Tag Archives: Dodd-Frank

Thanks for the Too Big to Fail Memories – Sandy Weill

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After raking off three quarters of a billion dollars, Sandy Weill now says it may be time to separate commercial banking from investment banking.

On Wednesday Weill said, “What we should probably do is go and split up investment banking from banking,” He continued, “Have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail.” “There is such a feeling among people, among regulators, among the political system all over the world, against the banking system, and I don’t think that’s going to change so soon.”

This is the same Sandy Weill, who was the one time CEO of Travelers Insurance, one of the world’s largest insurance companies. He cooked up a scheme in 1998 to merge his company with Salmon Smith Barney, one of the largest investment banks and John Reed’s Citicorp, one of the world’s largest commercial banks. The result was a super-bank called Citigroup. In 1998 Federal Reserve Chairman Alan Greenspan, President Bill Clinton and Treasury Secretary Robert Rubin approved the merger, even though it violated prohibitions enacted in the Glass-Steagall act of 1933.

In 1999, under the leadership of the Clinton administration, and with the encouragement of then Treasury Secretary Robert Rubin, the repeal of key provisions in the Glass-Steagall act by the Gramm-Leach-Bilely Act of 1999 gave legitimacy to the Citigroup merger.

The Glass-Steagall Act of 1933, also known as the Banking Act of 1933 (48 Stat. 162) was passed in response to the stock market crash of 1929 and the subsequent failures within the banking system. Essentially the Act’s purpose was to prohibit commercial banks from engaging in the investment business. The Gramm-Leach-Bilely Act of 1999 removed many of the barriers that Glass-Steagall had erected. Finally Gramm-Leach-Bilely set up the ability for banks, investment houses and insurance companies to become hopelessly intertwined and to grow so large as to become “too big to fail.” It was signed into law by President Clinton.

Gramm-Leach-Bilely blurred the line between investment, insurance and lending, and weakened the enforcement provisions against sub-prime and predatory loans. After the law’s passage, sub-prime lending skyrocketed. In a paper for the St. Louis Federal Reserve System, Souphala Chomsisengphet and Anthony Pennington-Cross point out: “the market share of the top 25 firms making sub-prime loans grew from 39.3 percent in 1995 to over 90 percent in 2003. Many firms that started the sub-prime industry either have failed or were purchased by larger institutions.” Such purchases which would have been prohibited before the Gramm-Leach-Bilely Act.

When asked if he would re-instate Glass-Steagall in 2007, Barrack Obama said, “Well, no. The argument is not to go back to the regulatory framework of the 1930′s because, as I said, the financial markets have changed substantially.”

Today former senator Chris Dodd, co-sponsor of the Dodd-Frank Act which is an attempt at renewed banking regulation, and though intended to reduce the chance of another banking crisis, actually exacerbates the problem by piling so many onerous regulations on small community banks that they are giving up and merging with large commercial banks, told CNBC’s “Squawk Box” “When I first heard about it (Sandy Weill’s comments) it sort of reminded me of Paul Bunyan becoming an ecologist.” He went on to say that forcing all large banks to downsize was “too simplistic,” saying that Citi’s former chief was wrong to call for an end to financial supermarkets. “Just breaking up the banks is not the solution,” Dodd said. He insisted the tools of Dodd-Frank could, in extreme circumstances, be used to break up a systemically risky institution.

“The legislation allows for that Draconian step to be taken if necessary, not just with banks but with institutions that pose substantial risk to the country. They have the power and authority under this legislation to actually do that.”

So while Sandy Weill is calling for a return to the type of regulation and banking system he himself destroyed, we will once again have to live with the unintended consequences of laws passed by those who know little about the subject of those laws.

Over-Regulation Nation

Liberals love to cite how tax rates are at their lowest in recent memory, ballooning corporate profits, and how Bush era policies caused the financial meltdown.  They seem to think these are ample reasons to argue why we shouldn’t deregulate our over-regulated economy.  However, it is becoming harder for the political left to argue this point  since we are witnessing the worst recovery in American history.

The depth of the 2008 meltdown was shocking, but to lust to curb “reckless” capitalism from the political left was not only irresponsible, but also detrimental to America’s long-term economic health.  We are an over-regulated nation.  Florida requires its residents to file reports if a vending machine label is missing.  The Federal Railroad Administration mandates that a letter “F” be painted on the front of a locomotive to indicate which end of the train you are on. Bethesda officials closed a lemonade stand run by children because they lacked a trading license.

If markets are over-regulated, capitalism cannot flourish, entrepreneurship stalls, and the innovative cream that is inherent in the fabric of this nation cannot rise.  Free market enterprise is the only system that has achieved remarkable benchmarks in society.  Take China for example.  When Deng Xiaoping took over following Mao’s death, he gravitated more market-oriented reforms, especially in the rural parts of the country to help farmers.  The loosening of regulations on private business allowed them to flourished and outpace state-run enterprises.  He instituted Special Economic Zones, which allowed capitalism to flourish and attract foreign direct investment.  In short, China is an economic tiger  today because of Mr. Xiaoping.  I remember my East Asia Studies Professor, David Strand, stating in lecture that in this period the middle class of china grew from 5-15 million to nearly 300 million during this economic restructuring.

By loosening regulation, China was allowed to grow.  America’s political left should consider this.  Instead, we roll out disastrous financial regulations, like Dodd-Frank, which is a monstrous 848 pages long!  It contains 400 new mandates, of which only 93 are law and intelligible enough to follow.   The new law is a mess, whose difficulty has been cited by firms. The regulatory leviathan is worse when you look at health care.

On average, one hour spent on a patient is equivalent to thirty minutes of paperwork.  The number of federally mandated reimbursements for hospitals for various ailments will increase from 18,000 to 140,000 that range from parrots, burns, and flaming water skis.  In the Obama’s administrations huge power grab with Obamacare, it only adds more red tape, paperwork, and headaches.  It is the wonder of socialized medicine. In all, the cost of these regulations is staggering.  A study from the Small Businesses Administration found that our over-regulated economy costs an employer $10,585 dollars.

America’s overregulation derives from big government.  President Obama’s desire to increase the welfare state has proven to be expensive and killing America’s potential to have robust economic growth.  His reforms and new mandates costs employers capital that could be used for investment to grow their businesses.  These aren’t fat cat bankers.  Small businesses employ the most workers in America and make less than $250,000 a year, but suffer at the behest of President Obama’s intransigent liberalism.   Government involvement, and the resulting ineptitude that is killing America’s middle class, can best be summarized in the words of Milton Friedman, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”

The Danger of the Cordray Recess Appointment

Back on Dec 6th and 7th of this year a two-part article appeared on CDN that described the method the Obama administration was using to take over U.S. Banks by copying exactly how Venezuelan President Hugo Chavez was taking over every part of private industry in creating his Communist Collective down in South America. Please read, U.S. Banks Being Taken Over Using Chavez-Style Manipulation Part 1 to understand the eery similarities between Chavez and Obama’s methods of operation today. Then, in Part 2 of that same article, it is exposed exactly how Indy Mac bank of California became One West bank, as the FDIC, Obama and Bernanke-Approved Bank Fraud lined the pockets of Dell, Paulson and Billionaire Leftist money-manipulator, George Soros, while also depleting FDIC funding, thus leaving U.S taxpayers to foot the bill.

The Indy-Mac fraud was in fact a test-run and model to use for the takeover of U.S. Banks and effect a major shift of financial power to assorted leftists like George Soros and crony-capitalists like Dell and Paulson. And they use the Dodd-Frank supposed financial reform bill, in conjunction with a politically injected CFPB ( Consumer Financial Protection Bureau) appointed “Czar” to complete the tri-fecta of taking over banks, turning them over to the likes of George Soros and assorted crony-capitalists, and then sticking the taxpayers with the losses from these same banks through depleting the FDIC fund, which is now about bankrupt.

Enter the latest unconstitutional recess appointment and “Money Czar” Richard Cordray. While President Obama was campaigning on the taxpayer’s dime once again in Ohio, he announced this latest violation of the U.S. Constitution with a load of misinformation, the likes of which Mr. Josef Goebbels would surely be proud of: “Today, I’m appointing Richard as America’s consumer watchdog,” Obama told the crowd. “That means he’ll be in charge of one thing: looking out for the best interest of American consumers. His job will be to protect families like yours from the abuses of the financial industry. His job will be to make sure you’ve got all the information you need to make important financial decisions.”

“Looking out for the best interest” of whom Mr. President? George Soros? Michael Dell? Is that what we are supposed to believe is the “Middle Class” you are “protecting” with this sham? How about when it was recently announced that the bank of America was going to charge debit card fees and the so-called financial reform bill permitted it? Sure they stopped it simply because customers started leaving the bank in droves over it, but it was legal under your new law. What Obama does not want the citizenry to understand is the fact that Richard Cordray will now have unfettered access to the taxpayer’s bank account without any input from Congress. Zero. Nada.

In the article Cordray Can Wait from Investors.com, accessed Jan. 05, 2012, we see the following: (emphasis added)

As Ohio’s attorney general, Cordray’s main focus was making Wall Street pay for the financial crisis. He sued BofA, AIG, Standard & Poor’s, Moody’s and other Wall Street firms on behalf of public-employee pensions. His shakedown netted trial lawyers and the unions they represent for more than $1 billion in settlements and fees.

Most concerning, this wannabe federal bank sheriff is in the back pocket of trial lawyers. The law firm that represented Ohio in the AIG case pumped $125,000 into Cordray’s campaigns. Other firms donated $200,000 to Cordray, who plans to run for Ohio governor one day. The new bureau will spawn more work for trial lawyers as it investigates banks for loosely defined “abusive” practices, including loan price “discrimination.”.

This recess appointment will fund the DNC through crony-trial lawyers for decades to come as was also documented here. Last but not least, from Investors.com we see this tidbit: (emphasis added)

As Democrats set up the CFPB, the director enjoys unprecedented power, reporting only to the president. The agency is housed in the Federal Reserve and funded outside the annual appropriations process (with a startup budget of half a billion dollars). In effect, it’s not accountable to Congress or the American public.
The Senate GOP threatens to filibuster Cordray’s final confirmation vote unless the agency adds a bipartisan panel to check its director. They don’t want to give another activist appointee blank-check authority to go after banks and provide even more grist for class-action lawyers. Someone’s got to stop the shakedown.

More race-based grift for class-action, DNC-donor trial lawyers? Do you mean like this example here: In that info-byte we see that bank of America will dole out $335 million dollars to “Black and Hispanic” borrowers because they were supposedly charged more for home loans. Apparently it doesn’t matter if these “victims” of unfair lending practices were very high-risk borrowers with no proven ability to pay when Democrats and Progressives forced banks to make sure “everyone gets a home regardless of ability to pay” mandates that caused the housing crisis in the first place. NOTE: With Blacks and Hispanics making up a small portion of the U.S. Population, isn’t it strange that white people are not included in these reparations, I mean settlement? How about Asians? Back to Investors.com for some more truth about Cordray being illegally injected into our government and his agenda:(emphasis added)

The new bureau will spawn more work for trial lawyers as it investigates banks for loosely defined “abusive” practices, including loan price “discrimination. Heading its Office of Fair Lending is Patrice Ficklin, a a black civil-rights lawyers who headed Fannie Mae’s racial grievance unit. She leads a team using new race-based lending data to crack down on banks that apply prudent lending standards equally to minorities.

Richard Cordray and Patrice Ficklin will now be able to dip into the wallets of the American taxpayers, pay trial lawyers that donate to the DNC millions of taxpayer dollars, and further redistribute those stolen tax dollars to DNC voters of their choice without any oversight from Congress. Nothing to see here folks, just move along.

U.S. Banks Being Taken Over Using Chavez-Style Manipulation

These bankers should be shown for what they really are to the public: vulgar robbers, thieves in ties, pickpockets and obstinate kleptomaniacs:”  Hugo Chavez

President Chavez created new national laws not unlike the U.S. Dodd-Frank supposed financial reform law that Barack Obama signed on July21, 2010. ( along with the supposed food safety law, and Obama-care that completes the tri-fecta of taking over banks, food companies and producers, and the complete U.S. health-care system)

The Chavez’ method of operation in stealing the total private sector wealth of private sector companies and taking over their total economy was done quickly and right out in the open, whereas Barack Obama’s plans have been quietly designed and signed into law beneath the radar of the public and many under-qualified members of Congress, who either do not see the stealth takeover of the private sector by the U.S.  government, or are choosing to turn their backs on the very people who elected them into power by remaining silent. Make no mistake here, the Obama and Chavez  doctrines run  extremely parallel and are rooted in the Marxist ideology of  Socialist wealth redistribution by a plutocracy that in the end ends up in an all-powerful Communist collective. First, let’s look at what Mr. Chavez has done in Venezuela.

Karl Marx

Chavez’s government well knows ( in his own mind) that the dollar-blinded rich in Venezuela must be defeated politically. A democratic economy is essential, and as private ownership fails to meet the needs of the masses, the state is taking over and formulating alternative ways of managing production and distribution. The pricing system is being moderated and social priorities are replacing market manipulation. As the global banking crisis and its scandals grew, the Venezuelan government ensured effective regulation at home. Several small private banks were taken over following revelations of bank fraud. (No fair trial, no evidence needed, just revelations) In November the main shareholder of a group of four banks, Grupo Financiero Bolivar, Ricardo Fernandez, known as a Chavez supporter, was arrested. Two of the banks were nationalised, and two were closed. The Institute in Defence of People’s Access to Goods and Services took control of four food companies owned by Ricardo Fernandez, to make sure there were no supply disruptions. Subsequently, a further three banks were nationalised and, on 11 December, Venezuela’s Superintendency of Banks closed an eighth.

Chavez declared on 10 December. “I have ordered the takeover of tuna, fish, corn processing and rice companies, as well as [the bankers’] estates and cattle this will become wealth for the people’. He added: ‘We are confronting these problems in a coordinated manner with the whole state, and we are taking over companies that were forming a kind of network …We cannot wait until tomorrow. At the first sign, [we take] immediate action and inexorably apply the established laws and procedures.”  (Just like Liberal fake democrats in the U.S. created a slew of laws with no allowed input from Republicans or we the people, Chavez and company drew up and instituted their own laws)

The Venezuelan media takeover has played a central part in Chavez’ plans:  In this battle the media is central, and on 23 January RCTV and five other cable channels were temporarily taken off the air for breaking transmission laws requiring them to televise government announcements. On 14 January the state expropriated the sugar mills ‘Casta’, in the state of Tachira and the ‘La Batalla’ agricultural mill in the state of Barinas, to turn them into social property. All of this was accomplished when Hugo Chavez was given permission to rule by decree, without any input from the National Assembly:  Venezuelan lawmakers loyal to President Hugo Chavez Wednesday approved a measure granting the U.S.-baiting left-wing leader authority to rule by decree  for the next 18 months.  Informed Americans have now come to realize that Obama and company now effectively control the mainstream media, as shown by their refusal to report on Obama’s questionable past, radical associations, and college Marxist ideology such as is thoroughly documented right here.  Now we shall look into what is going on in our banking sector, as we already have been made aware of the complete takeover of our healthcare system, 2 major auto companies, the government intervention into our agriculture sector enabled by the Food Safety Bill, all done in very much the same way Hugo Chavez has done in Venezuela, as shown above.

Signing of Dodd-Frank Bill enables Leftists and Obama Crony-Capitalists to take control of U.S. banks

          The FDIC closed 157 banks in 2010 and the current total for 2011 now stands at 90. 

During trips to several small towns in our area during the past two years, my family has always ended up discussing the possible reasons as to why all of the banks now have new names. The only bank still under it’s original name is the Bank of America, along with two credit unions. Why is this? If a bank is closed, how is it that it reopens almost immediately under a new name, and just why is this happening at an alarmingly increasing rate today? I recently discovered the answers to those questions, and several other questions others may have concerning the massive numbers of bank closings since 2009, and it is pretty unsettling, to say the least. 

            How is the takeover of hundreds of U.S. Banks being engineered today?

In order to close a bank down, surely there must be strict laws in place to provide security against fraud to protect depositors, taxpayers who have to foot the bill under bank foreclosures under FDIC guidelines, and their investors right? Well it turns out there were protections put into place.. until the passage of the Dodd-Frank financial reform act came along and changed the rules. First in March of 2009, the federal government starting stress testing the largest banks in the U.S. (note that this was immediately started in Obama’s first year in office) Please see The Case for Stress-Testing Community Banks*. Since this was actually the start of this method of evaluating banks, and then authorizing the FDIC to close them down, it is important to understand the role of  SCAP,  for Supervisory Capital Assessment Program and the subsequent evolution of the Dodd-Frank bill that now allows the federal reserve and the U. S. government to shut down any FDIC insured bank in America at any time. (Just like Chavez did, with zero input from elected officials)

The SCAP was launched in March 2009 to stress the capital of the 19 largest banks. This was a supervisory exercise to determine the capital buffers sufficient to withstand losses and sustain lending in institutions the U.S. Government deemed “systemically significant,” or “too big to fail.” While it was unlikely the rest of the banking industry would tolerate a system‐wide stress test, Federal policy was essentially leaving the rest of the industry to market forces and the normal FDIC resolution process. ( but not for long as we shall see next)

The stress test focused on the level and composition of capital for two years into the future. The test was conducted under two macroeconomic scenarios for two years forward:

o Baseline scenario based on consensus expectations as of February 2009; and

o More adverse scenario assuming a deeper and longer‐term downturn

(Ironically, this “more adverse” scenario was very close to what the U.S. Experienced).

The original SCAP program set the stage for Dodd-Frank regulations that would allow these “stress tests”, ( that actually had no proven benefit what so ever) to be injected into financial law. This marked a turning point on the thinking and attitude of the SCAP and the role stress testing could play in the banking industry.

 

Dodd‐Frank Act

The value of stress testing was cemented as Congress crafted regulatory reform. To ensure stress

testing became part of the fabric of bank supervision, Congress memorialized it in the following ways:

1. Federal Reserve to provide at least three different sets of conditions for firms to stress test

against;

2. Federal Reserve to do annual stress tests on bank holding companies over 50 billion in assets

and non‐bank financial firms under Federal Reserve supervision;

3. Above firms required to do their own semi‐annual stress test; and

4. All other banks with assets greater than 10 billion required to do annual stress test.

While the legislation establishes bright lines for the size of institutions which are required to perform stress testing, the entire financial services industry should be prepared for increased expectations as financial regulators become accustomed to seeing stress testing as part of the risk management framework and an important part of the supervisory process. Increasingly, bank management will find it difficult to demonstrate sufficient risk management processes without incorporating an element of stress testing.

Take note: Community Bank Performance 2009 & 2010

The pace of bank failures increased significantly in 2009, with 140 institutions being closed. As of October 1, 2010, 129 banks have closed in 2010. That has increased to a total of 247 bank closures during 2010, and 2011. As we see billions of dollars in losses putting a huge strain on the FDIC insurance fund, just who ends up taking over these ‘closed banks’ that end up reopened almost the very same day/week that they were shut down? End Part1   In Part 2, we see just who is taking over these FIDC mandated shuttered banks, who is left paying the bill for their past debt, and just who is raking in billions of dollars from these big government manipulated bank closures.

 

 

 

 

Gay Liberal Rep. Barney Frank Calls it Quits: Good Riddance

After 32 long years of representing Massachusetts District 04 in the U.S. House of Representatives, Congressman Barney Frank has announced he will not be running for reelection in 2012. The openly gay Liberal (see fake Democrat) says his new district lines would force him to campaign aggressively, a task his 71 year old body may not be up to handling any longer. With the other half of the Dodd-Frank financial reform bill, Chris Dodd out in California working as a stealth lobbyist for the Hollywood motion picture association, now both [supposed] financial reform architects will be far away from DC by the time the real nasty elements of the Dodd-Frank bill start to be enforced in the coming years.

Photo: Saul Loeb/AFP/Getty Images

When researching other articles about Frank’s retirement, there was one disgusting pattern of irresponsibility in pushing of the gay lifestyle embedded in many of the so called news articles. Being an effective legislator is one thing, but celebrating someone’s perversions of sexual relationships such as in the same sex lifestyle of Barney Frank, as being supposedly some kind of heroic example for our children to follow is a disgusting bunch of societal manipulation that should be called out every time it rears it’s ugly, perverted head in our society today! While the ignorant puppet-parrots of the left might not mind their children going to sleep with visions of Barney Frank mounting his man-child lover whom worked at Fannie Mae, or vice-versa, as in gay Liberal Barney Frank being mounted by his man-child lover, you sick, demented, perverted parasites of the left need to keep your queer lifestyles out of all of America’s children’s lives and schools. Parents, you need to pay attention more so than ever today. For those of you who want grandchildren from your own bloodlines, maybe you should be teaching your children about how the fact that them giving you authentic grandchildren of your bloodlines and lineage becomes an impossibility when 2 men or 2 women marry each other.

Gay Liberal Barney Frank is getting out of Congress right before many of his Dodd-Frank financial rules take effect. His bed-pal (pun intended) in the Dodd-Frank bill has already high-tailed it out of DC. The Dodd-Frank [supposed] financial reform bill has some nasty elements yet to be exposed, and gay-boy-lover Frank does not want to be around when those facts come to light.The Dodd-Frank {supposed} financial reform, bill did not address the biggest fraud that caused the housing crash of 2008 in the first place: Fannie Mae and Freddie Mac and Progressives everyone-deserves-a-house-regardless-of-
proven-ability-to-pay vote-begging schemes of the 2006-2008 elections. Yes, the Progressive Gay Liberal Barney Frank is finally retiring from Congress.

Good frigging riddance!

Barney Frank to Leave the House

Barney Frank dares GOP to raise the debt ceilingIn a press conference at 1pm EST, Rep. Barney Frank (D-Mass) is going to announce why he will not seek re-seek his seat in the House of Representatives during the 2012 election.

After 32 years in Congress, the colorful, often bombastic and caustic Representative from Massachusetts will call it quits.

The openly-gay Congressman is a promoter of gay rights and a co-sponsor of the contentious Dodd-Frank financial reform act that is often cited as a major hinderence to the economic recovery in the United States.

Massachusetts was already set to lose one seat due to Congressional re-districting and this could cost the firmly blue state a seat that was all but guaranteed.

No comment was immediately available from the Congressman’s office and his spokesman would only say that the reason for Rep. Frank’s decision to leave Congress would be obvious at 1pm.

Moveon.org Takes Credit for Dodd-Frank Consequences

It’s been so long since we saw anything actionable come out of Obama’s MoveOn.org. Now, a letter from the organization is encouraging their base to pull their money out of banks.

Dear MoveOn member,

The big Wall Street banks crashed our economy, refused to clean up the mess, and still haven’t been held accountable.

Now the Occupy movement has inspired people everywhere to take action in protest and a lot of us have realized there’s something we can do to fight back: close our accounts and move our money out of the big Wall Street banks and into community banks and credit unions.

This week, in the lead-up to the November 5 Make Wall Street Pay day of action targeting the giant banks, we’ve set up a new “Move Your Money Pledge.” Our goal is to get as many people as possible pledging to close their accounts with the big banks.

Are you ready to show the Wall Street banks that we’re going to hold them accountable ourselves? If you’re ready to stop banking with Wall Street—or if you already have—click here to sign the Move Your Money pledge:

Yes, I want to sign the Move Your Money pledge.

By signing the pledge you’ll be able to turn your private choice as a bank customer into a powerful public display of outrage and protest by joining tens of thousands of others who are ready to switch banks and close accounts.

We have resources available to help you find a new bank and a guide for how to go through the process of closing an account. Whether it’s a spare credit card, a savings account, or your personal checking, every account counts.

If we can get a huge number of accounts closed at the major banks we’ll certainly impact their bottom line, but we’ll also do something even more powerful—we’ll send them a very clear message that the public’s outrage is only growing stronger and that we’re not going to let them off the hook for the damage they’ve done to our economy.

Can you sign the pledge and close an account?

Yes, I’ll sign the pledge.

Thanks for all you do.

–Daniel, Elena, Robin, Stefanie, and the rest of the team

There are a few key things to pay attention to in the letter. First is the credit given to Occupy Wall Street – as if it has anything to do with why people are already moving from big banks like Wells Fargo and Bank of America to local community banks and credit unions. The real culprit is the Obama-supported Dodd-Frank bill which forced banks to move fees from retailers to bank customers.

As a result of Dodd-Frank, fees that used to be included in the prices of goods and services at the time of purchase are now being put upon bank customers whether they buy those goods or not. Seeing that added cost on bank statements has people leaving the big banks in droves for credit unions and home town banks. Any thoughts on whether retailers will reduce their prices as this goes into effect?

The additional fees are what have customers making the switch – not some letter from MoveOn.org. That won’t stop MoveOn.org from taking credit for the huge number of switch-overs once they occur – mark my words on that.

Another key phrase is “We have resources available to help you find a new bank..” – of course they do. No way their bank choices might be politically motivated…

This is but another instance of the Obama organization trying to  find a way to spin a positive from a mess that they created. Dodd-Frank is causing a consumer shift from one set of financial institutions to another. Instead of considering the implications of that unintended consequence – they’ll spin it and take credit.

 

H/T @pcam for tweeting about the MoveOn letter

More Government Home Mortgage Refinancing Schemes Coming Soon

There are currently two bills in Congress that have been proposed to supposedly “fix” the current mortgage crisis. The very same mortgage crisis that was caused by big government intervention into the mortgage business sector in the first place by the wizards of Congress.  Millions of honest, hard-working people are struggling to stay in their homes today. They now owe way more than their house is worth, thanks largely to Congress mandating the ignorant “everyone has a right to own a home”  programs which forced lenders to hand out loans to high risk /unqualified borrowers in the first place.   Fannie Mae and Freddie Mac first started gobbling up sub-prime securities due to mandates they received from Congress in 2000, and the Clinton-era Housing and Urban Development Department, ( (HUD)  which attempted to make housing “more affordable to minorities and disadvantaged people by using their vast (soon to be taxpayer- funded) resources to purchase massive amounts of sub-prime mortgage securities. In 2000, Fannie and Freddie held less than 2.5% of the mortgage market, then it expanded to hold over 40% by 2004. Today? Fannie and Freddie now guarantee more than 70% of all home loans in America. As foreclosures hit record highs almost every month during the past two years,  Fannie and Freddie are now bleeding your tax dollars at an ever-increasing rate and the government wants to once again take action to stem the foreclosure crisis. (While also covering up the fact that their meddling in the mortgage business caused this crisis to begin with)

President Obama refused to deal with the Fannie and Freddie tax-payer funded black hole with his “supposed”  Dodd-Frank Wall-Street Reform and Consumer Protection Act last year. Now the Democrats and Barack Obama are bashing the Bank of America for charging $5 a month debit card fees, which were needed to stem the bleeding caused by the Dodd-Frank bill in the first place. This is exactly why people are fed up with big government control and intervention into every aspect of our free market system today. The Dodd-Frank bill is set up to allow the U.S. Government to close all small banks in the U.S. through their fake “stress tests” and then create a central government-run banking system.  Check the proof that backs up that statement from ABC News Business Blog:

“The Federal Deposit Insurance Corporation (FDIC) announced its 73rd bank closure this year, pacing well behind the gargantuan number of 157 total bank closures in 2010.” (emphasis mine)

When the Federal Government closes all the small independent banks in America, who in the hell do you think will control the entire banking system then? This is exactly why Newt Gingrich constantly repeats the statement that we need to repeal the Dodd-Frank bill on day one of the new GOP President’s administration in 2013.  Government control of our entire banking system is a clear and present danger to our free market system.

When we add the Federal Housing Authority to Fannie and Freddy’s percentage of all home loan mortgages we see direct government control of 90% of all U.S. mortgages! Now that the damage and wealth redistribution has been done by government intervention into the mortgage industry, we see that Fannie and Freddie are backing off of  Jumbo housing loans in an article from The Real Deal Online;

In its bid to reduce taxpayers’ $141 billion exposure to housing mortgage risk and spur private investment in the sector, Fannie Mae, Freddie Mac and the Federal Housing Administration stopped backing jumbo housing loans. According to the Wall Street Journal, that move could put the housing market, and specifically housing prices, in a further funk.

Government meddling has the housing and mortgage industry in a shambles, so now they want to make the banks pay the price, which we see here:

The three entities ( Fannie, Freddy and the FHA) backed about 90 percent of home mortgages in recent months, thanks to the expanded loan limits. But the limits were restricted this month, meaning more buyers will have to turn to private banks to secure mortgages. Those loans are harder, and more expensive, to obtain. Banks would need to issue 56 percent more jumbo mortgages to fill the gap.

So what are the wizards of Congress to do to fix the very mess they, themselves have created in the mortgage debacle in America? Why, let’s propose two more government mortgage refinancing bills in Congress shall we? Current  House resolution 363 is titled The Housing Opportunity and Equity Act. Current Senate bill 170 is titled the Helping Responsible Homeowners Act.  Two different bills with two very different agendas, from savingtoinvest.com:

Housing Opportunity and Mortgage Equity Act (H.R. 363)  • Allows for refinancing of loans owned or guaranteed by Fannie Mae and Freddie Mac.
• Both current and delinquent borrowers are eligible.
• Prohibits appraisal to establish current loan to value.
• Limits interest rate and fees borrower may be charged on new loan.
Helping Responsible Homeowners Act
(S. 170)
 • Allows for refinancing of loans owned or guaranteed by Fannie Mae and Freddie Mac.
• Borrower must be current on existing mortgage.
• Removes limit on current loan to value.
• Limits interest rate and fees (including loan level price adjustments and delivery fees) borrower may be charged on new loan.

Look at HR 363 above. They want to help BOTH those who are current on mortgage payments and those who are delinquent. (what about proven ability to actually pay for the loan there?) They also want to prohibit appraisals on the homes being refinanced! Who, in their right mind would ever refinance a home loan without getting an appraisal to make sure it hasn’t been destroyed or burnt to the ground beforehand?   The Senate bill would seem to be a more responsible way  to help folks who are under water in their home loans today, but in today’s “compromising” Congress we can bet that the final bill will continue down the path towards the “everyone deserves a home whether they can actually pay for it or not” ignorant Liberal ideology. President Obama was scheduled to give another speech about what he plans to do about the mortgage crisis last week, but that didn’t happen to my knowledge.

 Pay attention as Congress tries to fast-track some form of Mortgage Refinancing plan once again in the coming weeks. Just remember the fact that, while the wizards of Congress are up in DC making wonderful speeches about their “newest fix” for the mortgage crisis plans, the fact remains that they are the ones who created the crisis in the first place.   2012 just can’t get here fast enough!

Dodd-Frank: A Year Of Uncertainty

WASHINGTON, July 21, 2011 /PRNewswire-USNewswire/ — The following was released today by the Republican National Committee:

OBAMA SAID DODD-FRANK WOULD PROVIDE “CERTAINTY TO EVERYONE” BUT BUSINESSES ARE OPERATING IN “AN ENVIRONMENT OF REGULATORY UNCERTAINTY”

PROMISE: President Obama Said That Dodd-Frank “Provides Certainty To Everyone From Bankers To Famers To Business Owners To Consumers.” “It provides certainty to everyone from bankers to farmers to business owners to consumers. And unless your business model depends on cutting corners or bilking your customers, you have nothing to fear from this reform.” (President Barack Obama, Remarks By The President On The Passage Of Financial Regulatory Reform, Washington D.C., 7/15/10)

REALITY: Dodd-Frank “Will Unleash The Biggest Wave Of New Federal Financial Rule-Making In Three Generations.” “Yet Dodd-Frank, with its 2,300 pages, will unleash the biggest wave of new federal financial rule-making in three generations. Whatever else this will do, it will not make lending cheaper or credit more readily available.” (Editorial, “The Uncertainty Principle,” The Wall Street Journal, 7/14/10)

Due To The Intense Period Of Rule-Making “Market Participants Will Need To Make Strategic Decisions In An Environment Of Regulatory Uncertainty.” “U.S. financial regulators will enter an intense period of rulemaking over the next 6 to 18 months, and market participants will need to make strategic decisions in an environment of regulatory uncertainty.” (“Summary Of The Dodd-Frank Wall Street Reform And Consumer Protection Act, Enacted Into Law On July 21, 2010,” Davis Polk & Wardwell LLP, 7/21/10)

  • “The Legislation Is Complicated And Contains Substantial Ambiguities, Many Of Which Will Not Be Resolved Until Regulations Are Adopted …” “The legislation is complicated and contains substantial ambiguities, many of which will not be resolved until regulations are adopted, and even then, many questions are likely to persist that will require consultation with the staffs of the various agencies involved.” (“Summary Of The Dodd-Frank Wall Street Reform And Consumer Protection Act, Enacted Into Law On July 21, 2010,” Davis Polk & Wardwell LLP, 7/21/10)

Harvard Finance Professor Hal Scott: “This Massive Revamp Of American Regulation Creates Uncertainty For Now, And, With Basel III, Significant Costs In The Future, With Uncertain Benefit.” (Hal Scott, Op-Ed, “Little To Celebrate On Dodd-Frank’s Birthday,” Financial Times, 7/19/11)

OBAMA SAID THAT DODD-FRANK WOULD MAKE THE ECONOMY “STRONGER” BUT IT HAS HAMPERED BUSINESSES AND MAIN STREET WITH RULES AND HIGHER COSTS

PROMISE: Obama Said That Dodd-Frank Was Part Of Building “An Economy That Is Stronger And More Prosperous.” “Along with the steps we’re taking to spur innovation, encourage hiring, and rein in our deficits, this is how we’re ultimately going to build an economy that is stronger and more prosperous than it was before and one that provides opportunity for all Americans.” (President Barack Obama, Remarks By The President At Signing Of Dodd-Frank Wall Street Reform And Consumer Protection Act, Washington D.C., 7/21/10)

REALITY: “To Date, The Total Estimated Compliance Costs From Dodd-Frank Remained At $1.26 Billion, But Of The 140 Major Rulemakings, Only 26 Contain Quantified Cost Estimates.” (Sam Batkins, “The Week In Regulation: July 5-8, 2011,” American Action Network, 7/8/11)

“The Rules Have Changed So Many Times … If You’re Not On Top Of All The Issues It’s Very, Very Difficult To Stay In Business Today.” “[Mike] McHugh, president and chief executive officer of Continental Home Loans Inc. in Melville, New York, is about to endure even more change as the Dodd-Frank Act, designed to prevent another mortgage-fueled frenzy like the one that led to the 2008 credit crisis, kicks in this summer. ‘The rules have been changed so many times,’ McHugh said. ‘If you’re not on top of all the issues it’s very, very difficult to stay in business today.'” (Lorraine Woellert and Carter Dougherty, “Dodd-Frank Rules Make Mortgages Less Profitable: One Year Later,” Bloomberg, 7/12/11)

“But It’s The Derivatives Portion—The Part Of The Bill Aimed Directly At Wall Street—That Might End Up Touching Most Lives In Rural America.” (Michael M. Phillips, “Finance Overhaul Casts Long Shadow On The Plains,” The Wall Street Journal, 7/13/10)

  • Derivatives Reform Could Make Hedging More Expensive For Farmers Since “New Requirements On Big Players Will Create Higher Costs For Small Players.” “The question for these farmers is whether such rules will make hedging more expensive. Some say new requirements on big players will create higher costs for small players, including the cash dealers will have to put aside to enter into private derivatives transactions. Some brokers think restrictions on big-money banks and investors will drain the amount of money available to the everyday deals farmers favor.” (Michael M. Phillips, “Finance Overhaul Casts Long Shadow On The Plains,” The Wall Street Journal, 7/13/10)

 

PRESIDENT OBAMA SAID THAT DODD-FRANK WOULD GUARANTEE “NO MORE TAXPAYER-FUNDED BAILOUTS – PERIOD” BUT THEY ARE “STILL POSSIBLE”

PROMISE: President Obama Said That Dodd-Frank Assured That “There Will Be No More Taxpayer-Funded Bailouts – Period.” “Because Of This Reform, The American People Will Never Again Be Asked To Foot The Bill For Wall Street’s Mistakes.  There Will Be No More Taxpayer-Funded Bailouts — Period.” (President Barack Obama, Remarks By The President On The Passage Of Financial Regulatory Reform, Washington D.C., 7/15/10)

REALITY: Standard & Poor’s Says That Despite Dodd-Frank, Future Taxpayer Bailouts Of Systematically Important Financial Institutions Is “Still Possible.” “Standard & Poor’s Ratings Services believes that the primary goal of DFA is to make banks less risky and better capitalized so the need for extraordinary support is reduced. However, given the importance of confidence sensitivity in the effective functioning of banks, we believe that under certain circumstances and with selected systemically important financial institutions (SIFI), future extraordinary government support is still possible.” (“The U.S. Government Says Support For Banks Will Be Different ‘Next Time’ – But Will It?,” Standard & Poor’s, 7/12/11)

Federal Reserve Chair Ben Bernanke Says That Too-Big-To-Fail Institutions Could Still Receive Taxpayer Bailouts From The Treasury. “As bad as this news is for taxpayers, the potentially worse news came when Mr. Hennessey asked if, in times of crisis, the government could still assist a particular company now that Dodd-Frank reform is the law of the land. Mr. Bernanke quickly put the matter to rest by noting that a too-big-to-fail company undergoing the government’s new resolution process could still receive money from the Treasury. Uh, oh.”  (Editorial, “The Diviner of Systemic Risk,” The Wall Street Journal, 9/4/10)

A Product Of The RNC Research Department

Dodd-Frank “Cheat Sheet” Released by InformationWeek Financial Services

NEW YORK, March 28, 2011 /PRNewswire/ — InformationWeek Financial Services, the leading media outlet focused on helping senior executives in banking, capital markets and insurance navigate the fast-changing world of financial services IT, has released the industry’s first Cheat Sheet for the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Dodd-Frank Cheat Sheet, developed by the editors of Bank Systems & TechnologyWall Street & TechnologyAdvanced Trading and Insurance & Technology, provides financial services professionals with an easy-to-read synopsis of the new law’s rules and definitions. Coming in at just under 40 pages, the Dodd-Frank Cheat Sheet provides layman’s definitions of the rules, outlines the law’s impact on technology organizations and highlights key deadlines. The Cheat Sheet isn’t a substitute for reading the entire 1,000 pages of the original legislation, but it will help financial professionals get their minds around Dodd-Frank.

“Dodd-Frank touches on virtually every part of the financial services business,” says Greg MacSweeney, Editorial Director for InformationWeek Financial Services. “The law contains new rules for derivatives clearing, mortgages, executive compensation, credit cards, proprietary trading, consumer protections and more. Technology leaders and their IT organizations will certainly be pressed to help the business comply with the law and they will be tasked with launching new technology accordingly.”

The InformationWeek Financial Services Dodd-Frank Cheat Sheet is available for download, free of charge, to all subscribers at www.banktech.com/dodd-frank.