As the Wall Street crowd howls, Americans should thank the 228 Republicans and Democrats who voted against the most socialist piece of legislation offered since Hillary Clinton's failed attempt to nationalize medicine. Make the Banks Fix It
I am familiar with several financial services companies. These outfits are demanding price concessions to help them get through the current mess. "Hey, we fucked up the economy--why don't you guys fix it for us?"
Bankers are the dumbest lot of people on the planet, next to Democrats in Congress. Wachovia's Ken Thompson bought a troubled sub-prime mortgage lender in 2006 after the last sub-prime mortgage company he'd bought was failing. Genius.
Every real business person knows how to deal when a large number of customers are struggling--help them.
The banks (as required by Congress directly through legislation and indirectly through Fannie Mae and Freddie Mac) made a bunch of loans they knew would fail in order to prop up their balance sheets. Paper profits--and wholly fraudulent. Thank Sarbanes and Oxley.
Anyway, the banks can still fix themselves and their delinquent borrowers by writing new, standard, 30-year fixed loans at an appropriate interest rate. That's all they have to do.
Yes, they'll lose out-year paper profits. They were never going to collect those, anyway. Had the economy kept up, the borrowers would have refinanced before the rate adjustments or balloons. No one was going to pay $5,000 a month on $250,000 loan. No one. Never.
So recast the loans, take one, final write down (which would probably be a write-up at this point), and move on. You could have done this two years ago, you idiot bankers, but you were too damn greedy and stupid. For your stupidity you should be chained naked to the bumper of a 1963 Chevy pickup and dragged slowly through the streets of Wichita, Kansas.
If the government wants to help the banks do this right thing through insurance, I'm all for it.
The World Won't End Because of the "Credit Crisis"
Everyone involved in this "rescue plan" is a professional salesman. They all know the importance of creating a sense of urgency. "You know, another couple saw this house this morning, and they're coming back at 4:00 to sign a contract." Horseshit. Even if a couple really did say they'd be back, every sales professional knows that buyers are liars.
The world will not end because democracy worked today. The world is better off because democracy prevailed over emotional tyranny. Nor will we fall into Great Depression II. Nor will you be unable to get a car loan. Nor will McDonald's go out of business, as Shepard Smith was saying tonight on Fox News.
Credit markets are currently "frozen" because the lenders are smart enough to wait until Uncle Sam (meaning you and I) assume the risk for bad loans. Why would I lend you money today on your promise to repay if I can lend you more money tomorrow on the government's promise to repay? I wouldn't. I'd wait until Congress passes the rescue plan. When Congress says, "take a hike," the people who make money lending money will start lending money again. And if they can't, others will get into the market. IT'S THE WAY CAPITALISM WORKS.
Today the stock market fell 7 percent., In 1987, it fell 22 percent in one day. IGNORE THE HYSTERIA ABOUT LARGEST ONE-DAY POINT DROP. Seven hundred points in a day was a big deal in 1987. It's not today. Don't believe me? What if your boss offered you a 7 percent raise . . . based on your 1987 salary? For me, that would be about $100 a month. Give me 3 percent on this year's salary, any day.
(As of 10:16 p.m. CDT, Dow, NASDAQ, and S&P Future are UP)
Democrats--and Democrats Alone--Caused the Financial Mess
In 2005, John McCain proposed an overhaul of Fannie Mae and Freddie Mac to curb abuses by its Democrat executives. Democrats blocked the bill using parliamentary maneuvers. From McCain's endorsement:
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
Barack Obama, already amassing a fortune in contributions from Fannie Mae and Freddie Mac executives, did nothing to advance this needed reform. He could have stood up to the all-time champion of Freddie/Fannie fund-taking, Chris Dodd, but Obama failed to lead. He followed the party line, helped his friends Jim Johnson and Franklin Raines, and let this current crisis evolve.
UPDATE: Watch Democrats PRAISING the leadership of Fannie Mae crook-in-chief Franklin Raines on Conservablogs.
John McCain warned us of the current mess we're in and offered a solution to prevent or minimize the damage. Obama took money to make sure the problem happened.