AIG Needs $38 Billion More

We just loaned them $85 Billion. But that wasn’t enough.

Everyone. Together now. “I told you so!

The Federal Reserve announced Wednesday it was lending billions of additional funds to cash-strapped American International Group Inc.

Under the program, the New York Federal Reserve Bank will provide $37.8 billion in additional cash to certain domestic life insurance subsidiaries of AIG  in return for investment-grade, fixed-income securities.

AIG already has an $85 billion line of credit with the Fed. As of last week, AIG had used $60 billion of this loan, according to Fed data.

This new program will allow AIG to replenish liquidity, the Fed said. At the same time, the securities will provide enhanced protection to U.S. taxpayers, the central bank said.

These big wigs spent over $440,000 on a party when they got the first loan. No telling how much they will spend now.
Take a look at:
Right Voices

Obama Makes False Claim to Cut Spending

Only in the weird world of Quantum Mechanics can math like this be explained. The Committee for a Responsible Federal Budget, an independent, group analyzed Obama’s tax and spending plans.

They result in a net increase of spending of $281 billion.

The claim that, “Actually I’m cutting more than I’m spending so that it will be a net spending cut” is totally false.

How did the morning shows in the MSM confront this? They ignored it.

NewsBusters highlights this problem while AP takes issue with both candidates on factual errors.

Democrats Won't Hold Hearings On Fannie – Yet

It looks like Waxman and the Democrats are trying to downplay their role in the subprime debacle. It is time for all the cards to be placed on the table and let the chips fall where they may. Democrats, Republicans, insiders, outsiders. Whatever!

Whoever is as fault for this should be prosecuted and publically, and pilitcally, humiliated. This is the greatest economic crisis since the Great Depression and our politicians are doing what they do best. Play politics.

“Any hearing on oversight that does not begin with Fannie and Freddie and [former Fannie Mae CEO] Franklin Raines will be a sham,” said Rep. John Mica (R-Fla.). “This is like investigating a train robbery and only talking to the dining car stewards.”

The GOP attack from the dais came as the National Republican Campaign Committee and House Minority Leader John Boehner (R-Ohio) sent nearly simultaneous news releases criticizing Fannie and Freddie.

Boehner’s statement echoed Mica’s, saying, “Chairman Waxman’s refusal to hold hearings to examine their role says a lot about where the Democrats’ priorities lie.”

TheHill.com.

All Criticism is Racism

Hot Air has a wonderful take on Barney Frank. He is such an endless supply of inane stupidity.

Barney Frank’s latest defense of Congress over the financial meltdown could be predicted based on the success of Barack Obama’s campaign in using the same defense.  According to Rep. Frank, any attempt to pin the blame for the collapse of Fannie Mae and Freddie Mac on the activities of both, as well as Congressional policy that fueled it, is now officially racist.  Frank says conservatives want to blame minorities for the collapse:

Frank charged that conservatives aim to shift blame for the market meltdown away from Wall Street and toward minority-lending laws like the federal Community Reinvestment Act.

“The bizarre notion that the Community Reinvestment Act . . . somehow is the cause of the whole problem, (conservatives) don’t mind that,” the lawmaker said. “They’re aware that the affordable-housing goals of Fannie Mae and Freddie Mac (and) the Community Reinvestment Act (aim to help) poor people. And let’s be honest, the fact that some poor people are black doesn’t hurt either from their standpoint.”

Let’s keep score.  Criticizing Obama means we’re racists.  Criticizing Congress means we’re racists.  Getting angry at Congress for pushing Fannie Mae and Freddie Mac into buying bad loans and infecting the entire financial system with essentially fraudulent paper — at a cost of up to $700 billion in taxpayer money and potentially trillions in lost investments — means we’re racists.

The CRA was only a small part of the cause of the collapse.  It affected loans only at the margins.  The Clinton administration opted for more aggressive enforcement, and “community organizers” like ACORN used that to file nuisance complaints that could keep banks from merging and acquiring other banks.  That may have pushed lenders into lowering standards on a handful of loans, but only to enough of an extent to avoid government sanctions.

In that sense, the CRA is a bit of a red herring.  The real cause of the collapse was the Congressional push for Fannie and Freddie to support subprime lending by purchasing the paper from lenders, which is related to the same policies that generated the CRA but isn’t the CRA itself.  Lenders make money one of two ways: keeping the paper themselves and getting the interest over the term of the loan, or selling the paper to someone else for a guaranteed short-term profit.  When Fannie and Freddie began buying all of this paper, they created a huge demand for subprime loans — and lenders responded by offering easy money to almost anyone who applied.  They threw out income requirements and equity thresholds (such as down payments) and generated tremendous short-term profits for themselves … while Fannie and Freddie assumed all the long-term risk.

Frank: Criticism of Congress is now racist, too.

Christmas in October

The $700B bailout contains is now over $800B. Why? It contains BILLIONS of dollars in -barrel spending. About $112B to be more exact.

Lawmakers from both sides of the aisle are out of control on this. This entire problem could have been handled by the FED and market forces. It did not have to be lubricated with 16% pork.

America will become a debtor nation at this rate.

Here are some predictions for you to tuck in your electronic back pocket.

  1. Credit market problems will require more than just an injection of funds to become fully functional again.
  2. The FED will have to change the capital reserve ratios to keep us afloat.
  3. $700B is not enough.
  4. Consumer credit debt is next; or at least soon.
  5. Any rally in the Dow will be short-lived.
  6. Fannie problems have not finished their impact on overseas markets.

Further reading:

Billions in earmarks in Senate’s bailout bill

Bottomless Bailout

Kick the Ant Hill

NOW They Tell Us

The Blame Game

The Democrats have been denying that they are the primary cause of the Fannie and Freddie fiascos. Even Bill Clinton admits that there needed to be greater regulatory controls and key Dems consistently fought against them. Listen to Cal Thomas:

When Speaker Nancy Pelosi took to the floor of the House on Monday to blame Republicans for the financial turmoil and charge them with a laissez-fare attitude toward regulation, it seemed like a calculated effort to shift attention and accountability from what Democrats have done to create the current conditions. Fortunately, we have YouTube.

At a 2004 hearing of the Government Sponsored Enterprises Subcommittee, then-Chairman Rep. Richard Baker (R-La.) predicted the collapse of Fannie Mae if nothing was done. Baker called for more regulation, something Democrats claim Republicans never wanted. In an editorial Tuesday, The New York Times got it wrong when it accused Republicans of engaging in “free markets-above-all ideology.” That just isn’t true. President Bush was calling for more oversight of Fannie Mae and Freddie Mac in his first year as president, though he also praised efforts to expand minority home ownership at a time when bad credit risks were straining the system.

Read the rest of the article – WORLD Magazine

I am ready to Kill the Bailout

Right Voices is on target again with a collection of quotes from Dems – In Their Own Words