"The welfare of humanity is always the alibi of tyrants" - Albert Camus

Wednesday, June 23, 2010

Latest Financial Reform Follies

Even a three year old who puts his hand on the hot stove and gets burnt learns not to do it again, but apparently not our esteemed politicians. 

Believe it or not, HUD just announced "Obama administration unveils national strategic plan to prevent and end homelessness".  No need for a doubletake, here is the link to the HUD announcement.

This is wrong on so many levels that it stunned me; that is, until I remembered the times we live in.

At its most fundamental level, it is not the government's role to end homelessness - it is the people's role, at the individual level.  Every big government politician over the past 18 years (including Presidents Clinton, and G.W. Bush) have promoted this foolishness.  To the gullible and the liberals among us, such nanny state policies represent the 'humanitarian' side of progressive politicians while they seem incapable of comprehending that growing government is positively correlated to progressively increasing power base for such politicians.  A perfectly predictable cause and effect relationship that has perpetuated ever growing government intrusion in to people's lives (which ironically liberals hate when it comes to morality).  The intellectual bankruptcy of progressive liberalism does not allow the most basic deductive reasoning process to understand that there is nothing humanitarian in creating layers upon layers of dependency classes with no sense of individual responsibility. This lack of critical thinking capability is also why it is virtually impossible to substantively and philosophically debate a progressive liberal.

At a more pragmatic level, one asks how does a government agency that is broke manage to stay afloat, let alone accomplish such a herculean task?  Why, by raising the cost of Mortgage Insurance to the consumer of course!  As Rep. Barney Frank (jokingly enough still the Chairman of the House Financial Services Committee) wants it, VA, FHA, and Rural Housing Service loans are to be left out of risk retention.  For those not familiar, risk retention is the new requirement for lenders to hold a 5% interest on any loan they make.  In other words, consumers will be steered into more expensive loan products (mainly FHA and VA) by institutions in order to avoid what is essentially a forced reserve fund.  The unintended consequences, which all liberal policies come with, will be harder to come by and more expensive loans. 

Earlier, last week, the Congressional leaders also decided to leave the rating agencies out of the reform bill.  Yes, the same agencies which graded what amounted to be piles of junk Mortgage Backed Securities AAA because of incestuous relationships with companies like Goldman Sachs - the poster child for crony capitalism! 

How about Fannie Mae and Freddie Mac?  So what if they cost the tax payer several times more than the combined total of all the other entities bailed out, they also are structurally untouched and unreformed. 

Throw in the House bills provisions that create a permanent $200 billion bail out fund for financial firms that are too big and interconnected to fail, power to essentially take over and control (including all salaries) any firm deemed to be in trouble, overly regulatory (read: costs that will be passed down to the consumer) provisions and you have the makings of another proud Democrat bill. 

With Barney Frank and Chris Dodd - two of the biggest shysters of the sub-prime mess still in charge - protected by their party instead of being investigated - nothing will change soon.

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