ALG - Loosening lending standards, which caused the crisis, will not solve it

April 4, 2013, Fairfax, VA—Americans for Limited Government President Bill Wilson today issued the following statement blasting a push by the Obama Administration and the Federal Reserve to once again loosen mortgage lending standards to increase the pool of eligible homebuyers:

"To suggest that lowering credit standards is the solution to the financial crisis is to ignore the past 20 years of history. The fact is, borrowers can already get loans from Fannie and Freddie for as little as 3 percent down, and from the Federal Housing Administration for as low as 3.5 percent down. Prices have not been this low since 2003. And interest rates have never been this low.

"The problem in the housing market is not a lack of lending capacity, which is virtually limitless as banks are sitting on $1.6 trillion of excess reserves. It's that even with it as easy as it is to get a loan, demand is still very low in the weak economy, and therefore it's not easy enough for the central planners, so the push becomes to lower credit standards.

"The same thing happened after the 1991 recession when credit slowed down. By 1992, Congress had agreed to institute and expand the GSE 'affordable' housing goals, which required an increasing percent of government-backed mortgages to be of lower quality, which contributed substantially to the housing bubble. Since the economy is addicted to credit expansion, in order to grow, the incentive is for lending standards to become progressively weaker over time. By 2007, when the bubble popped, those goals had expanded from 30 percent of Fannie and Freddie's portfolios to 55 percent.

"This is what happens every time the government wants to facilitate credit expansion to bolster asset prices. After the stock of available borrowers based on current credit standards is exhausted, the only recourse left to policy makers is to weaken credit standards. When this leads to asset bubbles and credit collapses, as it already has, then the American people are told that the banks that made the loans must be made whole through bailouts whether from Congress or the Federal Reserve. We've seen this movie before. It is a fraud and it will only lead to a repeat of the 2008 meltdown."

To view online: http://getliberty.org/loosening-lending-standards-which-caused-the-crisis-will-not-solve-it/

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Americans for Limited Government is a non-partisan, nationwide network committed to advancing free market reforms, private property rights and core American liberties. For more information on ALG please call us at 703-383-0880 or visit our website at www.GetLiberty.org.

CEI Today: Bank bailout vote fail, wind tax subsidy, and Obama's college bailout

BANK BAILOUT FAILS IN SENATE - JOHN BERLAU

TAG Bank Bailout Fails in Senate, Taxpayers Win

On behalf of taxpayers and future generations burdened by the nation's debt, the Competitive Enterprise Institute rejoices at today's Senate defeat of the Transaction Account Guarantee on a procedural budget rule.

"Though TAG went down due to legitimate concerns about the shutting down of constructive amendments and violations of budget rules, this subsidy providing an unlimited safety net to millionaires and billionaires deserved to be defeated because of its own fiscal recklessness," said John Berlau, CEI's Senior Fellow for Finance and Access to Capital.

 > Read more on the Senate vote at CEI.org

> Interview John Berlau

WIND TAX SUBSIDY - MYRON EBELL CEI and Coalition Partners Urge Congress to Let the Wind Tax Subsidy Expire Congress is now considering an extension of the Wind Production Tax Credit. “The wind production tax credit is the worst kind of crony capitalism,” said Myron Ebell. “It uses billions of taxpayer dollars to encourage states to pass renewable energy requirements, which in turn causes electric rates to go up for consumers in those States. “Wind industry leaders have said repeatedly over many years wind power is on the verge of being competitive, or indeed is already competitive with, conventional sources of electric generation. If that is so, then the only reason to keep subsidizing wind is to pay off the crony capitalists who crowd the halls of Congressional office buildings.” “Congress should not vote to extend the Wind Production Tax Credit, which is set to expire at the end of this year.  That will save billions of taxpayer dollars and help prevent electric rates for consumers from going up and up.” > Interview Myron Ebell

OBAMA'S COLLEGE BAILOUT - HANS BADER Openmarket.org: Obama’s Low-Quality College Bailout Will Fuel Skyrocketing Tuition We wrote earlier about perverse federal financial aid policies that encourage colleges to jack up tuition. Recently, the Obama administration came up with something even worse. It announced a new financial aid policy that will effectively bail out low-quality, high-tuition colleges and especially law schools at taxpayer expense, and encourage colleges and professional schools to increase tuition even more. These changes are the product of a revised income-based federal student loan repayment program that will go into effect starting Dec. 21.  > View the full commentary at Openmarket.org > Interview Hans Bader

More in the news... CEI Podcast For December 12, 2012: Ending The Beer Monopoly Right-To-Work Laws Aren’t Perfect, But They’re Better Than The Likely Alternative

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.  For more information about CEI, please visit our website, cei.org, and blogs, Globalwarming.org and OpenMarket.org.  Follow CEI on Twitter! Twitter.com/ceidotorg.

CEI Today: ExxonMobil, another bank bailout, and Rachel Carson's legacy

CARBON TAX & CRONY CAPITALISM - MARLO LEWIS

Globalwarming.org: Where Does ExxonMobil Stand on Carbon Taxes?

Yesterday on NPR’s radio program To the Point, I said it was dishonorable for ExxonMobil to support a carbon tax. I compared ExxonMobil’s reported embrace of carbon taxes to Enron’s lobbying for the Kyoto Protocol.

Enron was a a major natural gas distributor and saw in Kyoto a means to suppress demand for coal, natural gas’s chief competitor in the electricity fuel market. ExxonMobil is a major natural gas producer. So I took this to be another case of political capitalism – corporate lobbying to replace a competitive market with a rigged market to enrich a particular firm or industry at the expense of competitors and consumers.

> Read the full commentary on Globalwarming.org

>Listen to the interview on  kcrw.com

> Interview Marlo Lewis

 

SENATE VOTE ON BANK GUARANTEES - JOHN BERLAU CEI.org: Coalition Tags TAG Bailout as Regressive and Economically Disastrous The U.S. Senate voted on Tuesday to support consideration of an extension on unlimited, taxpayer-backed guarantees on non-interest bearing bank accounts. Fourteen leaders and scholars of conservative and free-market groups, including CEI, had opposed this Transaction Account Guarantee (TAG). Enacted at the height of the financial crisis, TAG provides unlimited government-guaranteed deposit insurance for non-interest bank and credit union accounts, over and above the $250,000 limit for all accounts. Yet the Senate today is voting on whether to extend this "temporary program," which benefits only the wealthiest depositors, for another two years. > View the coalition letter  > View John Berlau's commentary for Nationalreview.com > Interview John Berlau

RACHEL CARSON'S SILENT SPRING - ANGELA LOGOMASINI Townhall.com: Year Ends 50th Anniversary of Silent Spring An Unhappy Legacy Continues This year marked the 50th anniversary of biologist Rachel Carson’s 1962 book, Silent Spring. Although the anniversary is soon to become history as well, Carson’s impact promises to continue well into the future—and it’s not something to celebrate. Carson was right to advocate for careful use of pesticides, but her harsh rhetoric needlessly raised excessive alarm. She postulated man-made chemicals affect processes of the human body in “sinister and often deadly ways,” birthing a powerful environmental movement that is fiercely anti-pesticide.  > View the full commentary on Townhall.com > Interview Angela Logomasini

More in the news... The Wind Production Tax Credit: Corporate Welfare at its Worst Tobacco rules substitute one problem for another Avoid a Beer Monopoly By Setting the Market Free Obama’s Dangerous Italian Labor Rhetoric Sierra Club Transportation Report Unsurprisingly Trashes (Some Bad) Road Projects, Praises Transit And Bike Waste

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.  For more information about CEI, please visit our website, cei.org, and blogs, Globalwarming.org and OpenMarket.org.  Follow CEI on Twitter! Twitter.com/ceidotorg.

I, PENCIL

The Competitive Enterprise Institute is proud to announce a new ambitious film project: an animated adaptation of I, Pencil by Leonard Read.

> View the I, Pencil short film

> Tweet about I, Pencil

ALG Blasts Obama Pledge of U.S. Bailout to Europe's Sovereign Debt Crisis

June 8, 2011, Fairfax, VA—Americans for Limited Government President Bill Wilson today issued the following statement blasting the Obama Administration for offering that the U.S. would contribute to another bailout to debt-plagued Greece said to total €80 to €100 billion:

"Leaving the absurdity aside of the world's largest debtor, the U.S., pledging financial assistance to troubled sovereigns like Greece, it is no less outrageous.  The real reason for the U.S. intervention may be that American financial institutions like AIG may have sold credit-default swaps to some European institutions that bought Greek debt as insurance against default.  If Greece defaults, then the swaps would pay out, and that would put companies like AIG and whoever else sold swaps on Greek debt in hot water. 

"Moreover, German and French banks own about €15.5 billion and €10.28 billion of Greece's €340 billion debt, meaning a default would hit them particularly hard, too.  The European Central Bank too is on the hook directly for €45 billion in Greek debt, not to mention tens of billions of Greek debt it accepted as collateral when making loans.  Of course these banks want another bailout.  They cannot afford to take losses of that magnitude.

"Really, this is less about bailing out Greece than it is about bailing out international banks that have bet extremely poorly on sovereign debt in Greece and elsewhere.  It must be made perfectly clear that American taxpayers ought not to be on the hook for the mistakes of European bankers and profligate spenders in Greece.  Bailing out Europe is a crime against American taxpayers that will not soon be forgiven."

ALG Condemns Financial Takeover as "One More Piece of Liberty Lost"

"When there's another bailout — not if, but when — and any of these 60 Senators dare attempts to condemn it, they need to be called out for the liars that they are." —ALG President Bill Wilson.

July 15^th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today condemned the U.S. Senate for enacting the conference version of the Dodd-Frank financial takeover bill, sending the bill to the desk of Barack Obama to become law.

"The American people have lost one more piece of their liberty, as the Senate has voted to create a hidden, permanent bailout that will enable faceless bureaucrats to levy taxes, bail out politically-privileged institutions and to seize and liquidate politically-unconnected ones, redistributing their assets to favored constituencies, like unions," Wilson declared.

"There will be no votes in Congress like TARP ever again, as Congress has abdicated the power to tax and spend elsewhere," Wilson explained, adding, "Which solves a political problem for members of Congress, but is really just a con game so that they don't have to take responsibility for unpopular bailouts and government takeovers."

Wilson said "the American people can thank these 60 senators that voted to invoke cloture on the Dodd-Frank bill," which included all but one Senate Democrat and Republican Senators Olympia Snowe, Scott Brown, and Susan Collins.  The vote ending debate was 60 to 38.

Wisconsin Senator Russ Feingold was on the only Democrat to vote Nay, whom Wilson said "had the intellectual honesty to say he wanted to address the root causes of the financial crisis," and thanked him for his votes to bring an end to Fannie Mae and Freddie Mac, and to audit the Federal Reserve.

Wilson called the bank tax by the Federal Deposit Insurance Corporation (FDIC) on about 60 bank holding and insurance companies with $50 billion or greater in assets included in the legislation "taxation without representation". 

"The taxes which will finance the 'orderly liquidation fund', the cost of which will be passed on to savers, investors, and anyone who uses the financial system," Wilson said, citing a Congressional Budget Office (CBO) analysis of a similar bank tax proposal by the Obama Administration, "the ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government. The cost of the proposed fee would ultimately be borne to varying degrees by an institution's customers, employees, and investors, but the precise incidence among those groups is uncertain."

"These taxes, bailouts, and takeovers will happen arbitrarily, by faceless, unelected bureaucrats at the FDIC, Treasury, and Federal Reserve.  When there's another bailout — not if, but when — and any of these 60 Senators dare attempts to condemn it, they need to be called out for the liars that they are," Wilson concluded.

Attachments:

"'Down a Rabbit Hole:' The Threat Posed by the Dodd-Frank Bill to the Private Sector," Updated June 28^th, 2010, Americans for Limited Government.

"Big Brother is Watching You: The Threat Posed by the Dodd-Frank Bill to Privacy," Updated June 28^th, 2010.

Letter to the U.S. Senate, ALG President Bill Wilson, April 26th, 2010.