Rep. Ed Royce Continues His Attack on Shareholders, Favors Running Fannie and Freddie with No Capital

During a House Financial Services Committee hearing this week on the Financial Stability Oversight Council, Royce, in an exchange with Treasury Secretary Jack Lew, continued his anti-shareholder bias and also demonstrated his lack of understanding of basic math.

A video of the exchange, posted by Rep. Royce’s office, can be found here, and we’ve pulled some of the notable excerpts below:

“One of my colleagues asked if the GSEs have repaid the money that they have borrowed from the American taxpayer. The simple answer that my colleague tried to illicit, I think, is that the payments they have made to the government now exceed the rescued funds that they received. But, Mr. Secretary, I think you agree here, this is not the real answer nor the real question. The real question is have they repaid their debt to the American taxpayer, and for that answer I think we can go to the Federal Reserve Bank of New York… The New York Fed said thattaxpayers are entitled to substantial risk premium…The false narrative that is perpetuated is that the taxpayers have been repaid, it’s time to end conservatorship, and return the GSEs to the control of shareholders. From your comment earlier, I assume you disagree with this narrative…”

Yes, taxpayers are entitled to significant compensation for the risk borne in the $187 billion bailout of Fannie and Freddie, just as they are entitled to recompense for the $426 billion dollars in bailouts of the big banks and auto industry authorized under the TARP program. What Rep. Royce fails to mention, however, is that the GSE’s are already far and away America’s most profitable bailout, having returned over $40 billion to date in profit on top of what the Treasury invested.  The “real question” here, for which we have yet to receive a “real answer,” is, “Why does the government continue to let taxpayers bear all of risk at the point of first-loss under the guise of repayment?” Secretary Lew kind of acknowledges this in his response:

“I totally agree… the risk is being borne by taxpayers on an ongoing basis and the conservatorship is not over….So I think that the right thing is to do GSE reform and get on to a new restructured system, but it is not the right time to be talking about ending the conservatorship and paying dividends.”

Via: Investors Unite

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STOP THE DEBT CEILING SCARE TACTICS

To quote the famous Yogi Berra, “it's like déjà vu all over again” with the battle over ceremonially raising the debt ceiling.

According to the elected officials of our great nation, we must saddle our children and grandchildren with another couple trillion dollars of debt in order to protect them. This logic seems flawed.  

In the coming week, we will see how the genius of Washington will save the American people from another crisis—a crisis that will bring Apocalypse 2.0, if the talking heads are to be believed. Markets will crash, 401(k) plans will be wiped out, a huge recession will ensue, and cats will be sleeping with dogs. It will be horrible!

But will it?

On Fox News last week, I discussed how we are being fed a line akin to being offered oceanfront property in Arizona. We have been fed this same line for years now. We got it in 2008 to approve the TARP and again in 2011 with the doom-filled sequester.  

Did we suffer greatly?

Fact is, the markets came through just fine after the sequester, hitting all-time highs. The TARP was fully paid back, allegedly, with profit from banks who never wanted the money in the first place. Those same banks are now booking record profits. Yes, growth is anemic and employment is weak, but we seem to get through these frightening scenarios each time.

Via: Breitbart

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Ahead Of Election, Obama Stops Releasing “Stimulus” Bill Reports As Required By Law…

The $831,000,000,000 economic “stimulus” that President Obama spearheaded and signed into law requires his administration to release quarterly reports on its effects.  But “the most transparent administration in the history of our country” is now four reports behind schedule and has so far not released any reports whatsoever in 2012.  Its most recent quarterly report is for the quarter than ended on June 30, 2011.

One wonders how the administration would treat a private citizen who acted like such a scofflaw in response to one of Obama’s principal legislative initiatives.  It certainly appears that this administration, which is so very fond of regulating Americans’ lives — witness the 13,000 pages of Obamacare regulations it has already penned — doesn’t hold itself accountable to the same set of rules that it’s so eager to compel the American people to obey.

Section 1513 of the American Recovery and Reinvestment Act of 2009 (the “stimulus”) explicitly states, “In consultation with the Director of the Office of Management and Budget and the Secretary of the Treasury, the Chairperson of the Council of Economic Advisers shall submit quarterly reports to the Committees on Appropriations of the Senate and House of Representatives that detail the impact of programs funded through covered funds on employment, estimated economic growth, and other key economic indicators.”  (The head of the Council of Economic Advisors, currently Alan Krueger, is appointed by the president, confirmed by the Senate, and works within the Executive Office of the President.  He is the president’s chief economic adviser.)

Indeed, the old reports that the administration released begin, “As part of the unprecedented accountability and transparency provisions included in the American Recovery and Reinvestment Act of 2009 (ARRA), the Council of Economic Advisers (CEA) was charged with providing to Congress quarterly reports on the effects of the Recovery Act on overall economic activity, and on employment in particular.” 

Section 1513 of the ARRA further specifies, “The first report…shall be submitted not later than 45 days after the end of the first full quarter following the date of enactment of this Act….The last report required to be submitted…shall apply to the quarter in which the [Recovery Accountability and Transparency] Board terminates under section 1530.”  Section 1530 declares, “The Board shall terminate on September 30, 2013.” 

Via: Weekly Standard

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CBO: Bailout Will Lose $24 Billion

Obama: ‘We Got Back Every Dime’ of Bailout; CBO: Bailout Will Lose $24 Billion. Who to Believe!!!!

(CNSNews.com) – President Barack Obama said on Thursday that “we got back every dime we used to rescue the financial system."

According to the Congressional Budget Office, however, the government will lose about $24 billion on the bailout.

“We got back every dime we used to rescue the financial system, but we also passed a historic law to end taxpayer-funded Wall Street bailouts for good,” Obama said in Miami Thursday.

The Congressional Budget Office--based on figures from Obama’s own Office of Management and Budget---gives a different assessment.

“The cost to the federal government of the TARP’s transactions (also referred to as the subsidy cost), including grants for mortgage programs that have not yet been made, will amount to $24 billion,” said the CBO report, which was released on the same day Obama spoke.

Via: CNS News

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Sesame Street Created '1.47' Jobs with $1M stimulus grant

This grant was brought to you by the letters “A” and “R” — as in American Recovery and Reinvestment Act, aka the “stimulus bill.”

Sesame Workshop, the independent nonprofit corporation that produces the popular childrens’ program Sesame Street, received a $1,067,532 stimulus bill grant in August 2010, via the Department of Health and Human Services.

The funding was to promote healthy eating according to the federal Recovery.gov website:

This grant was brought to you by the letters “A” and “R” — as in American Recovery and Reinvestment Act, aka the “stimulus bill.”

Sesame Workshop, the independent nonprofit corporation that produces the popular childrens’ program Sesame Street, received a $1,067,532 stimulus bill grant in August 2010, via the Department of Health and Human Services.

The funding was to promote healthy eating according to the federal Recovery.gov website:

SW [i.e., Sesame Workshop] will carry out an expansion of its highly successful Healthy Habits for Life initiative, which promotes improved nutrition and increased physical activity, targeting low-income preschool-aged children and their families and care providers.

The projected created “1.47″ new jobs, the website reported. How they could calculate this to a hundredth of a percent is anybody’s guess. In any event, that comes out to about $726,000 per job created.

The money is separate from the funds Sesame Workshop receives from the federally-funded Corporation for Public Broadcasting to run the Sesame Street program on PBS stations.

The Recovery Act website lists the healthy eating project as more than 50 percent completed though most of the grant money appears to have been drawn.

Sesame Street has been in the news lately ever since Republican presidential candidate Mitt Romney said  last week that he would like to cut the funding PBS even though he likes Big Bird, a popular character on the show. The statement prompted a public comment from PBS criticizing Romney.

Via: Washington Examiner

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US drops to 18th most economically free country

At its pinnacle in 2000, the United States ranked second in the world for economic freedom. In the latest report on world economic freedom from the Fraser Institute, the U.S. has now dropped all the way down to 18th, falling behind countries like Bahrain, the United Arab Emirates, Estonia, Taiwan and Qatar.

The decline did not happen overnight. “This entire decade we’ve been sliding towards this 18th ranking,” report author Joshua Hall explained to The Daily Caller News Foundation.

By 2005, the United States had already dropped to eighth in economic freedom. In 2009, the U.S. fell behind welfare state countries like Denmark, Finland and Canada.

“When people think of Canada, they think of socialized medicine, but in many facets of life, Canada is a lot more economically free than the United States,” said Hall.

The annual report uses 42 different variables that can be categorized into five distinct categories: size of government, legal system and property rights, sound money, freedom of trade internationally and regulation.

The growth of government and less secure property rights have the most to do with the United States’ drop.

“I think we think of the underlying causes of our decline in legal system and property rights, the Supreme Court’s Kelo decision [over eminent domain], the war on terror, and things related to the rule of law, things like TARP and the bail outs, have all contributed to the decline of scores in areas one and two,” Hall explained.

The Daily Caller

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TARP and GM

In December of 2008, GM approached Congress and asked for a bridge loan to allow them to restructure. While the House passed legislation to accomplish this, it was not passed through the Senate. Days later, the Bush administration initiated a loan through the TARP program which would provide $14 Billion in loans and stock purchases to GM and follow many of the guidelines that were sought in that legislation. This included a restructure plan that would have to be approved by the Obama administration.

In February of 2009 GM presented their plan to the Obama administration. The plan was seen as preferential to union workers by bondholders and many stated their intention to oppose it. In March of 2009 President Obama announced that he was not accepting the viability plan put forth by GM, but that he was authorizing more funds to keep the company afloat. President Obama also initiated programs to provide funds to companies that supply parts to GM and Chrysler.

GM was placed into bankruptcy on June 1, 2009 and the company was supplied with an additional $30.1 Billion dollars, bringing the total loans and stock purchases to $50 Billion. The company was made a private entity at that time.

The bankruptcy restructuring plan agreed upon by the government and GM gave the US government a 60% share in the company and gave the Canadian government a 12% share. The United Auto Workers gave up a health and savings plan worth $20 Billion in exchange for a 17.5% share in the company and over $8 Billion in debt and preferred stock. Bondholders held $27 Billion in stock prior to the collapse and received only a 10% equity share in the new GM company. 

Throughout the bankruptcy process, President Obama stated that he had not desire to run a car company and would not interfere with daily GM business. This is at odds with numerous actions taken before and after the bankruptcy filings.

• Days before GM was placed into bankruptcy, the Obama administration demanded and received the resignation of company CEO Rick Wagoner.
• The Obama administration pushed for the closing of numerous GM dealerships
• The substance of the bankruptcy settlement was heavily tilted to favor unions - a result that many people suggest would not have occurred without political motivations
• The bankruptcy settlement allowed the US government, the Canadian, and the UAW Union to appoint chairs of the board - an action that would directly change the direction of the company for years

The TARP program established specific rules on what could be purchased with the funds. These rules stated that only Preferred Stock or Common stock without voting rights could be purchased. The reason for this was to prevent the government from controlling a company it purchased stock in through TARP funds. President Bush violated those rules when he used the money to provide a loan to GM. President Obama further violated those laws when he purchased stock in the company and used the ownership of that stock as authority to appoint board members. The creation of programs to give funds to companies simply because they depended on GM and Chrysler for business was also not allowed in TARP documents.

Via: The Political Guide

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Report: Harry Reid Used Ted Kennedy’s Brain Cancer To Beg For Stimulus Votes…

Michael Grunwald’s “The New New Deal” details the $787 billion stimulus passed in the early days of President Barack Obama’s presidency, and offers the back story of Senate arm-twisting needed to secure the votes.

Among the revelations in Grunwald’s book is an anecdote recalling Senate Majority Leader Harry Reid’s attempt to push three veteran Republicans to vote for the bill — by guilt-tripping them over former Massachusetts Sen. Ted Kennedy’s brain cancer.

Without vote commitments from the Republicans he had hoped to push his direction, Reid brought Republican Sens. Chuck Grassley of Iowa, Thad Chochran of Mississippi and Mike Enzi of Wyoming to his office to appeal for their votes.

“He was basically pleading for our votes,” Grassely said, according to Grunwald. “He said: ‘You all know something needs to be done. The Democrats did TARP for Bush. You’ve got to look past the substance.’”

When his initial plea did not work, Reid reportedly told the three Republicans that he needed their votes so that he would not need to bring Kennedy — at the time battling brain cancer — back to work to end a filibuster.

“He said if you can’t vote with us, we’re going to have to bring Kennedy to the floor, and it really could kill him,” Grassely said. “We looked at each other like: Huh?”

According to Grunwald’s account, Reid then asked if there was a volunteer to vote on Kennedy’s behalf, as there had been precedent for “pairing votes” as a courtesy for ill senators of the opposite party. None of the three took him up on the offer, nor did Utah Republican Sen. Orrin Hatch, who Reid also attempted to pressure with the Kennedy plea.

Via: Daily Caller

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Read more: http://dailycaller.com/2012/08/17/book-reid-used-kennedys-brain-cancer-to-beg-for-stimulus-votes/#ixzz23wvElX56