konane's Blog

"Mark’s (Levin) Exclusive Interview with a Survivor from the Oil Rig Explosion

April 28, 2010

'Sedition' Is Constitutional

By John Griffing

"For the past year, the Obama administration, unable to win arguments based on facts and merit, has been moving to criminalize the political opposition in an effort to artificially control the debate. First, the DHS published reports classifying conservative viewpoints as terroristic. Then hate crimes legislation was introduced to squash religious speech regarding sexual deviancy. And finally, Regulatory Czar Cass Sunstein claimed the power to ban "falsehoods," an infraction Sunstein in his infinite nonpartisan wisdom would define and determine. And now, the ultimate political A-bomb has been introduced into the public discourse: the charge of sedition. 

That was the charge against Glenn Beck and Sarah Palin from Time Magazine's Joe Klein.  "Sedition" is a historically loaded word, since it is primarily associated with the jailing of political opponents and has traditionally been hard to identify. Those in power usually wield the "sedition" slur as a bludgeon against anyone who stands in the way of their agenda, whatever that may be.

Additional cases include New York Times Co. v. Sullivan and Watts v. United States. Although the Sedition Acts expired some years before these cases were decided, the wording is useful. In New York Times Co. v. Sullivan, the SCOTUS declared, "Although the Sedition Act was never tested in this Court, the attack upon its validity has carried the day in the court of history." In Watts v. United States, Justice  William O. Douglas concurred: "The Alien and Sedition Laws constituted one of our sorriest chapters; and I had thought we had done with them forever ... Suppression of speech as an effective police measure is an old, old device, outlawed by our Constitution." And finally, Watkins v. United States held that those accused under the Smith Act could rely upon the First Amendment as defense, holding that "[a] congressional investigation is subject to the command that Congress shall make no law abridging freedom of speech or press or assembly." This last case was especially relevant during the so-called Red Scare, when hundreds of suspected Communists were the left's cherished victims of America's own show trials.

There are the occasional nuts on both ends of the political spectrum, but to tar half of America with such a firebrand word is to engage in willful deception and intimidation -- especially in cases like that of alleged offender Glenn Beck, who is on record promoting nonviolence.

Bottom line: If debates cannot be won based on the strength of arguments, and it becomes necessary to engage in threats and ad hominem attacks, then the debate has already been lost by whoever resorts to these lowbrow devices. Maybe Cass Sunstein should spend some time examining the "falsehoods" emanating from members of his own party, like Nancy Pelosi's decision to stop just short of calling conservative Americans Nazis. It is remarkable that we live in a time when the Speaker of the House can impugn her own constituents with the crudest label known to man and escape serious consequences.

"Rule of law is not for sale in America

By:Gregory Kane
Examiner Staff Writer
April 29, 2010

Source WashingtonExaminer.com 

"Legislators in the sovereign state of Arizona apparently missed the documentary "Un Sueno Americano." And well they should have.

Earlier this month, Arizona passed a law giving police the power to question people about their immigration status. But not just any people. Those questioned must have been stopped by police for a perfectly legal reason first.

Terry stops -- what police call "stop, question and frisk" stops -- have been legal since 1968, so the Arizona law is perfectly constitutional. (Memo to President Obama and Attorney General Eric Holder: Now might be a good time for the two of you to actually read the Constitution you've sworn to uphold. You might want to add the Supreme Court's 1968 opinion in Terry v. Ohio to your list.)

Arizona's law passing constitutional muster didn't stop the predicted outcry from America's repeal-all-immigration-laws-now crowd. No sooner was the law passed than charges of racism sprang up. I'm betting critics haven't even read Arizona's law, but they've probably watched repeated showings of "Un Sueno Americano."

I caught the film on the Documentary Channel, which I stumbled across by cruising through my DirecTV program guide. I love documentaries, so finding a channel that airs them nearly 24 hours a day made me feel as if I'd died and gone to Chicago. (Yeah, I love Chicago too.)

When done right, documentaries can entertain and inform. "Un Sueno Americano" didn't entertain very much, but it sure as heck informed. And here's what I learned.

Did you know the rule of law is up for sale in America?

"Un Sueno Americano" -- Spanish for "An American Dream" -- is blatantly pro-illegal immigration. That is, pro-illegal immigration from one direction. That would be from south of the United States into the United States. I suspect the producers of "Un Sueno Americano" feel Mexico's immigration laws are perfectly fine.

The gist of the film is that those who enter the United States illegally are coming here to be part of the American dream, in hopes of getting a better life. At one point the film's scriptwriters mention that the poverty rate in Mexico is 40 percent. The implication is that those Mexican poor are somehow the responsibility of the United States, not Mexico.

But here is where that logic -- if indeed it can be called that -- breaks down. If America is obligated to take in Mexico's poor and educate them, and provide them with health care and jobs, then it has that obligation to the poor of every nation in the world.

How many people would that be, exactly? The numbers are staggering; we simply can't afford to do it.

The more practical solution is the one everybody ignores: Implore or compel the Mexican government to address the needs of its own poor so they don't have to sneak into the United States illegally. But suggest that and the charges of racism will fly anew.

At another point in "Un Sueno Americano" some guy is going on and on about is the billions of dollars illegal immigrants add to the American economy in pursuit of their dream. But the American dream is worthless without the rule of law. Or, to quote our president on the matter of immigration: "We must remain a nation of immigrants and a nation of laws."

So the film's producers are saying, in essence, that because illegal immigrants bring us a ton of money, then somehow the rule of law is canceled in this country. Either that, or the rule of law is for sale in America.

That might be true in Mexico, but it sure as heck ain't the case here."

Examiner Columnist Gregory Kane is a Pulitzer-nominated news and opinion journalist who has covered people and politics from Baltimore to the Sudan.

http://www.washingtonexaminer.com/opinion/columns/Rule-of-law-is-not-for-sale-in-America-92316274.html

"HOW MUCH IS 'ENOUGH'?

By Neal Boortz

Quoted exactly as posted including picture.

"he (Obama) spoke the most revealing and clarifying 10 words of his administration this week: "I think at some point you have made enough money."

Excuse me!!!!!!!!!!!!!!!!! 

________________

 

"At some point you have grabbed enough power

Source Powerlineblog.com

Via SteveQuayle.com Q News

____________

"Megabanks: The Banking Oligarchy That Controls Assets Equivalent To 60 Percent Of America’s GNP

Link to the Forbes column referenced below .... suggested reading.

_____________

http://www.forbes.com/2010/04/23/general-motors-economy-bailout-opinions-columnists-shikha-dalmia.html?boxes=opinionschannellatest

___________________

"Investigate this

Source Powerlineblog.com

VAT, first rolled out in 1950s France, is a sales tax on everything that every person or entity buys within a country, with exceptions or reductions carved out for things like food, newspapers, or various links along the industrial supply chain.

But as the last 18 months of federal misgovernance has aptly demonstrated, we do not live in anything like an ideal world.

The only reason VAT is even on the table right now is that bureaucrats like VAT enthusiast Nancy Pelosi have an appetite for spending that far outpaces Americans’ willingness to cough up their hard-earned dough. Every statehouse and city council across the land is literally out of money, and turning to the only people who can print the stuff: Washington.

The federal government spent $3.5 trillion last year while taking in just $2.1 trillion, producing a deficit-to-Gross Domestic Product ratio of 10%, a level not seen since World War II. By contrast, the European Union requires member countries to keep deficits at 3% of GDP. If America was in Europe, we’d be Greece.

What’s worse for us is that we’ve pretty much given up trying to address the root problem, which is the decade long spending binge initiated byGeorge W. Bush and then tripled down on by Barack Obama. The VAT isn’t a way to streamline a complicated tax code; it’s a new spigot to flood money into the pockets of teachers who can’t be fired, and securities regulators who can’t get enough porn.

The grand irony here is that the very continent we’re scrambling to emulate has been moving aggressively in the opposite direction on taxes and economic policy.

While the US keeps corporate taxes frozen near 40%, EU countries have slashed them down to an average of around 25%. Top marginal income tax rates, which in the US are 35%, are under 25% all across the former East Bloc.

As the share of government spending in health care has been steadily increasing in the US, it has been inching downward in Europe. While first Bush and then Obama pushed through massive new public entitlements, governments from Stockholm to Rome have been grappling with real private reform.

Though conservatives especially like to sneer at the democratic socialism of Old Europe, it is precisely those cheese-eaters in France and Vikings up north who have been leading the world in privatization these last two decades, selling off everything from airports to sewage companies.

It was hardly an accident that, in the midst of Washington’s partial nationalization of Detroit automakers, Swedish Enterprise Minister Maud Olofsson announced “The Swedish state is not prepared to own car factories.” With this week’s news that General Motors is “paying back” one set of Troubled Asset Relief Program loans from another pile of TARP money, we can see why Europeans have a lot to teach us about separation of industry and state.

Where Republicans look across the Atlantic and see soft socialists worth avoiding, Democrats see enlightened progressives worth emulating. And it does not matter how little reality conforms to either fantasy.

So now the federal government is pushing to ape Germany and France in paying individuals far-above-market prices for selling their excess solar or wind power back to the electricity grid. The only problem? Those countries are running, not walking, away from those unaffordable programs.

The same dynamic is at play with labor relations.President Obama is on record pushing organized labor’s dream policy of “card check,” which would drastically bump up private sector unionism after decades of steady decline, and he has gone so far as appoint to his bipartisan “deficit commission” the notorious labor honcho Andy Stern.

Meanwhile Germany, which has the tightest labor-management-government relations in the EU, has been aggressively loosening, not tightening, workplace rules.

The fact that America’s most influential public-sector union leader is within a thousand miles of a deficit commission, let alone one that is floating the idea of an American VAT, tells you all you need to know about the relationship between any new consumption tax and fiscal responsibility. Which is to say, there isn’t any.

The solution to unsustainable budget deficits and precarious debt levels remains the same as when Barack Obama took office: Stop spending so much ed money. Until government gets serious about that, trial balloons for gobbling ever-more tax money deserve nothing more than a good swat.

And we’ll be left with a massive exodus of business geniuses to that bastion of capitalism — France."

"ATLANTA -- A GOP businessman who has thrown $2 million of his own money into running for governor is refusing to swear loyalty to the state Republican Party.

Party leaders say the oath is required to run as a Republican in Georgia.

But Ray Boyd said he cannot pledge allegiance to a party "that's drifted away from its core principles."

"I'm not a Republican who follows the sheep," Boyd said in an interview with The Associated Press.

"They're going to have to throw me out of the party because I am prepared to go to the mat over this."

Republican Party Chairwoman Sue Everhart said Boyd must either sign the pledge or he cannot run on the GOP line.

"I don't know what the big problem is - you either are a Republican or you're not," she said.

"This is not saying you can't disagree with the party, people do that all the time. This says that he agrees with our principles and that he will agree to abide by those principles."

Boyd said he's provided the state party with alternative language - saying he would not be bound by any position of the Georgia Republican Party - but Everhart wouldn't listen.

He likened Everhart to (Democratic House Speaker) Nancy Pelosi.

The 67-year-old from Rutledge burst upon the Georgia political scene when earlier this month he filed paperwork showing he has invested $2 million of his own money into winning the Republican nomination for governor. Seven other Republican candidates were already jockeying for the GOP nod.

His $2 million gambit immediately became the talk of state politics. While wealthy political insiders don't have a track record of success on the campaign trail in Georgia, an anti-incumbent wind this year has left many wondering of Boyd could stir things up, particularly with tea party activists in the state.

In Georgia, candidates must qualify to run with their respective parties, paying a fee and filing paperwork. The parties then submit the names of the qualified candidates to state elections officials to be placed on the ballot.

Georgia law allows state political parties to require a specific pledge if they choose.

The state Republican Party has adopted the oath as part of its rules. The state Democratic Party has not and a spokesman said no similar pledge is required to run as a Democrat.

Boyd said Lt. Gov. Casey Cagle's decision to strip state Sen. Preston Smith of his chairmanship of the Senate Judiciary Committee for failing to support a new tax on hospitals showed why he could not sign an oath to the GOP.

"It reaffirms to me why I'm running against these politicians who will sign anything, they will say anything," Boyd said. "It's an oath, by God, it means something to me."

Everhart said the next move will be up to Boyd.

"I don't know what else to do for this gentleman. I think he is angry and wants to have his way," she said."

Butch2030 posted an excerpt to a CNN article about remote control of insulin and the fear of someone playing havoc by hacking into the system.  https://www.lotterypost.com/news/212498/1621920

"Senate Panel Previews Electronic Health Technology
 

  Monday, April 26, 2010
By Matt Cover, Staff Writer

Source CNSNews.com

PanasonicTOUGHBOOK H1 with Blood Pressure Monitor, Cardiovascular and Weiging Scale device specializations by Bluetooth (Photo courtesy of Continua Health Alliance)

 

"(CNSNews.com) – The Senate Committee on Aging last week offered a preview of the government’s future role in health care, showing how Americans will interact with doctors and other health care providers. The demonstration offers a glimpse at an overlooked effect of health care reform.
 
The effort, loosely called e-Health or e-Care, combines health-care technology with 21st-century Internet connectivity. It will allow doctors to interact with their patients through innovations such as video chats, telephone health checkups, and home-health monitoring devices that relay data over wireless Internet connections.
 
“The development of the broadband network and health information technologies has the potential to truly transform health care and simultaneously enable better outcomes and lowering costs,” said Sen. Susan Collins (R-Maine).
 
One of the new health technologies on display last Thursday was an automatic drug dispenser that can monitor and adjust medication dosages wirelessly, allowing doctors to tailor dosages of drugs such as insulin without having to schedule in-person visits with patients. 
 
“What we’re talking about, folks, is using a device like this one,” Sen. Ron Wyden (D-Ore.) said, as he displayed the small device. “It attaches to the patient’s skin and is loaded with drugs that are administered in the exact way that the doctor prescribes – wirelessly.
 
“That means that a doctor can vary the doses based on the information the doctor is receiving [from the monitor]. The patient doesn’t have to go in to the doctor and then the pharmacy to change his or her prescription,” he said.
 
The data recorded by such devices would be automatically uploaded to a patient’s electronic health record, which could then be reviewed by a doctor from a computer or smart phone, allowing the doctor to monitor a sick patient in almost real time.
 
“This device here connects to other devices that measure a patient’s blood pressure and glucose [sugar] levels – things that any doctor treating a diabetic patient wants to know about,” Wyden said. “It wirelessly uploads this data to an electronic medical health record that is monitored by a health care professional.”
 
The key to the new health care technology is broadband Internet connectivity, Wyden explained, because new technologies such as home monitors and new methods such as video conferencing require high-speed connections.
 
“What all these devices and technologies require is access to a high-speed Internet connection, or what is commonly called ‘broadband,’” he said.

In adopting these new technologies, the government aims is to reduce the cost of Medicare by changing the way it pays doctors, who would be allowed to bill for Internet-based "visits" with patients instead of in-person visits.
 
“Five percent of Medicare beneficiaries, who in most cases have one or more chronic conditions, constitute 43 percent of Medicare spending,” Dr. Mohit Kaushal, health care director at the Federal Communications Commission, told the committee.
 
“But there’s a set of broadband-enabled health information technology, both now and emerging from development, that can mitigate many of these issues and reduce the cost of care while improving clinical outcomes,” Kaushal said.
 
Kaushal, testifying before the committee via video conference due travel disruptions caused by the Icelandic volcano, said that Medicare needs to begin reimbursing for e-Care technologies so that doctors will have an incentive to purchase and install them.
 
“Given what it will take to implement an outcomes-based reimbursement model [for Medicare] reimbursement should be expanded for e-Care technologies that will improve system-wide expenditure reductions under CMS’ [Center for Medicare and Medicaid Services] fee-for-service model,” Kaushal said.
 
Other areas of interest include medicines that can tell a doctor if they have been taken on time, wireless monitoring of nutritional information, and sensors worn on the body or placed around the home that can detect if an elderly person has experienced a fall, alerting emergency personnel and the person’s doctor.
 
“Continuous monitoring of vibrations in the floor can detect falls and classify them according to the best choice of first responders – either a 911 call or a visit from a caregiver,” University of Virginia professor Robin Felder told the committee.
 
“Emerging technologies allow pills to be electronically outfitted with transmitters to communicate with the user’s wristwatch that shows that the pill has been consumed,” Felder continued. “Broadband connectivity of these devices would allow the electronic medical record to be updated with regard to medication compliance and efficacy.”
 
Government plans to use grant programs, as well as Medicare’s Center for Medicare and Medicaid Innovation – established by the health care reform package passed in March – to test which technologies actually work.
 
“The new Center for Medicare and Medicaid Innovation is given authority to test innovative payment and service model,” Dr. Farzad Mostashari, senior advisor at the Office of the National Coordinator for Health IT at the Department of Health and Human Services, said.
 
“These models may include care coordination for chronically ill individuals at risk of hospitalization through telehealth, remote patient monitoring, care management, and patient registries,” he explained.
 
While the government’s current focus is on saving money in Medicare, private sector companies see much broader uses for e-Care technology.
 
Eric Dishman, global director of health innovation and policy at Intel Corporation, compared e-Care to the e-mail revolution of the late 1990’s, saying that new health technology is not meant to replace the doctor-patient relationship.
 
“None of this effort is about replacing the traditional doctor-patient relationship, but it’s about enhancing and extending it to more people and regions of the country,” Dishman explained.
 
“Just as e-mail became a new way of interacting with other people that didn’t replace all other forms of communication such as phone calls and letters, e-Care uses new technologies to create a new way of providing care that complements – but doesn’t replace – all clinic visits,” he said.
 
Despite the high praise and high hopes expressed by everyone in attendance, e-Care technology is still very much in development requiring more market innovation and “thoughtful study” to see which methods work and which ones don’t.
 
“We don’t yet have all the answers,” Mostashari said. “They will come from continued market-based technology innovation paired with more results-oriented payment and thoughtful study to capturing the lessons and evidence from ongoing efforts.”

 

by Arnold Kling
This article appeared in the April 5, 2010 issue of the National Review.
Source Cato Institute

 

"It's politics, not economics, that made them behemoths

 

"Big banks are bad for free markets. Far from being engines of free enterprise, they are conducive to what might be called "crony capitalism," "corporatism," or, in Jonah Goldberg's provocative phrase, "liberal fascism." There is a free-market case for breaking up large financial institutions: that our big banks are the product, not of economics, but of politics.

 

There's a long debate to be had about the maximum size to which a bank should be allowed to grow, and about how to go about breaking up banks that become too large. But I want to focus instead on the general objections to large banks.

 

The question can be examined from three perspectives. First, how much economic efficiency would be sacrificed by limiting the size of financial institutions? Second, how would such a policy affect systemic risk? Third, what would be the political economy of limiting banks' size?

 

It is the political economy that most concerns me. Freddie Mac and Fannie Mae represent everything that is wrong with the politics of big banks. They acquired lobbying prowess, their decisions were distorted by political concerns, and they were bailed out at taxpayer expense. All of these developments seem to be inevitable with large financial institutions, and all are deeply troubling to those who value economic freedom. Unless there are tremendous advantages of efficiency or systemic stability from having large banks, their adverse effect on the political economy justifies breaking them up.

 

If we had a free market in banking, very large banks would constitute evidence that there are commensurate economies of scale in the industry. But the reality is that our present large financial institutions probably owe their scale more to government policy than to economic advantages associated with their vast size. Freddie Mac and Fannie Mae were created by the government, and they always benefited from the perception that Washington would not permit them to fail -- a perception that proved accurate. Similarly, large banks were viewed as "too big to fail," which gave them important advantages in credit markets and allowed them to grow bigger than they otherwise would have. In 2007 and 2008, Lehman Brothers was able to obtain substantial short-term credit from what otherwise would have been risk-averse money-market funds, notably the Reserve Primary Fund, which "broke the buck" after Lehman's collapse, greatly intensifying the subsequent financial panic. It is difficult to view Reserve Primary's large position in Lehman debt as anything other than a bet that the government would engineer a bailout. It probably would have parked its funds elsewhere had Lehman been considered small enough to fail.

 

Other policies in recent decades have subtly favored big banks. The government encouraged the boom in securitization, for instance, which helped swell the size of financial firms and was stimulated by banks' desire to skirt capital-requirement rules. And the credit-rating agencies' outsized role in financial markets -- indeed, the very existence of a small, powerful cabal of federally approved rating agencies -- was the work of regulators. Such policies fostered large financial institutions such as AIG, which built its huge portfolio of credit-default swaps on the basis of Triple-A grades from the credit-rating cartel.

 

Turn now to the question of efficiency: Is bigger better for consumers? Bankers speak mystically about the "financial supermarket" and claim that there are tremendous economies of scope in financial services, meaning that a consumer benefits from being able to have a checking account and a stock portfolio at the same large firm. But in practice, whatever benefits might be derived from such a supermarket are probably more than offset by the diseconomies of managing such a complex entity.

 

Another unsound argument is that large banks are needed to finance large multinational firms. If large international firms require big capital investments, these can be obtained by issuing securities or by loan syndication, in which the risk of borrowing is spread across several banks. The existence of large non-bank firms does not imply the need for similarly gigantic banks.

 

There are economies of scale, but small banks can take advantage of them, too. For instance, a small bank can join an ATM network or contract with a third party to develop Internet services. It does not have to build such systems from scratch, and we do not need big banks to make them possible.

 

Which brings us to the question of systemic risk. Regulation can, of course, make systemic risk worse: The U.S. banking crisis of the 1930s was exacerbated by the fact that banks could not start new branches across state lines or, in many cases, even within the same state. This led to poor diversification of regional risk. The regulation in question was admittedly poor, but we need not return to the banking system of the 1930s to achieve a reduction in the size of America's largest banks.

 

Some point out that the Canadian banking system performed relatively well during the financial crisis, noting that Canada's assets are concentrated in just five large banks. This is offered as evidence that large banks are conducive to financial stability. But while Canada's big banks have a big share of the country's assets, they still are much smaller than America's largest banks: Bank of America and JP Morgan Chase are three or four times the size of the Royal Bank of Canada, Canada's largest. And while its banking marketplace is dominated by five big players, Canada's population is less than one-seventh that of the United States; even if we concede that Canada is served well by five large banks, the equivalent in the United States would be 35 large banks. In 2008, total assets of the U.S. banking system were about $10 trillion, with the top five bank holding companies in possession of $6 trillion. If the entire $10 trillion had been divided evenly among 35 banks, none would have accounted for more than $300 billion in assets; all of our banks would have been smaller than the fifth-largest Canadian bank.

 

Overall, there is little evidence that really big banks are necessary to a sound financial system. The financial crisis demonstrated that they are not sufficient for a sound financial system. And it is possible that without very large banks the system actually would be more robust. Certainly, the failure of any one bank would be less traumatic if the size of that bank were small relative to the overall market.

 

I am not optimistic that there is an easy cure for financial fragility even if we break up the banks. To the extent that they share exposure to the same risk factors, a system with many small banks could be just as vulnerable as a system with a few large ones. The fundamental sources of financial risk -- including leverage, interest-rate risk, exchange-rate risk, and speculative bubbles -- have a way of insinuating themselves regardless of the banking industry's structure and in spite of the best intentions of regulators. But while no one can promise that breaking up large banks would make the financial system safer, it would without question make it less corporatist. Which returns us to the question of political economy.

 

In the United States, big banks provide an invitation to mix politics and finance. Large financial firms get caught between public purposes imposed on them by Congress and the interests of private stakeholders. If they do not maintain good relations with legislators, they risk adverse regulation. Therefore, it behooves them to shape their regulatory environment. And they have done so. In recent decades, the blend of politics and banking created a Washington-Wall Street financial complex in the mortgage market. This development, and its consequences, have been well documented. Michael Lewis's 1989 book Liar's Poker includes a portrayal of the political exertions of investment bankers to enable mortgage securitization to take off. "The Quiet Coup," an article by Simon Johnson that appeared in the May 2009 issue of The Atlantic, chronicles the rapid accrual of profits and power by large financial institutions over the past 30 years; during this period, Wall Street firms were able to shape the basic beliefs of political figures and regulators, a phenomenon that Brookings Institution scholar Daniel Kaufmann has dubbed "cognitive capture." Andrew Ross Sorkin's Too Big to Fail, which describes the response of the Federal Reserve and Treasury to the financial crisis, leaves the distinct impression that senior bankers had much more access to and influence over Washington's decision makers than did career bureaucrats.

 

Notwithstanding the good intentions of policymakers, who no doubt plan to create a stronger regulatory apparatus going forward, large banks will inevitably have too much power for the apparatus to govern them. They will shield themselves from its attentions by making political concessions on lending practices. So long as big banking is conjoined to big government, that is, we risk a return to the regime of private profits and socialized risk.

 

I would prefer a completely hands-off policy when it comes to financial markets, but the political reality is that deposit insurance and regulation are not going away. Given that they are not, the worst possible outcome is that the marriage of politics and finance evolves into outright corporatism, as it did with Freddie Mac, Fannie Mae, and the rest of the nation's largest financial institutions. And that evolution is directly attributable to the influence that comes from banks' being big enough to achieve real political power. To expand free enterprise, shrink the banks."

 

by Andrew Mellon

Source Big Government

"At the end of 2007, hedge fund billionaire John Paulson invested $15 million in the leftist non-profit, Center for Responsible Lending, their largest single donation ever. Around the same time, Paulson and his employees contributed over $100,000 to the Democratic Senatorial Campaign Committee, headed, at the time, by Sen. Chuck Schumer. Roughly six months later, CRL and Sen. Schumer both launched a highly public attack on the California-based mortgage lender, Indymac. The lender failed, wiping out the investment of thousands of people. Roughly six months after that, John Paulson, in partnership with George Soros, bought up the remnants of Indymac for pennies on the dollar.

It is a drama that no longer surprises us, unfortunately. Wealthy investors use their access to elected officials and their checkbook to advocacy groups for private profit. But this story has a twist; a top executive of CRL when this deal went down, Eric Stein, is now working at the Treasury Department,  heading up the proposed Consumer Financial Protection Agency. Mr. Stein will be the chief federal official designing regulations to protect consumers. Right.

This is that story.

Financial crises create opportunities. Prudent and discerning entrepreneurs who save their capital for a rainy day are able to acquire assets at firesale prices and put these assets to higher and better uses. Market forces cleanse wasteful malinvestments, innovative business models make existing ones obsolete and the economy roars forward all the stronger for it.

But while market entrepreneurs generally prosper during times of great dislocation, ultimately to the benefit of all participants in the economy, today political entrepreneurs have hijacked the economic system. The politically connected elites have used this downturn to carry out a massive wealth transfer from the people to the public and private sectors, fleecing the middle class for their own enrichment.  In their hypocrisy, the long ago small businesses that grew large because of free markets have helped chain these markets through lobbying for regulations and subsidies to shield themselves from competition and their own errors.

This has occurred most egregiously in the financial sector, where there has been a veritable free-for-all in legalized political plunder.  Those who understand the illusory nature of our monetary and symbiotically related political and financial systems have clamored to profit as much as possible before the house of cards falls, with the sanction of our supposed representatives.

 

The biggest asset bubble contributing to this Depression, occurring in housing, was largely attributable to artificially low interest rates, government agencies and concomitant policies that pushed profligate lending, and the lobbying and more brutish efforts put forth by the groups that proliferated around and prescribed to the pollyanish at best and perverse at worst “home-ownership for every American” persuasion.

Here at Big Government we have been working to pull the veil back and expose these organizations, most notably in the Center for Responsible Lending (CRL). As readers may recall, most recently we examined the Center’s alleged lobbying violations.  This organization is highly significant in that for its efforts, the CRL has won a front row seat in helping design the Consumer Financial Protection Agency (CFPA), as one of its major architects is former CRL senior executive Eric Stein who is serving as the Treasury Deputy Secretary for Consumer Protection and will likely be tabbed as the CFPA Czar.

Like with all of the economic and social justice-peddling shell organizations, in the case of the CRL the acorn does not fall far from the ACORN. Hidden beneath an innocuous title is an organization in the CRL whose activities serve ends directly opposite of those they purport to promote. Under the guise of fostering fairness in lending, the CRL has been used as an attack dog to force banks to lend to poor credit risks.  Due to the Community Reinvestment Act (CRA), redlining lawsuits and the intimidation of groups like the CRL, many banks were threatened into creating mortgage products such as Alt-A and NINJA loans, discarding all rational lending standards and helping create a market ripe for speculators and sure to ultimately be delinquent homeowners.

That the CRL has been largely funded by the Sandler family of option-ARM (and SNL) fame in itself stinks. The Sandlers, Co-CEOs of Golden West Bank were major underwriters of these mortgages generally structured to have low “teaser” rates in early years, followed by massive increases in rates when the mortgages reset, rates that many borrowers could never afford.  The explosion in this imprudent lending helped pump housing prices to epic levels, and the Sandlers wisely dumped these mortgages on Wachovia as the bubble reached its apogee. This is a Soros-like strategy of playing the market, which is likely no coincidence as we will soon see.

John Paulson, recently back in the news due to the SEC’s civil suit against Goldman Sachs was the most famous winner of the subprime mortgage debacle, as he used derivatives to bet against mortgage-backed securities that in some cases he had worked with banks to create in order to profit when the housing market crashed. He has received much acclaim for being an astute investor who took a contrarian view and put his money to work accordingly even in the face of rising housing prices, placing bets that ended up paying off handsomely. Paulson & Co. earned an unprecedented $15 billion from the trades, and Paulson himself was said to pocket approximately $4 billion in 2007.

While overnight, Paulson became a celebrity in the financial community, with the media following his every move, interestingly one tidbit seems to have largely evaded them. As John Paulson noted in a statement to the House Committee on Oversight and Government Reform in November of 2008,

As we saw the difficulty homeowners were having in making mortgage payments, in July 2007, prior to the initiation of any government support programs, Paulson & Co. made a $15 million charitable contribution to the Center for Responsible Lending to form the Institute for Foreclosure Legal Assistance (IFLA). The institute supports local groups across the country providing legal representation to families facing foreclosure.

Incidentally, the IFLA is being managed by the National Association of Consumer Advocates (NACA), another ACORN-like organization that helped inflate the housing bubble with its dubious practices.

That Paulson would make such a donation is ironic, in that his contribution came from money that Paulson & Co. had earned from the collapse of the very housing bubble that the CRL had helped to blow.  While most in the media remained mum on this curious gift, to its credit, Business Week provided a disturbing but logical reason for it, insinuating that Paulson was to financially benefit from a bankruptcy reform bill that the CRL was advocating.

According to a trade publication called the Credit Union Times, in early 2008 Republican Representative Patrick McHenry sent a letter to Democratic Representative Barney Frank requesting a hearing on the use of non-profits to manipulate markets, citing Paulson’s donation as being reflective of this problem.  Specifically he asserted, “In October, he [Paulson] gave $15 million to the Center For Responsible Lending, which has been leading the charge in lobbying for a law that would let bankruptcy judges restructure mortgage loans. By forcing servicers to accept lowered monthly payments, market values would likely fall even further, and Mr. Paulson would most definitely benefit financially.”  This issue though quite suspect is not nearly as significant as the one we are approaching.

Paulson was not the only major benefactor of the CRL.  As Activist Cash notes, George Soros’ Open Society Institute has donated at least $100,000 to the CRL. Soros of course seems to be behind almost all of these leftist groups as has been well-documented in numerous articles and in David Horowitz’s 2007 book, The Shadow Party: How George Soros, Hillary Clinton, and Sixties Radicals Seized Control of the Democratic Party.  When it comes to Soros’ character and aspirations, it bears noting that Soros willingly confiscated property with the Nazis who slaughtered his own Jewish people during the Holocaust, and was quoted in a <snip>ing 2004 Newsmax article as saying that he wanted to “puncture the bubble of American supremacy.”  He has also had a penchant for making bundles of money off of collapses resulting from the socialist policies that he so ardently supports. Needless to say that in my view, George Soros is a dangerous and diabolical character.

During the throes of the credit crisis with banks failing across the country due to their collapsing loan portfolios, friends of the CRL John Paulson and George Soros along with a handful of other money managers formed an investment vehicle called IMB Management Holdings to acquire these beaten down assets. The first bank that they purchased? IndyMac.

As you may remember, IndyMac was the struggling bank that New York Democratic Senator Charles Schumer curiously was said to have caused a run on in July of 2008, and I say curiously given that a. IndyMac was a commercial bank in California, about as far as could be from Schumer’s constituents, and b. normally it does not fall under the job description of members of Congress (even ones with a fetish for the camera as great as that of Schumer) to leak statements that may materially affect financial institutions. Schumer’s statements on the problems of IndyMac were eerily similar to those divulged in a report released by the Center for Responsible Lending entitled “IndyMac: What Went Wrong? How an “Alt-A” Leader Fueled its Growth with Unsound Abusive Mortgage Lending.”  The very business that the CRL had helped push banks like IndyMac into was now being criticized by the CRL as abusive.

The timing of Schumer’s actions and those of CRL are worth noting. Sen. Schumer released his “concerns” about Indymac on a Thursday. On the following Monday, CRL released their “report” on Indymac.  Understand, the CRL report was the first time in the organization’s history that they released a full research report on an individual company. Built on interviews with former employees, the report would have taken some time to compile. It may have been a weird coincidence, but a PR firm could not have designed a better schedule.

Whether or not Schumer and the CRL orchestrated the bank run, within 11 days of Schumer’s revelations, depositors withdrew more than $1.3 billion from IndyMac.  A bank that at its peak in March of 2008 had held $32 billion in assets was sold to Paulson and Soros’ holding company for $13.9 billion in a deal that closed in March of 2009.  Created out of IndyMac’s remains was OneWest Bank.

Senator Schumer and The Center for Responsible Lending appear to have been on the same page for some time.  In February of 2008, the CRL cited Senator Schumer in a white paper critical of Countrywide’s lending practices.  In March 2009, Schumer co-sponsored a bill to create a “Financial Product Safety Commission,” supported by “over 55 national and state organizations, including Consumer Federation of America, Center for Responsible Lending, Leadership Conference on Civil Rights, NAACP, La Raza, AFL-CIO, SEIU, National Consumer Law Center, Consumers Union, Public Citizen, and US PIRG.”  Additionally, in June of 2009, Senator Schumer was honored by ACORN, one of the CRL’s closest allies. When these points are considered in context of Schumer’s ideological bent and constituency, I believe it is safe to say that at the very least Schumer is sympathetic to the CRL’s agenda.

Senator Schumer has also had substantial financial ties to George Soros and John Paulson.

Most recently, in June of 2009 Soros donated $2000 to Schumer.  In 2005, Soros hosted a fundraiser for Democratic Senatorial candidates headlined by Schumer.  In general, given the millions of dollars that Soros has contributed to Democrats and Democratic causes over the years, it is likely that other benefits both direct and indirect have accrued to the New York Senator courtesy of Mr. Soros.

Meanwhile, John Paulson’s hedge fund Paulson & Co. has been a very generous donor to Democrats.  In 2007, Paulson made a $25,000 donation to the Democratic Senatorial Campaign Committee (DSCC) chaired by none other than Senator Charles Schumer (outdoing even Soros who only contributed a measly $21,750 to the DSCC that year), and also contributed $2300 each to Senate Finance Committee Chairman and Democrat Max Baucus, and Senate Appropriations Subcommittee on Financial Services Chairman and Democrat Dick Durbin.  All told, during the 2007-2008 fundraising cycle, Paulson & Co. contributed $105,000 to the DSCC, $20,700 to Baucus and $19,400 to Durbin.  More recently, Paulson is reported to have held a $1000-per-head fundraiser for Democratic Senate Banking Committee Chairman Chris Dodd.

Now to be fair, it is common practice for Wall Street firms to donate to politicians that legislate on issues dear to them, but in the case of these two gentlemen, donations have been decidedly partisan and closely connected to Schumer.

To review, George Soros and John Paulson are major supporters of the CRL, the ACORN-like group that helped contribute to the financial crisis and whose former principal Eric Stein is now building and set to run the Consumer Financial Protection Agency. Chuck Schumer likely shares the CRL’s agenda and appears to have helped precipitate a run on IndyMac at the same time as the release of the CRL’s critical report on the same bank, a bank that Soros and Paulson were later able to purchase in a sweetheart deal with the FDIC (though the FDIC has reacted in unprecedented fashion in vehemently denying this claim). Soros and Paulson have been major contributors to Senate Democrats including Schumer and his allies.

To add another wrinkle to the story, in July 2008, shortly after regulators seized IndyMac, Self Help, the financial parent of the CRL that spawned in response to the CRA chartered a credit union in California with $5 million.  The purpose of the union was to serve “low-wealth California families,” likely the same families that IndyMac had targeted before its collapse.  According to the Credit Union Times, Self Help has swelled since its inception and now controls $150 million in assets.

Can this all be a coincidence?  Given George Soros’ proclivity for shady dealings in his profiting from the collapse of the Soviet Union, and in his downright frightening instigation of “velvet revolutions” abroad, it is hard to imagine him partaking in a venture in which the odds are not decidedly in his favor.  Soros’ investing style is to guarantee success by supporting policies that undermine countries and their industries, and profit handsomely off of their failures and at times subsequent bailouts, be it in the case of the British pound or Citigroup.  What is peculiar is how wedded Soros has become to John Paulson, a man whose past I have not found to be checkered with progressivism, but I suppose their profits trump partisanship.

The above shameful narrative is in my view illustrative of the rule rather than the exception in contemporary America.  Simply put, the house always wins.  The house is the government-financial complex.  The best political entrepreneurs enjoy the spoils of this corrupted system at the expense of market entrepreneurs and the American people.  This system can only last so long before it collapses, and knowing this, the most adept players are cashing in under the pretense of crises that will pale in comparison to the ones we will ultimately face if we do not reverse our path as a people.

The MSM’s reticence to investigate the CRL represents another failure on their part to do their job.  More important however are the the implications herein regarding the CRL’s potential complicity with Senators and hedge fund managers which appears to be not only outrageous, but hazardous especially in light of the CRL’s role in forthcoming financial regulation.  Yet this particular story represents a mere symptom, albeit writ incredibly large, of a socialistic and thus immoral system that is fast accelerating our demise."