Wednesday, November 20, 2013
In the News Today
Wednesday, November 20, 2013
In the News Today
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."
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.
BANK BAILOUT FAILS IN SENATE - JOHN BERLAU
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.
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.
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.
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."