Tag Archives: Federal overreach

Mortgage Mess Redux

The current financial morass we still endure began with the mortgage mess that came to light in 2008 at the latest.   Many of the politicians acted with great surprise that there was a problem and quickly jumped to blame “Wall Street” for the problems and the crunch on new mortgages and the construction business.  That lead to TARP and then the Government Motors bailout and the Stimulus bill soon after.  The birth of the Tea Party had its inception and inspiration from a rant by Rick Santelli on CNBC in the late winter of ’09.

His rant arose with the first of several Federal programs to protect the poor homeowners who were facing foreclosure because they couldn’t pay for the mortgages they were “tricked” into signing for homes they couldn’t afford even with they put virtually no money down at the time of closing.   They made no sacrifice to get the home in the first place.   Santelli asked then on the floor of one of the exchanges if “you” wanted to pay for your neighbor’s house when you had played by the rules and he had the big house and lots of goodies he couldn’t afford.  The roar of the crowd was overwhelming.   Helping out those who were irresponsible in the first place raised the whole spectre of moral hazard.  We were at a tipping point where there was an abandonment of personal responsibility for personal decisions and a turn toward government to fix all our problems for ourselves.  It was during that time that Santelli talked about holding a “tea party” to protest the actions of the Federal government bailing out homeowners regardless of the foolishness or even venality of their own actions.   That phrase about the tea party was picked up by those folks who believed Government intervention into every aspect of our lives and dominance of our lives was wrong then  and the wrong direction to be taking.   The Fed got into the act at that time also and in addition to the Stimulus bill of over 800bn, the Fed went on a buying binge to bolster the mortgage and credit markets with over 1 trillion of various bond purchases during ’09.

Well, a few trillion dollars later we still face the same problem.  The housing and mortgage mess got us on the downhill slide and do you think we have improved the situation with all that Federal money (and borrowing) thrown at the problem?  Now there is the added burden of the legal difficulties created by the sloppy paperwork and legal work of the big banks and the investment houses that bought those mortgages.  At the moment over 90% of all our mortgages or owned or backed by the Federal government rather than the private market.  That can’t be a good thing.  They can’t even deliver the mail on time and on budget and they are controlling trillions of dollars in mortgage obligations.   This is no defense of the banks.    In a free market system properly allowed to function we all have to bear responsibility for our decisions and failures.   Yes, failure means the person or company goes under and we move on and reset things.  But that has not happened because the politicians don’t think we are tough enough or brave enough to face the consequences of our own actions.

The banks for a few decades now had been under increasing pressure to make loans to minority groups.  They were accused of “redlining” certain areas and not providing funding and loans for new homes.  No need to repeat the legislative history, we all should know it by now.  The Federal government in its infinite wisdom decided that it was good policy to make loans to minority groups and that failure to do so should be punished.  The banking industry had all along argued that they would make loans to anyone who had the credit to service the loans.  Of course that was true.  Why would they not increase their business if they could by making such loans.  It was business and credit that determined the lending standards.  But the Feds came busting in the door and demanded that they make such loans.  After all the Feds regulated the banks and they made it clear if they did not comply with the new rules they would make life miserable for the banks and even revoke their charters.

Eventually, the banks caved into the new laws and the intense pressure of the regulators.  They did want businessmen have always done throughout history; they figured out a way to make money in the existing system whether they liked it or not.  Soon those new loans were rolling out.  We know they were “liar loans” and loans with no documentation and loans made with no money down and often even the closing costs were covered by a grant from one institution or another that existed to aid minority groups.  Then those loans were bundled up and sold to Fannie or Freddie and often after that were resold into the bond markets with those securitization packages or done so directly by the investment houses.  But like those chickens coming home to roost, the bad loans eventually revealed themselves to be just what they were from the beginning–bad loans that should have never been made.

Now the politicians scream about the bad loans  but where were the voices of the politicians and their outrage when they were being made in the first place?  These loans weren’t being made in the dark of the night in some obscure alley.  Get the Feds out of the mortgage business entirely.  Let the State legal system deal with the foreclosure process.  That is a matter of State law in any event and there are perfectly adequate protections for anyone that was truly defrauded by some bank.  Let the investment bankers and banks that bought those mortgage securities suffer whatever loss they incur for a bad decision.  Dismantle Fannie and Freddie and don’t resurrect them.  We must as a nation restore the vigorous concept of moral hazard to the marketplace and our daily lives.  Take ownership of our decisions and consequences as individuals and companies.  Yes, there will be some pain, but hell’s bells we have already suffered pain and are still doing so.  We can figure this out on our own, thank you very much if the Federal government will get out of the way.

“A man’s liberties are none the less aggressed upon because those who coerce him do so in the belief that he will be benefitted.”  H. Spencer.  www.olcranky.wordpress.com


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Federal Courts Gone Wild

The recent ruling by the Federal District court in California that gays must be allowed to serve in the military and the companion injunction ordering the military to implement her ruling immediately world-wide is very concerning.  If you think this is going to be a rant against gays you are reading the wrong blog.   Basically I believe folks can do whatever they want behind closed doors with a willing adult partner.  That doesn’t mean I approve it or condone it but it is not my business as long as such behavior doesn’t harm children or third parties.  Hey, if some like to get their kicks with hand-cuffs, bull whips and lots of leather then that is their affair but that doesn’t mean I would allow such activity to be done in front of a 10 year-old child.  The concern with the ruling is the encroachment of the judiciary into areas not authorized by the Constitution and specifically reserved to other branches of the government.

From the inception of our nation, during the Revolutionary War, the question of who would get to appoint officers and develop and code of military conduct was contentious.  Even before we won our freedom the Continental Congress and Washington had disagreements over this issue.  Ultimately, the Congress did allow Washington to appoint or dismiss his own subordinates which was a real mark of the confidence and respect that had for the man.  The whole concept of who controls the military and how has been a touchy subject for our society and others.  Subjecting the military to civilian control has been a major theme of our military establishment and actual operations.  It was so important that it was one of the specific matters addressed in the Constitution.

Regarding military matters the Constitution in Article One, Section 8 provides as follows: “to raise and support Armies, but no Appropriation of Money to that Use shall be for a longer term than two years;  To provide and maintain a Navy; To make Rules for the Government and Regulation of the land and naval forces;”.   That clearly set forth the concept that the miliary could not be allowed to write its own rules of conduct and the appointment procedure for officers and other ranks.  From our earliest times the courts have consistently held that the Bill of Rights if modified when you are in the military.  The sergeant doesn’t have to get a search warrant to inspect your footlocker, nor do you have to right to free speech as examples.  The recent firing of General McChrystal is only another example of the restrictions that have been placed on military personnel by Congress and those authorized by the Constitution to run the military.   Same thing happened to MacArthur by Truman. The courts have long recognized that the military is unique as an institution and as a free people we surrender some of our traditional rights in the military as we provide for the common defence.

Congress has the right to determine the eligibility of those serving in the military. If they want to restrict it to those over 21 that weight over 160 pounds but less than 250 they have the right and authority to do so.  The list of examples they have the right to impose is as endless as your imagination.   You don’t have a Constitutional right to serve in the military but you may have a legal duty to do so when Congress so deems necessary.   Ask the millions of men drafted into our various wars.  

The galling issue at hand is the usurpation of the Federal court of Constitutional authority not granted to it and the creation of “rights” that do not exist.  The Federal judiciary believes it is the supreme arbiter of all matters.  But the judiciary is as capable as the other branches of over-stepping its bounds.   The ruling on gays is unconstitutional.  The Congress and the Congress alone as the right to write the rules and regulations regarding the military.   The issue of gay rights is secondary to the more fundamental and important question of the authority of the Federal courts to intervene in matters granted to another branch of government.  For example could the Federal courts order a President to veto some particular piece of legislation because they deem it unconstitutional?  Can the courts tell the Commander in
Chief how many troops are constitutional to use in any conflict?  

Running the military is for Congress per the Constitution.  If the rules created by Congress are offensive to the people then we need to petition Congress to change the rules or vote in those who favor different rules.  If this ruling of the Federal court is allowed to stand we embark down a road that is only dimly lit with those awful unintended consequences.  The courts can act in an unconstitutional manner just as any other branch of government. The court order should at least be ignored.  There is precedent for that.  Lincoln during the War Between the States ignored the ruling of the Supreme Court regarding the writ of habeas corpus Maryland legislators he had arrested because he thought they might vote for secession.  He simply ignored it and never made any attempt to comply.  The Federal courts have gotten too big for their breeches and need to be knocked down a notch or two.

The Constitutional provision granting authority to Congress over the military is why all the major appointments of generals by Presidents have to be approved by Congress.  As Commander-in-Chief you would think he could promote whoever he wanted but that is restricted by Art. One, Sec. 8.   www.olcranky.wordpress.com

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