will and courage to face the reality of the financial charades created within these organizations. What is the key to measuring the depth of theses sinkholes? Expected losses resulting from future delinquencies, defaults, and foreclosures on mortgages held by Fannie and Freddie. What are the prospects on this front?

The composition of the $5.5 trillion of loans guaranteed by Fannie and Freddie suggests that the surge in delinquencies may continue. About $1.98 trillion of the loans were made in states with the nation’s highest foreclosure rates — California, Florida, Nevada and Arizona — and $1.13 trillion were issued in 2006 and 2007, when real estate values peaked. Mortgages on which borrowers owe more than 90 percent of a property’s value total $402 billion.

Fannie and Freddie may suffer additional losses as a result of the Treasury’s effort to prevent foreclosures. Under the program, banks with mortgages owned or guaranteed by the companies must rewrite loan terms to make them easier for borrowers to pay.

How long might this entire mess take to unwind and what are the impacts on our nation’s housing market? The Obama administration’s programs  to modify mortgages are ultimately a stalling tactic to stem the foreclosure process. What does that mean for the future of our housing market? Let’s visit housing and mortgage expert Mark Hanson who recently wrote that at the current pace of foreclosures, it will take 101 months (that’s right, over 8 years!!) to clear the number of loans in the distressed pipeline.

Add it all up, and we are talking potentially a trillion dollar loss and almost a decade for our nation to reconcile the housing mess driven by Fannie and Freddie, facilitated by their Washington cronies.

Nice legacy.

LD

Oh, yeah – Freddie Mac is asking for TEN Billion Dollars. I reckon they just want to add it to their tab:

ABC News’ Matthew Jaffe reports:

Government-backed mortgage giant Freddie Mac today asked for $10.6 billion in additional federal aid after reporting a loss of $8 billion in the first three months of this year.

To date Freddie Mac has been provided with around $51 billion in government funds. The new aid would bring the total assistance to the lender to over $61 billion.

Late last year the Treasury Department essentially agreed to provide a blank check to Freddie Mac and fellow government-backed lender Fannie Mae when the agency controversially removed the cap on federal support for the lenders.

A “blank check”? That is what Geithner wants to give Freddie and Fannie? I reckon that’s what happens when you have someone in charge who can’t even fill out his own tax forms properly (or, as I like to say, a Tax cheat). Some folks aren’t happy about it, though:

Republicans have blasted the administration for that move, as well as for not putting forth a plan to overhaul the government-sponsored enterprises. Thus far the administration’s only action has been the April 14 release of a series of questions for public comment on what to do with the mortgage giants.

In addition, Treasury Secretary Tim Geithner has acknowledged that the government expects to suffer “very substantial losses” on its investments in the lenders, with recent estimates ranging around a minimum of $85 billion.

Well, that’s just jake – “a minimum of $85 billion.” That’s our money, folks.

And let’s not leave Fannie Mae out of this mix. Oh, no – now Fannie is asking for some more cash, too, a cool for $8.4 Billion more?:

Fannie Mae requested another $8.4 billion from the federal government on Monday, saying that it expects its deficits to continue due to trends in the housing and financial markets.

The government-controlled mortgage giant said it lost $13.1 billion applicable to common shareholders in the first quarter of 2010. In the year-earlier quarter, Fannie suffered a $23.2 billion loss, but an accounting change makes comparing the year-over-year losses difficult.

Fannie’s request for more federal funds comes just four days after Fannie’s twin Freddie Mac also asked for a handout – to the tune of $10.6 billion – after posting an $8 billion quarterly loss.

In using Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to prop up the mortgage market, the government in December lifted a $200 billion limit on their bailouts, essentially giving the twin housing lenders a blank check. Fannie Mae has already received $76.2 billion from the federal government and Freddie has gotten $50.7 billion.

“In the first quarter, we continued to serve as a leading source of liquidity to the mortgage market, and we made solid progress in our ongoing efforts to keep people in their homes,” Fannie Mae President and CEO Mike Williams, said in a press release.

Just to recap, Fannie Mae and Freddie Mac were largely responsible for bringing down the housing market (click HERE to read the rest of the article).

Yes, indeedy, so no doubt the new Finance Reform Bill begins with Fannie and Freddie, right? Oh, so wrong. Chris Dodd, who benefited mightily from Fannie Mae and Countrywide says, “Nooooooooo.” Dodd thinks it should wait:

Sen. Chris Dodd (D-Conn.) said Friday that legislation to address troubled mortgage lenders Fannie Mae and Freddie Mac will have to come after the current financial-reform effort.

Fannie and Freddie, which are known as “government-sponsored enterprises” (GSEs), have been a lightning rod for criticism of Democrats during the financial reform debate.

Dodd, who is chairman of the Banking Committee and has led the effort to craft a financial regulatory reform bill, said that there was not enough room in the legislation for rules covering Fannie and Freddie.

“Fannie and Freddie and the whole GSE system and it’s a great question and a legitimate one in desperate need of reform,” he said on CNBC. “But candidly there’s only so much I could only take on with this bill, and so that comes up. But not in this round. It’s in the next wave here we have to deal with GSEs.”

Well, sure, that makes sense, right? If you live in Upside-Down World, anyway (click HERE to read the rest). What a glaring, blatant, prop-up for those two entities that have done SO much to destroy the housing market. Unbelievable.

Frankly, I think this is a dereliction of duty on behalf of our Congress people. They refuse to hold accountable the very companies who wreaked havoc with our economy. They are in collusion with them. Even worse, they continue to throw money down the money hole.

I have used this video before, but it seems mighty timely given the requests of Fannie and Freddie (Onion video alert):

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

If only this were a joke…

The challenges on our economic landscape remain daunting. While employment and manufacturing may be stabilizing, the housing and mortgage markets remain mired with real issues.

The issues within housing and mortgages are at the base of our economic crisis encompassing both Wall Street and Washington. From structured transactions on Wall Street to financial regulatory reforms in Washington, the issues ultimately come back to housing and mortgages. I will discuss all these issues tonight from 8-9pm ET as No Quarter Radio’s Sense on Cents with Larry Doyle. Bill Berliner is uniquely qualified to address these topics. Bill has extensive experience within the financial industry and currently shares this experience from his firm, Berliner Consulting and Research, LLC:

Berliner Consulting & Research is devoted to providing information, data, and advice on mortgage lending and mortgage-backed securities acquisition and management. Formed in 2008 by William Berliner, the firm is dedicated to providing outstanding information, advice, and commentary to its clients.

The firm provides advice and analysis to clients on a wide variety of mortgage products and mortgage-backed securities. Located in Southern California, Berliner Consulting & Research provides assistance in developing loan origination, securities valuation, and risk-management systems. We also help lenders and investors deal with the increased reporting required for directors and regulators by providing expert writing and report-creation services.

In regard to Bill’s background:

A respected analyst and author with a wide variety of experience, Mr. Berliner began his career in the Government Operations department at Bear, Stearns & Company in 1985. He was promoted to the trading floor in 1986, and eventually ran the position tracking (“Pops”) desk for the MBS trading desk. He worked in CMO trading from 1988-1993, when he left to join Nikko Securities. After stints at Nikko, Prebon Yamane, and the New York State Banking Department, he joined Countrywide’s Capital Markets unit as a CMO trader in 1996. He moved to the Fixed Income Research Department in 1998, and eventually ran the firm’s highly-regarded Trade Strategies Group until September of 2008.

Please join me this evening for what will be an engaging and informative discussion. Listen LIVE at the BlogTalkRadio website. Dial in with questions at 347-677-0792 or join our always energized chat room. As a reminder, all NQR shows are taped, archived, and available as podcasts on iTunes.

LD

We are at a remarkable moment. We have an open, 2,000-mile border to our south, and the entity with the power to enforce the law and impose safety and order will not do it. Wall Street collapsed, taking Main Street’s money with it, and the government can’t really figure out what to do about it because the government itself was deeply implicated in the crash, and both political parties are full of people whose political careers have been made possible by Wall Street contributions. Meanwhile we pass huge laws, bills so comprehensive, omnibus and transformative that no one knows what’s in them and no one—literally, no one—knows how exactly they will be executed or interpreted. Citizens search for new laws online, pore over them at night, and come away knowing no more than they did before they typed “dot-gov.”

It is not that no one’s in control. Washington is full of people who insist they’re in control and who go to great lengths to display their power. It’s that no one takes responsibility and authority. Washington daily delivers to the people two stark and utterly conflicting messages: “We control everything” and “You’re on your own.”

All this contributes to a deep and growing alienation between the people of America and the government of America in Washington.

None of this happened overnight. It is, most recently, the result of two wars that were supposed to be cakewalks, Katrina, the crash, and the phenomenon of a federal government that seemed less and less competent attempting to do more and more by passing bigger and bigger laws.

Add to this states on the verge of bankruptcy, the looming debt crisis of the federal government, and the likelihood of ever-rising taxes. Shake it all together, and you have the makings of the big alienation. Alienation is often followed by full-blown antagonism, and antagonism by breakage.

Ms. Noonan also states:

The right never trusted the government, but now the middle doesn’t.

If Jane Hamsher is to be believed, many on the left aren’t thrilled either.

Of course, the White House is going to go after Social Security again. It’s the pot of gold at the end of Wall Street’s rainbow, and they desperately want that injection of cash which could keep their giant ponzi scheme from exploding. . . for a little while.

Lucky for them, Obama has successfully dismantled the opposition that kept George Bush from privatizing Social Security at Wall Street’s behest only a few years ago. Did anybody fail to get that message when majority whip Dick Durbin yesterday told “bleeding heart liberals” that they need to be willing to accept cuts to Social Security and Medicare benefits for the economic well-being of the nation?

…Just as the choice groups sat on their hands for the Nelson amendment in the health care bill, just like the Sierra Club remains mute in the wake of an oil spill the size of Delaware, there will be nothing more than progressive window-dressing in opposition to cutting Social Security benefits this time around. Any of these groups utter so much as a whimper in response to Durbin’s very alarming statement yesterday? Nada. Zip. Zero.

The idea that the right is more “authoritarian” and top-down than the left is absurd.

Good point, Ms. Hamsher – I don’t much trust what’s coming out of either side.

Ms. Noonan then discusses the much criticized law that Arizona’s passed out of frustration to control its borders:

It is doing this because the federal government won’t, and because Arizonans have a crisis on their hands, areas on the border where criminal behavior flourishes, where there have been kidnappings, murders and gang violence. If the law is abusive, it will be determined quickly enough, in the courts…

But the larger point is that Arizona is moving forward because the government in Washington has completely abdicated its responsibility. For 10 years—at least—through two administrations, Washington deliberately did nothing to ease the crisis on the borders because politicians calculated that an air of mounting crisis would spur mounting support for what Washington thought was appropriate reform—i.e., reform that would help the Democratic and Republican parties.

[snip]

The American president has the power to control America’s borders if he wants to, but George W. Bush and Barack Obama did not and do not want to, and for the same reason, and we all know what it is. The fastest-growing demographic in America is the Hispanic vote, and if either party cracks down on illegal immigration, it risks losing that vote for generations.

But while the Democrats worry about the prospects of the Democrats and the Republicans about the well-being of the Republicans, who worries about America?

No one. Which the American people have noticed, and which adds to the dangerous alienation—actually it’s at the heart of the alienation—of the age.

Both Hamsher and Noonan make clear that we don’t have much by way of allies in the persons of our government officials. It is apparent to anyone half awake that Democrats and Republicans, for the most part, capture an issue in furtherance of their careers and little else. There is a line in the movie “Syriana” –

“We want to give the appearance of doing our due diligence. But we don’t want to do our due diligence.”

Noonan uses the issue of government’s failure to secure the border to the same effect in her piece as Hamsher uses “the giant flaming ball of oil being pushed straight for the coasts of Alabama and Mississippi” that “[m]ight be the worst environmental event in decades” in hers – as examples of government ineffectiveness due as the result of succumbing to interest groups rather than doing what is best for the American people.

For those of us at NoQuarter long shouting in frustration for better leadership than what was being foisted upon us all, it is ironic that Noonan may be the first major pundit to make the following observation:

I asked a campaigner for Hillary Clinton recently where her sturdy, pantsuited supporters had gone. They didn’t seem part of the Obama brigades. “Some of them are at the tea party,” she said.

Though I don’t care for her “sturdy, pantsuit” snark –she notes correctly that we feel we have no place in this new world order of the Democratic party. Perrylogan, one of the commenters to Hamsher’s piece, makes clear why:

The progressive movement died during the primaries, when Obama’s supporters started calling their fellow Democrats racists.

Amen.

In the universe of President Obama, the second “Great Uniter” in a row (George Bush II being the first), we are now more divided against ourselves than ever. It also looks as though many are feeling divided from the very people we have elected to protect our best interests.

Much of this is the result of the politics of demagoguery – served up to control the populace rather than to assist it, to divide us from each other, so we never take the time to notice we have far more in common than we realize.

All this jumble is to say that when two ladies from opposite sides of the aisle express this much anger and frustration, it is time for our politicians to wake up – lest we do figure out how to unite peacefully. Then those elitists Jane, Peggy and we all rage against might be ridden out of town on a rail.

The DOW continues to be on the rise, which is certainly some good news, particularly for investors. Unfortunately, that is not translating into new jobs. Quite the opposite, in fact. For the second week in a row, first time unemployment benefits have risen, this week close to half a million (484,000), a rise of 24,000.

But there is another new high, and this one is troubling indeed. Home foreclosures have had their biggest increase in five years:

A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

Holy smokes. Now is the time when Democrats will blame Bush and the Republicans, as if they have not been in power for over three years. Even more than that, though, is how Fannie Mae and Freddie Mac were run by Democrats. THAT is one of the single biggest issues that led to our current economic crisis, as I have noted before. Now there is this editorial weighing in on this, too, particularly in light of oversight: How Fannie and Freddie Foiled Regulators.

The headline sets the stage for how that was able to happen:

Mismanagement of Fannie Mae and Freddie Mac and obstruction of their regulators by Congress and successive presidential administrations played a pivotal role in creating and then bursting the housing bubble at the heart of the economic meltdown of 2008, according to testimony of officials before the congressionally chartered Financial Crisis Inquiry Commission. Rather than offer a serious discussion of how to reform the two government-sanctioned enterprises (GSEs), however, President Obama and the Democratic leadership in Congress are only offering legislation to punish bank CEOs and stiffen regulations for private sector banks.

In 2006, Dan Mudd, then Fannie Mae’s chief operating officer, wrote in an e-mail to Chief Executive Officer Franklin Raines that the GSE desperately needed reform because “the old political reality was that we always won, we took no prisoners … we used to… be able to write, or have written, rules that worked for us.” Mudd’s e-mail was cited in testimony last week before the FCIC by James B. Lockhart, who in 2006 was acting director of the Office of Federal Housing Enterprise Oversight (OFHEO), the GSE watchdog. Lockhart said OFHEO’s regulatory authority was inadequate because “[Fannie and Freddie] could borrow so cheaply and at unlimited amounts to fund their portfolios because their lenders and rating agencies applied no market discipline.”

Remember Franklin Raines? His name may be familiar to you not for his involvement with housing, but it sure should from his involvement with Barack Obama. Yep, Obama sought advice from Raines on housing while running his campaign. They are buddies.

Back to the editorial:

Lockhart told the FCIC that before the housing bubble burst, he recognized that the GSEs faced serious credit risks and recommended freezing Freddie’s portfolio. That recommendation ran into “quite intense” pushback, according to Lockhart. The neutered watchdog could barely enact any reform at all, he said: “OFHEO was regulating two of the largest and most systematically important U.S. financial institutions and yet its powers were much weaker than bank or even state insurance regulators … OFHEO did not have all the necessary powers to deal with these giant housing enterprises.”

Armando Falcon, Lockhart’s predecessor at OFHEO, told the FCIC that when the understaffed regulator needed additional resources to conduct a special examination of Fannie Mae’s accounting practices, “we encountered more difficulty and delay. Fannie’s lobbyists were on the Hill spreading misinformation about my motives and asserting that the special exam was unnecessary.” Whenever faced with a report with negative connotations about the companies, Fannie’s supporters would launch an assault on OFHEO — from a full investigation of the group to demanding Falcon’s resignation.

So now the question is whether the FCIC will name names in its forthcoming report of those in Congress and the executive branch who protected and advanced Fannie and Freddie, at grievous expense to American taxpayers.

No wonder our housing market is in such dire straits. No wonder our economy is in such dire straits. That companies of this magnitude can be SO mishandled, and receive so little oversight, is mind boggling. And now Obama is going to have the government, the same one that oversaw Fannie and Freddie, oversee our HEALTH CARE?

So, let’s recap: DOW up, yay! Unemployment up, BOO! Home Foreclosures up, BAD! And Debt spiraling out of control with Obama & Co. wanting to spend more and more and more, VERY BAD!!!!

I didn’t use to buy the whole “Tax and Spend Democrats” meme, but there is nothing like cold, hard reality to change a saying to a truism. Yep, we’re in for a world of hurt, alright, and the current Administration seems completely tone deaf to the grave issues facing our nation. Obama will continue hosting summits like this nuclear one that end up accomplishing essentially nothing, talking a lot, but saying nothing, and ignoring the glaring warning signs.

Hold onto your wallets, folks, it’s gonna be a bumpy ride…

UPDATE: Kenoshamarge provided the following video which clearly highlights the problems going on with Fannie and Freddie SIX YEARS ago. The Democrats stonewalled the regulators at every turn:

2004 – Dems Refuse to Reform Freddie & Fannie
Uploaded by Ibn-Khaldun.

Wow – and did you catch Maxine Waters defending “Frank” Raines? And how about Barney Frank denying there is anything wrong? Holy cow. This pretty much says it all. Fannie Mae didn’t follow the rules then, and we are paying for it now…

U.S. Rep. Barney Frank (D-MA)

Banks are increasingly healthy, right? Our nation’s accounting rules promote real transparency and integrity in our financial reporting, right? Housing is bottoming, right? No, no, and no!

Why so pessimistic, you may ask? I am not pessimistic at all. I am merely searching for the truth in the midst of the smoke and mirrors on Wall Street and in Washington.

Thank you to our friends at 12th Street Capital for sharing a recently released letter from Congressman Barney Frank imploring the four largest banks involved in mortgage originations to write off second liens they are holding on their books at inflated values.

Why does Congressman Frank believe these loans need to be written off? The liens must be largely written off so that Washington can then compel banks to engage in writing down principal on first liens in an attempt to keep people in their homes. Keeping people and families in homes is certainly a worthy cause, but the process is fraught with all kinds of violations of moral hazards and assorted unintended consequences. When you hear that your neighbor receives a principal reduction, how long will it take you to go to your bank and demand the same?

Let’s review Frank’s brief, two-page letter (click on image below to access pdf document). Focus on Frank’s comment that the second liens have no real value but accounting rules allow the banks to carry them at artificially high values. Can you say, “cooking the books”?

What are the projected losses in these second liens? Well, how much of this paper is outstanding? The Wall Street Journal provides a bar graph in an article, Home-Savings Moves Afoot:

So, with $1 trillion in outstanding second liens on the books, the question begs as to how much of this indebtedness is current, how much is delinquent, and how much is truly worthless but not yet acknowledged. In discussions with those in the industry, suffice it to say, the most optimistic assessment is that the industry has at least a few hundred billion in losses yet to be acknowledged.

The larger banks addressed by Congressman Frank are the largest holders of these second liens. These banks do have earnings power given the free flow of liquidity provided by the Fed and accompanying capital markets activities. That is not the case with smaller institutions. How many of those institutions are already dead, but not yet buried?

Wonder why banks are reluctant to provide credit? They need to increase capital knowing these second liens are truly an ongoing sinkhole.

LD

America doesn’t need legislators who operate by looking in the rear view mirror. With the sole exception of Frank’s remark in support of auditing the Fed, he offers platitudes that can only be compared to a social misfit. In fact, as I watched this clip, I constantly envisioned Barney collecting tickets and serving soda at a local theatre . . . said with all due respect to ticket takers and soda jerks.

For Barney Frank to effectively absolve himself of the massive and corrupt bankrupting of Freddie Mac and Fannie Mae is a sin. For America not to hold him accountable is a greater sin.

This clip runs 18 minutes. WARNING: Barf bags highly recommended!

LD