Chicago Daily Observer

We’re told consumer confidence is at an all time low. Is it? Is it any lower than it was in 1979? Or are we just being fed more negativity on a daily basis?

The questions are posed because there is more than one way to look at the current economic situation. For example, all the focus is being put on homeowners who are losing their homes because they can’t pay their mortgages. But there is another side to the story that isn’t being talked or written about. The vast majority of Americans are paying their mortgages and are not in danger of losing their domiciles. So why is most attention is going to those who have sub prime loans or who have overstepped their ability to buy the home they have purchased?

It’s said a good offense is better than a defense and that’s exactly what some in Washington are ... Read More...

As one who knew Rahm Emanuel well in what his future biographers may describe as his “early formative years,” let me register a firm dissent from the chorus of favorable opinion greeting his appointment as chief of staff in the Obama administration. The rousing approval has now grown as conventional wisdom and has taken on the character of a cliché…certifiable now that even Carol Marin-whose opinions are always second-hand—has climbed aboard. Yes Obama is a good choice because he is a realist, not an idealist. There evidently was a feeling in the supine, pro-Obama media, that with all his filmy, gauzy rhetoric, Obama would hire a dreamer in the post who would look at the most beatific of cases and run the operation into the ground: something like what happened in the Carter administration.

No, assuredly, Rahm Emanuel is neither idealist nor dreamer. But he carries inside him all the ... Read More...

The New York Times does a profile on Rahm Emanuel and accidentally forgets to mention that Rahm Emanuel was a board member of Freddie Mac before coming to Congress.What does Rahm Emanuel know about one of the biggest financial frauds in U.S. history? Some honest people want to know.Here's Freddie's recent legal problems:

Freddie Mac (NYSE:FRE) received on Friday, September 26, 2008 a federal grand jury subpoena from the United States Attorney's Office for the Southern District of New York. Also on Friday, September 26, 2008, Freddie Mac received from the Staff of the Enforcement Division of the United States Securities and Exchange Commission notice indicating that the Enforcement Division is also conducting an inquiry, and directing the Company to preserve documents. The subpoena seeks documents relating to accounting, disclosure and corporate governance matters for the period January 1, 2007 to the present.

Here's more on Rahm ... Read More...

Emanuel, who served as a board member for Freddie Mac, one of the agencies that precipitated the economic crisis the nation now finds itself in, had no misgivings about taking a leadership role in tanking the bill. “He was cheerleading us along, mothering the votes,” says the aide. “We wanted enough to put the pressure on the Republicans and Congressman Emanuel was charged with making it close enough. He did a great job.”

Emanuel apparently is concerned the roles former Clinton Administration members may have played in the mortgage industry collapse could be politically—or worse, if the Department of Justice had its way, legally—treacherous for many.

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The Treasury Department has told members of Congress that the US faces a financial tsunami if a bill to allow the government to purchase up to $700 billion of toxic financial securities from financial firms is not passed – this week.

Unfortunately, this solution of giving the US Treasury almost unlimited power to buy distressed securities could be avoided if the government made some simple (and temporary) changes to mark-to-market accounting rules. So far, and for many unknown reasons, these changes have been considered off limits.

Why drawing such a hard line in the sand is so important, is a real mystery. Certainly, firms that took excessive risk should be punished. And the US should avoid creating moral hazard whenever it can. But saying; “I told you that you would stay in your room for a whole week if you disobeyed, and I don’t care if the house is burning ... Read More...

(In 2005) For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn’t become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn’t even get the Senate to vote on the ... Read More...

There are three elements of the Fannie Mae/Freddie Mac collapse that I am not buying into.
First is the story that extending mortgage loans to people who couldn’t afford them caused the collapse. These people were both a type of catalyst for the crisis and then victims of the downturn, but they did not cause it.

Second is the notion that this shows the need for more government regulation of the banking industry. Au contraire, it was government regulation that both forced bankers to make actuarially unsound loans and then protected them from the consequences that triggered this crisis.

Third is that this is a great example of Republican mismanagement of the economy. That would be more persuasive if Fannie Mae and Freddie Mac had not been a veritable halfway house for Democratic financial luminaries between jobs. For once, even Barack Obama opposes a federal investigation – for fear ... Read More...

Less than six months after the federal government interceded to prevent the collapse of Bear Stearns, it has now seized control of both Fannie Mae and Freddie Mac.

Although I am not thrilled with some details of the Treasury Department’s plan, something had to be done. The ultimate fate of the GSEs (Fannie and Freddie) increased uncertainty much like an approaching storm. Would they have to suddenly dump their massive portfolios of mortgages? Would they cease securitizing mortgages, throwing the mortgage market into further turmoil?

For the mortgage security marketplace these questions were huge. The mortgage market has been in disarray, spreads increased and prices were held artificially low, even for conforming, and performing, conventional mortgages. To top it off, reduced prices, because of “mark to market” accounting rules, led to pressure on capital requirements, which in turn increased the odds of a liquidation of huge mortgage portfolios. This “vicious ... Read More...

HT: Media Alert following Rahm Emanuel and Freddie Mac, finding a 2006 story

Freddie Mac, the home mortgage powerhouse, agreed on Tuesday to pay $3.8 million in civil penalties to the Federal Election Commission, which had accused it of improperly funneling corporate executives’ donations to candidates and holding lavish fund-raisers that often benefited congressmen on an influential House committee.

It is the largest fine that the F.E.C. has obtained in a civil case.

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There does seem to be a pattern of distraught companies under the influence of politicians, and successful politicians in Washington DC.

Perhaps the politicians are also under the influence of the distraught companies, or previously on the Board of Directors of a very distressed bank, as in the case of Rahm Emanuel at Freddie Mac.

Here’s a $1000 for Rahm ‘02
from a Freddie Mac/Senior Vice President $1,000…and another $1000 from Freddie Mac/Senior VP Capital…just going through the A’s and B’s in a 6 year old list of campaign contributors.

My guess is that there is more money that came into the Emanuel campaign from Freddie Mac from other letters of the alphabet.

Perhaps ther could be some explanation from a former board member and “financial wiz” on how Freddie Mac has become one of the biggest banking problems in the United Sates.

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