Is Anyone Minding the Store at the Federal Reserve?

This is a high quality version of the Financial Services Subcommittee on Oversight and Investigations hearing of May 5, 2009.

Rep. Alan Grayson asks the Federal Reserve Inspector General about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligations. Inspector General Elizabeth Coleman responds that the IG does not know and is not tracking where this money is.

Doctor asks federal judge to stop bailout

10/10/2008 2:11 PM

EAST ST. LOUIS-A Belleville doctor is asking a federal judge to bar President George W. Bush from enforcing the congressionally-approved financial industry bailout bill.

Dr. Randy J. Jung filed the request for a restraining order Friday, arguing Congress and Bush exceeded their constitutional authority when passing H.R. 1424, otherwise known as the bailout bill.

“In the spirit of the Magna Carta where the King and government are required to follow their own laws; and in the honorable tradition of the Judicial Branch of government providing checks and balances for excesses of Congress and/or the President, I would like to plead that a restraining order be issued preventing the ‘bailout bill’ from being enforced until after a federal judge has ruled on the above maters which strongly indicate that the Congress and President have exceeded their Constitutional authority passing H.R. 1424 as amended,” the complaint states.

“After reading Article I, Section 8 of the U.S. Constitution, I do not see where Congress has the legal authority to deprive its citizens of property in the form of taxation to effect the above act and bailout the troubled financial district,” the complaint also states.

Jung argues since the bailout bill is an attachment to mental health legislation, it makes it “extra topical to the spirit and scope of the mental health act” and is an effort to “get around the fact that the U.S. Senate is the originator of a bill raising revenue of $700 billion, which exceeds the rights of the US Senate as indicated in Article I, section 7.

“The U.S. Senate has taken away the constitutional right of the House of Representatives to originate bills for raising revenue; and is assuming that function for the Senate,” the complaint states.

“Sometimes, children are abused by their parent, relative, acquaintance, or stranger,” the complaint also states. “This abuse generally occurs in a milieu of neglect where other adults fail to allege that the perpetrator has exceeded his rights; and exercised his will over the child simply because he is powerful enough to do so.”

U.S. District Judge Michael Reagan and Magistrate Clifford Proud have been assigned to the case. No hearings have yet been scheduled.

The Dave Ramsey Plan

The Dave Ramsey Plan

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

Common Sense Plan.

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.

Darrell Castle: Something Wicked This Way Comes

SOMETHING WICKED THIS WAY COMES
by Darrell L. Castle
Constitution Party 2008 Vice Presidential Candidate

Laws, originally evolving out of the New Deal legislation written in response to the great depression, once protected the American financial system. Starting in the 1990’s, in response to intense lobbying efforts by the financial industry, those laws were stripped away. The most important one was Glass Steagall which separated commercial banking from the type of investment work of a stockbroker. Glass Steagall was signed out of existence in 1999 by President Clinton and less than 10 years later the entire financial system is bankrupt. Another law, known as The Uptick rule, prevented companies from crashing due to large scale shorting of company stock. A company’s stock could not be sold short as long as it was in continuous decline. Short sellers had to wait for an uptick in the stock before shorting. The Uptick Rule ended in 2007 just about one year ago.

Continue reading

McCain Urges Treasury to Act Without Legislation on Bailout

Republican Presidential candidate John McCain “Speaking on morning television, the Arizonan urges the Treasury Department to address the economic crisis on its own by buying $1 trillion in mortgages and tapping its exchange stabilization fund. Also backs raising the FDIC insurance cap to $250,000.”

http://thepage.time.com/2008/09/30/“i’m-not-going-to-parse-every-answer”/

So, in other words, Congress failed to pass an unconstitutional bill.  So, the Republican candidate for President wants the Executive Department to act anyways; he wants them to do something that they have no authority to do.  So much for the Constitution.  And this is who “Conservatives” want for President?  I chose Door # 3; Chuck Baldwin for President!

WaMu failed

The largest banking failure in US history happened a few hours ago when the Office of Thift Supervision took control of the Bank.  J.P. Morgan Chase purchased the banking assets for $1.9 billion dollars.  To quote the AP: “One positive is that the sale of WaMu’s assets to JPMorgan Chase prevents the thrift’s collapse from depleting the FDIC’sinsurance fund.” (source).  The new JPMorgan Chase is now the 2nd largest bank in the United States.

As a customer of WaMu (or rather, I guess, former customer), WaMu customer support has gotten horrible over the last several months and I think they would have failed at some point because of it.

I believe that this whole mess has been the end game that has been going on behind the scenes for many years…

Update: 11:05 pm – I believe that this bank failure was due to the “bailout” falling apart tonight.  The powers that be decided that the Senators needed some “motivation” to get something passed.  What a better way to do that than to have the largest bank failure in US history happen the day before the deadline that Secretary Paulson said this bailout had to be passed by or else the entire economy would collapse…  Mark my words, this “bailout” will pass at least one chamber tomorrow, if not both, in time for John McCain to triumphantly arrive at the debate at the University of Alabama…