Lally's Alley: ANOTHER RELEVANT QUOTE

Tuesday, September 16, 2008

ANOTHER RELEVANT QUOTE

"So the Republicans have decided to run against themselves. The bums have tiptoed out the back door and circled around to the front and started yelling, "Throw the bums out!" —Garrison Keillor

13 comments:

Harryn Studios said...: oh yeah - now jerk-off john is saying - 'don't forget, the democrats have had control of congress for two years now and haven't done anything to avert this financial crisis' - then going on to say the problems have to do with legistlation dating back to the 30's ...
but he knows how to solve this with sound fiscal management ...
if that's the case it's irresponsible of him as a senator not to have done something already - is this the kind of president we can look forward to ...
i want to know why all the candidates haven't spoken louder throughout their campaigning about the present wall street fiasco - are they too far inside to not have noticed - and if so, is anyone out there qualified ...; September 16, 2008 at 5:34:00 PM EDT
JIm said...: The core of the crisis is overleveraged real estate. The Congress, primarily Democrats, led by Chris Dodd and Barney Frank have fought against the deleveraging that the Bush administration has been urging for at least six years. Fannie Mae and Freddie Mac, even though a semi govt, enterprize fielded a huge lobbing effort that primarily, but not exclusively, supported Democrats. The name, Jamie Gorelich, should be familiar of Clinton administration and 9/11 commission member, fame. At least one of Obama's top campaign managers is also from Fannie Me, Freddie Mac culture. Unfortunately Pres. Bush could not get enough congressional support to clean up the huge leverage and eventually cut the implied govt. guarnatee.

Golden Oldie - “Fannie Mae Enron?” from the Wall Street Journal, October 2004

In the cookie-jar ploy, Fannie set aside an artificially large cash reserve. And — presto — in any quarter its managers could reach into that jar to compensate for poor results or add to it to dampen good ones. This ploy, according to Ofheo, gave Fannie “inordinate flexibility” in reporting the amount of income or expenses over reporting periods.

This flexibility also gave Fannie the ability to manipulate earnings to hit — within pennies — target numbers for executive bonuses. Ofheo details an example from 1998, the year the Russian financial crisis sent interest rates tumbling. Lower rates caused a lot of mortgage holders to prepay their existing home mortgages. And Fannie was suddenly facing an estimated expense of $400 million.

Well, in its wisdom, Fannie decided to recognize only $200 million, deferring the other half. That allowed Fannie’s executives — whose bonus plan is linked to earnings-per-share — to meet the target for maximum bonus payouts. The target EPS for maximum payout was $3.23 and Fannie reported exactly . . . $3.2309. This bull’s-eye was worth $1.932 million to then-CEO James Johnson, $1.19 million to then-CEO-designate Franklin Raines, and $779,625 to then-Vice Chairman Jamie Gorelick.; September 17, 2008 at 10:43:00 AM EDT
Lally said...: Nice try but no cigar Jim. Hmmmm, who was in charge of every aspect of the federal government in 2004 when that Wall Street Journal article you quote was written, and in fact had the power in all three ranches to do almost anything it wanted to? Oh yeah, the Republican Party! You rightwing apologists can certainly contort logic to blame out of power Democrats for the crimes of your leaders but it doesn't fly here, so try it elsewhere. (PS the republicans still have enough votes in the Senate to block any legislation the Democrats come up with unless there are some Republicans who are willing to put what's best for the country before what's best for the party, unlike McCain and Palin are able to do no matter how many times they shout the opposite and all their followers yell ditto.; September 17, 2008 at 10:51:00 AM EDT
JIm said...: Mike, You might want to check your facts.

September 11, 2003
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
By STEPHEN LABATON
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.

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

Link for full story http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print; September 17, 2008 at 1:04:00 PM EDT
Lally said...: hello? If that's the facts they prove my point. As usual, Junior's administration talks about reform or protecting the enivronment or being compassionate conservatives or never getting into nation building or being humble in foreign policy etc. etc. etc. and then, despite the fact they controlled every branch of government, didn't do any of that but did the opposite. In 2003, Junior was getting his way with everything (including the invasion of Iraq etc.) so how come he couldn't reform and regulate not just Freddie and Fannie, but the mortgage and banking and etc. financial institutions. Uh is it a coincidence that his brother Jeb and cousin George Walker worked for Lehman brothers? I have friends in that industry (and yours) who have been telling me for years that Merril Lynch and Lehman Brothers are the most dishonest among the financial institutions, and that's saying a lot. They warned me about them several years ago. The deregulation of these entities has led to another financial calamity that leaves the fat cats fatter (any of those salaries at the top levels cut? Uh no) or at least still fat and the rest of us once again footing the bill.; September 17, 2008 at 3:46:00 PM EDT
JIm said...: I don't know how a presidentilal attempt to deleverage Fannie Mae and Freddie Mac, that was opposed by congress and most vociferously by Barney Frank and Chris Dodd, proves your point. If you think the Democrats wore the white hats in this endeavor, you probably think they were courageous when Bush attempted to fix the other smoldering crisis we have; social security and medicare. A proposal to privatize (like 401ks) a portion for younger workers was treated with ridicule.

As for fat cats. They are pretty skinny these days.; September 17, 2008 at 4:27:00 PM EDT
Unknown said...: Oh yeah, 401K's are a good example, are you kidding??? Now I know people who wish they had taken cash instead of the 401K because of the current nightmare, so yeah, let's do that with the others and we'll all be better off. Keep dreaming!; September 17, 2008 at 8:28:00 PM EDT
JIm said...: Caitlin,
401ks can hold money market, cds, govt securities and or stocks. Personal responsibility is not necessarily a bad thing; September 18, 2008 at 9:52:00 AM EDT
Harryn Studios said...: i guess i'm still looking at all this and wondering what's the solution - no matter how many shovels of blame there are, we're all going to pay ...

follow the money - who benefits from this in the end ...

this two-party system is starting to look obsolete and irreconcilable with its' litigation of rights and wrongs that obscure issues and solutions to the problems at hand ...

entropy, narcissism, greed, apathy, fear, stupidity, irresponsibility, dishonesty are a few diagnostics that come to mind ...

we should be debating treatment for a full-blown disease and preventing exposure to its' cause ...

either way - we're paying ...; September 18, 2008 at 10:11:00 AM EDT
Lally said...: So when are you Republicans going to take "personal responsibility" for the mess you've made of the last eight years, or the CEOs of all these failed corporations and financial institutions going to take "personal responsibility" for the messes they've made, etc. etc. Oh no, that's right, all us tax payers are now going to "take personal responsibility" for AIG, the largest insurance company in the world, by paying for its bailing out while those who caused the crisis go without taking any "personal responsibility." Ad nauseum.; September 18, 2008 at 10:18:00 AM EDT
JIm said...: I assume by your logic, that Barney Frank and Chris Dodd who led the charge against deleveraging reform of the GSEs and were the beneficiaries of massive campaign contributions, along with Barak Obama, are absolutely blameless. Your imagionary world sounds like a wonderful place.; September 18, 2008 at 10:32:00 AM EDT
Lally said...: We've been living in your imaginary world for eight years now. I'll take mine anyday.; September 18, 2008 at 11:29:00 AM EDT
Harryn Studios said...: ok - so hypothetically, if we line up all the bad guys and bad decisions under the 'r' or 'd' columns and find that over the past eight years there's a longer list in the 'r' column - maybe jim would concede and say "ok, well [reaganesque] - you won that one sparky - but what about ..."
and this game of charades goes on and on - but this ain't no game - people are suffering and still getting trickled on ...; September 18, 2008 at 12:32:00 PM EDT