“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Thursday, August 19, 2010

Renting is Good

August, 18, 2010—(MCT)—With sweeping financial reform legislation enacted, the White House and Congress now must focus on fixing the mess created by the failed housing finance giants Fannie Mae and Freddie Mac. It’s a complex challenge with high stakes for taxpayers and the struggling real estate market.

On Tuesday, key administration officials conferred with about 200 industry executives, affordable housing advocates and other experts about the role the government should play in the nation’s housing finance system. Treasury Secretary Timothy F. Geithner asserted that federal involvement still was needed, but he promised “fundamental change.”

“It is not tenable to leave in place the system we have today,” he said, adding that Fannie and Freddie will change dramatically when they emerge from government control.

Pressure is growing to remake or replace the mortgage leviathans, which were seized by the government in September 2008 after huge losses from subprime mortgages put them on the brink of bankruptcy. The bailout has cost U.S taxpayers nearly $150 billion. But lawmakers must tread carefully to keep from further damaging a housing market that Fannie and Freddie almost solely are supporting. The two companies, along with the Federal Housing Administration, collectively guarantee more than 90 percent of all new U.S. home loans.

“Nobody wants to mess up the mortgage market,” said Douglas Elliott, an economics fellow at the Brookings Institution think tank. “And any transition with Fannie and Freddie is going to be fraught with some risk.”

Tuesday’s event came as the second anniversary of the government seizure of the firms approached, a bailout that left taxpayers as 80 percent owners. The administration faces a January deadline, added by lawmakers to the financial reform legislation, to make recommendations to end the expensive federal conservatorship of the firms.

Congress plans to ratchet up its involvement as well, with House Financial Services Committee Chairman Barney Frank, D-Mass., saying his committee will begin hearings when members return next month.

That’s not fast enough for many Republicans, signaling another bitter partisan reform fight. They have been pushing the administration for more than a year to address the mounting losses at Fannie and Freddie by getting the government out of the housing finance business.

“It is past time to rid the American taxpayer of the liabilities of these financial institutions once and for all,” Rep. Mike Pence, R-Ind., said Tuesday as he blasted the Obama administration for continuing the bailouts of Fannie and Freddie begun under President George W. Bush.

But the Obama administration has been moving slowly for fear of further harming the housing market. There was fresh evidence of problems Tuesday as Southern California home sales plunged 21.4 percent in July compared with a year earlier, according to research firm MDA DataQuick of San Diego.

“It’s much more important to get this issue right than to do it fast,” said Michael Berman, chairman-elect of the Mortgage Bankers Association.

Shaun Donovan, the secretary of Housing and Urban Development, said the stakes were high not just for the financial system but also for average Americans because of the major investment in their homes.

Donovan said the federal government’s involvement in the housing market needed to be reduced. And Geithner said there was a strong case for a “carefully designed” government mortgage guarantee in the future, a point echoed by panelists at the conference.

There also appeared to be consensus among the participants that any government guarantee needed to be explicit, not murky and implicit like the guarantee that stood behind Fannie and Freddie as private, government-sponsored enterprises before they were seized.

William Gross, managing director of bond fund giant Pimco, said government guarantees were crucial to the housing market, helping keep mortgage rates low.

But there still is major debate about how to structure such a guarantee and what size mortgages it should cover.

“The challenge is to make sure that any government guarantee is priced to cover the risk of losses, and structured to minimize taxpayer exposure,” Geithner said.

Fannie and Freddie were created by Congress and later turned into private, government-sponsored enterprises mandated to expand homeownership with requirements to purchase a set amount of loans made to low- and moderate-income borrowers.

Fannie and Freddie combined hold the credit risk on about $5 trillion in mortgages, and losses from loans made during the housing boom have continued to mount. The Treasury Department has pledged it will cover an unlimited amount of losses through 2012. As of June 30, the department had pumped $144.9 billion into the two companies.

Federal officials have stressed that the losses came from loans purchased before the government seizure and said standards at Fannie and Freddie have tightened significantly since then. And as the housing market has stabilized, the losses at Fannie and Freddie have lessened. Fannie lost $1.2 billion in the second quarter, down from $11.5 billion in the first quarter. Freddie lost $4.7 billion in the second quarter, down from $6.7 billion in the first quarter.

Still, the losses meant the two firms would need an additional $3.3 billion from the Treasury Department, bringing their bailout cost to $148.2 billion.

(c) 2010, Los Angeles Times.


  1. Sorry to step on your post, Whit, but I found this news both satisfying and encouraging.

    "KABUL, Afghanistan — Ever since the Afghanistan war became a counterinsurgency fight, critics have charged that commanders’ cautions about using force only inhibit the fight against the Taliban. But in the shadows, NATO Special Operations Forces are engaged in an intensely lethal war of their own.

    According to information provided to Danger Room by Gen. David Petraeus, the top NATO commander in Afghanistan, in just the past 90 days these elite units have captured or killed 365 militant leaders, detained 1,335 insurgent foot soldiers and killed another 1,031 insurgents on top of that."

    Read the rest here

  2. 2,731 bad guys taken out of the fight. About 30 a day.

    That is good news.

    How deep is their talent pool?

  3. Jeez, I go get a little sleep, and you suckers let the whole world go to hell. Philly Fed -7. Unemployment claims 500,000. What have you people been doing?

  4. Bloomberg - Hans Nichols, Julianna Goldman - ‎37 minutes ago

    President Barack Obama said the jump in unemployment claims shows the urgent need for congressional action on legislation to cut taxes and ease credit for small businesses.


    Obama: 'We need to help small businesses' USA Today

  5. Doug was whining about ObamaCare costing as much as the two wars. If true, so? Take a look at what you are buying: On the one hand you are burning up money shooting explody things killing and getting killed pumping money into Iraq and surrounds. On the other hand you are spending domestically fixing folk up and such. There is a tad bit of difference the value obtained through spending. Doug was for the war before he was against it...

  6. Yeah, the idea of equating Health Care with shipping money to Saudi Arabia is inane.

  7. Desert rat said:

    "2,731 bad guys taken out of the fight. About 30 a day.

    That is good news.

    How deep is their talent pool?"

    I am going to presume that by "talent pool" you mean the bad guys.

    If talent means just enthusiastic warriors, I would say that it virtually unlimited, in which case, 30 a day is merely satisfying.

    But if, by talent, you mean quality leaders, then the pool could be quite small. If, in fact, this is the case, then the 365 figure is mildly encouraging.

    I wish we not in Afghanistan at all but if we are going to be there then we should play to win.

    I am not an unreserved admirer of Petraeus but he appears to be a better strategist than McChrystal.

  8. Nice allies we got there.

    CAIRO (AP) - A Saudi judge has asked several hospitals in the country whether they could damage a man's spinal cord as punishment after he was convicted of attacking another man with a cleaver and paralyzing him, local newspapers reported on Thursday.

  9. By "their", yes, I was speaking of the enemy talent pool.

    I agree, there could be a glimmer of success in that 365 number, depending upon the matrix used to define leader.

    If we are taking Company grade leaders and above out of the play, at the rate of 120 per month, that is great news.

    If that includes fire team and squad leaders, not so much.

    Not given the size of the footprint we've established.
    From the data gathered here, at YaHoo News - AP Line it seems we lost 239 KIA from 1APR10 through 30JUL10.

    A high price to pay, for 365 killed or captured enemy leaders and less than 1,100 of theirs confirmed KIA.

    Hardly a five to one ratio.

    No telling how long those detained will remain in custody. We are following the Iraq model, after all.

  10. "Jeez, I go get a little sleep, and you fuckers let the whole world go to hell. Philly Fed -7. Unemployment claims 500,000. What have you people been doing?"


  11. Meanwhile, in Afghanistan they are chanting "Death to America" in the capital, Kabul.

    That is not cause enough to rubble that city.

    In the capital, Kabul, police fired weapons into the air Friday to disperse a crowd of angry Afghans who shouted "Death to America!", hurled stones and set fire to two vehicles after an SUV, driven by U.S. contract employees, was involved in a traffic accident that killed four Afghans, according to the capital's criminal investigations chief, Abdul Ghaafar Sayedzada.

  12. Karzai to Afghan contractors: Join us or leave

    Afghan President Hamid Karzai is upping the ante, if you will, by declaring that within four months, security firms operating in his country either become part of the Afghan National Police force or find something else to do.

    It's a tough card to play in an environment where even the president is protected by private security firms and the Afghan National Police are trained by them.

    The use of private security firms has mushroomed since the U.S. invaded Iraq in 2003, and now, more than seven years later, the U.S. is still struggling with ways to manage and oversee the use of the thousands of contractors it employs in Iraq and Afghanistan.

    There are about 110,000 private contractors working for the Department of Defense alone in Afghanistan, and that doesn't include the thousands more working for the Department of State or USAID. More than 24,000 of those contractors are armed and are providing security for convoys moving supplies throughout the country, protecting diplomats and even securing bases.

    What we're seeing now is the political collision of U.S. needs in completing its objectives in Afghanistan and the Afghan president's needs in making clear that he has control of his own country.

  13. "In order to protect Afghan life and property, avoid corruption, security irregularities and the misuse of military weapons, ammunition and uniforms by the private security companies which have caused tragic incidents, and after the required assessment, I approve shutting down all private security companies within four months, including both domestic and foreign," the decree said.

    From CNN, don't feel like linkage is needed.

  14. Desert rat said:

    "Meanwhile, in Afghanistan they are chanting "Death to America" in the capital, Kabul."

    I am not particularly concerned with a rent-a-crowd chanting of "Death to America": You can hear that almost anywhere. :-)

    "That is not cause enough to rubble that city."

    Merely for the sake of discussion, I ask: What would you consider consider cause enough to "rubble" Kabul?

    BTW, I came across a photo that may interest you.

  15. It'd be tough to find just cause for US to destroy Kabul, at the moment.

    If Osama had stayed there, fighting to the "last man" there'd have been justification.

    We could have decimated Tora Bora, with just cause. When he and Doc Z were there.

  16. New York Times -

    New research confirms the existence of a huge plume of dispersed oil deep in the Gulf of Mexico and suggests that it has not broken down rapidly, raising the possibility that it might pose a threat to wildlife ...

  17. The United States already has sent $87 million in flood relief to Pakistan. The aid has included daily military helicopter rescue and relief missions in northwest Pakistan's Swat Valley, pre-fabricated temporary steel bridges, more than 515,000 pounds of food and other relief goods, as well as $30 million distributed directly to non-governmental organizations assisting in the relief effort.

    Borrowed from Charlie Chi-com, that $30 million in cash we gave away, directly to non-governmental organizations.

    While Whit worried over $12,000 or so in fees and per diems for one of our in-house Federally approved imams to travel to visit with our Arab allies, around the Persian Gulf.

  18. Yeah, I heard that Acorn is spearheading the Paki Relief efforts on behalf of the US while the Imam Faisal whoever leads prayer services.

  19. I believe that Acorn is negotiating with State to handle our public works assistance program in Afghanistan.

  20. Almost 2,000 illnesses from the strain of salmonella linked to the eggs were reported between May and July, about 1,300 more than usual, he said. No deaths have been reported. The CDC is continuing to receive information from state health departments as people report their illnesses.

    "I would anticipate that we will be seeing more illnesses reported likely as a result of this outbreak," said Braden. The recall of 380 million eggs from Iowa's Wright County Egg is one of the largest shell egg recalls in recent history.

    Geez, that is one heck of an egg farm. I understand that you can see it from low earth orbit.

  21. More than just the AP, whit.
    Ms Talev of McClatchy Newspapers, along with those professional Pastors that the President confides in, they're all toting their fair share of his water, too.

    Pastors who pray with Obama say he's a devout Christian

    McClatchy Newspapers

    WASHINGTON -- Pastors who have prayed with President Barack Obama defended his Christian faith Thursday as the White House downplayed new polling that showed a steep climb since he took office in the percentage of Americans who think he's Muslim or at least don't believe that he's Christian.

    "He is a Christian by choice, a devout Christian," said Pastor Kirbyjon Caldwell of Windsor Village United Methodist Church in Houston. Caldwell is among a group of Christian leaders whom Obama regularly calls for inspiration. Caldwell also officiated at the wedding of President George W. Bush's daughter Jenna.

    Pastor Joel Hunter of Northland Church near Orlando, Fla., said of Obama, "Those of us who've spent time with him and have had a part of forming his spiritual life can testify with certainty of his commitment to Christ."

    Although Obama has made several high-profile overtures to Muslims in the U.S. and worldwide in the past year, both of those pastors said they suspected the rising false perception that Obama was Muslim had more to do with spurious Internet and partisan media campaigns.

    "There's a fairly effective 24-hour-a-day noise box out there intentionally misrepresenting the faith of the president, and it's very unfortunate," Caldwell said. "I think we're living in very interesting times when for the first time in modern-day politics we have a president who says, 'I am a Christian,' and some folk basically say, 'We don't believe you.' "

    Said Hunter: "There are a lot of folks who are naive and don't know, and they just buy into the strongest voice. Bottom line: They are wrong or misinformed."

    Read more:

  22. ...they're all toting their fair share of his water, too.

    They certainly are.

    It looks as though someone did some polling after the President's latest political gaffe re: the mosque.

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