Politics Fixing the Economic Crisis

Some thoughts from one who has some experience in compromise and taking the heat that comes with tough decisions. There are some things that should be easy. CEOs and their top people must be highly compensated, or they won’t take the jobs, unless they have broken some laws and want to save their rear ends. There are ways to solve this, but not overnight. Those who tried to get rich, (and some of them did) by buying multiple houses, and using equity leverage to buy even more, must not be protected from foreclosure, and should be penalized. I’d like to include the scammers who sold these “Get rich and No Down Payment” schemes in seminars, or on the internet. They fleeced a lot of folks, who now can’t pay the mortgage debt they incurred. They need to be sorted out and the lender should foreclose. without taxpayer support.

The real problem is the sub prime debt that is nearly impossible to solve. It has brought FNMA and Freddie, as well as some large investment bankers to ruin. As a banker who handled the investment accounts for two national banks, I can assure you that the high pressure salesmanship is nearly impossible to resist, especially when competitors are buying high returns and stockholders and regulators want the bank to make as much or more money than peer groups banks.

Another name for it is greed.

When I came back to banking after trying retirement, I asked what these M.B.S. securities were that were showing in the investment account. “Mortgage Backed Securities,” I was told and when I finally realized they were backed by loans made to sub-prime borrowers, meaning people with poor credit or no credit check, I could not believe it! Of course they paid a bit more interest and were issued by agencies of the federal government.

So what?

People with poor credit can’t or don’t pay their bills. Every loan officer in every bank knows this. I know from experience. I grew up with a single mom and we were poor. My first job out of college was collecting delinquent accounts for GMAC. To put these type of loans into securities, and put sales people who make LOTS of money selling these shams is akin to fraud!

The big problem is that we can’t let the whole system fail.

More later.

Which Presidential Candidates to Choose?

We seem to be in really deep do-do in just about every area that has ANY THING to do with politics. Many years ago, I decided that how I felt about candidates was not going to change any one’s vote, (including my family) so it seemed futile to argue with my friends about it. Furthermore, over the years, some candidates I did not care much for turned out to do a better job than I thought.

My first presidential vote was for Harry Truman, although it was based more on my dislike of the other candidate than my good judgment.

Turned out pretty good! Then it was Ike, who I thought was the best president ever. Eight years of peace and prosperity and no one ever doubted he was a straight shooter. Another choice that turned out.

I voted for Nixon twice, a poor choice. I didn’t vote for Jack Kennedy, and I thought he turned out to be better than I thought possible. Later, I worked raising money for Bobby Kennedy, but we will never know how that would have turned out Didn’t care for Lyndon Johnson, loved Bush the first, and never cast a vote for Bill Clinton, although he turned out as one of the best in my life time.

I left out some others, but by this time in my life, I stopped being emotional about it, as it seemed whoever was elected wasn’t going to affect my life much. As a banker, I generally favored the conservative point of view, but the hate generated by the religious right, and the take over by the silent majority made me uncomfortable with my live and let live ways.

I thought the election of George W. was stolen, and that offended me.

His first term confirmed my concern. Big deficits, tax breaks for the really rich, loss of a hard earned budget surplus, and the 9/11 disaster followed by a really outrageous war with no reason. Suddenly, there were the consequences of war. American young people being killed or horribly maimed. Expenditures out of control. A second front in Afghanistan with the same lack of planning and control. Meanwhile, we at home were not affected much by this insane behavior.

My thought there was no way we would re-elect the same people, but we did and it wasn’t even that close. The morning after the ‘84 election, I was in a golf cart with my best friend. who knew the Bush family, and had supported “W”. We never argued politics, but I told him that I hadn’t slept well the previous night because of wrestling with my concern.He smiled, and said, “Earl, don’t be so concerned about something you can’t control.”

But, I am concerned. I had made up my mind that I wouldn’t worry about this election, mostly because i wasn’t overwhelmed by either presidential candidate. My favorites in both parties had long lost.

Then McCain named Ms. Palin as his V.P. choice. This is an insult to all of us. What do you think she would do with the present trouble in the financial sector? Maybe extend the moose hunting season.

More to come.

Government $700M Bailout

700 Billion=$700,000,000,000.00!

How could we be in the hole that much? Could the brokers on Wall Street have possibly have made such huge blunders? They almost pulled it off in the 80’s, when the public picked up the tab on the S&L mess, only $92 billion that time, and we thought that was bad.

The crisis back in those days was caused by lack of regulation, and although some banks went under, not ONE CENT of public money went to save any bank or its customers. The FDIC had the funds to cover losses up to $100,000.00 of bank customers without going to any government agency! FDIC was completely funded by banks, but in order to save S&L customers, the FDIC funds were raided. and still the system was solvent.

Now, in this situation. the greediest of the greedy are being allowed to go so far as to ask the public for a complete bail out, without any penalties, except for the price of stock of some of the brokerage firms they manage!

It just isn’t right, my friends, it just isn’t right. Local banks are in grave danger. As usual, the regulators are making matters worse by over-regulating, and in so doing, they have brought the housing and small commercial building business to almost a complete stop! One of the biggest problems is how utterly complicated these problems and their proposed solutions are for most of us to understand.

More to come.

US Dollar Falls

Should we have faith in the US dollar right now?

Mortgage Backed Securities Trouble

Are mortgage backed securities good or bad?

Politicalbanker.com Setup At Last!

Good news friends and followers.  Obama, the government bailing out everyone, taxpayers going broke, and just about every other topic you ever wanted to hear about are coming your way.  The site is just about up and ready to go live.

 
photo credit: Petrick2008

After the long awaited frenzy the posts are beginning.  I look forward to feeding you the latest and greatest comments on the world around us.

Obama Versus Sarah Palin

Suddenly does it seem like Barak Obama is being stepped on by Sarah Palin?  Only a short time ago no one had ever heard of her.  Now she has stolen the thunder from potentially the next president of the United States.

photo credit: SanFranAnnie

In fact, is Barak Obama actually running against Sarah Palin at this point?