Why the Johnson and Crapo “Taxpayer Protection Act” will not protect taxpayers, by Edward Pinto, Resident Fellow and codirector of International Center on Housing Risk American Enterprise Institute
Posted: Mar 27, 2014
A housing bill was recently introduced in the Senate with bi-partisan support. Sponsors claim the bill will get rid of Fannie Mae and Freddie Mac and eliminate taxpayer exposure to losses in the housing markets. Not so says Ed Pinto, housing policy expert and resident fellow at the American Enterprise Institute, in the article below published by The Hill. I believe you will find Ed’s article insightful and informative.
The draft bill released on Sunday, March 16 by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho) will not protect taxpayers from future bailouts.
- It will replace the implicit federal guarantees enjoyed by Fannie and Freddie with explicit guarantees enjoyed by their successors.
- It will replace the single-family affordable housing mandates with a new set of affordable housing provisions that will also lead to debased underwriting standards.
- It will raise taxes on the middle class by imposing a new tax on homeownership that will be used to provide billions annually in furtherance of a misguided policy to promote risky lending to lower income homebuyers.
Experience has shown that any bill which includes an explicit guarantee of an insurance program will fail to protect taxpayers. The proposed Federal Mortgage Insurance Corporation (FMIC) will be no different.
Former FDIC Chairman Isaac to Newsmax: Fed QE Is a ‘Terrible Tax on Senior Citizens’ on MoneyNews, article includes Video of the interview, Februray 14, 2014 By Dan Weil
Posted: Feb 18, 2014
Former FDIC Chairman William Isaac has strong objections both to the Federal Reserve’s quantitative easing (QE) and its commitment to keep short-term interest rates near zero.
“QE has not been helpful to the economy. In fact, it’s impeding growth, and it’s a terrible tax on senior citizens who are trying to have income for their retirement,” he told John Bachman on “America’s Forum” on Newsmax TV.
“They just can’t find a way to earn money unless they want to jump into the stock market, and a lot of people are afraid to do that.”
Here is the link to the full article
Ex-FDIC head says banks need more leeway to lend By Paul Gores of the Journal Sentinel Milwaukee
Posted: Feb 13, 2014
Lax bank regulation contributed to the financial crisis and recession, but overly rigorous bank regulation now is hampering the economic recovery, a former top federal banking official says.
William Isaac, who headed the Federal Deposit Insurance Corp. from 1981 to 1985, said regulators have overreacted and should be encouraging bankers to lend, not inhibiting lending by piling on new rules.
After every banking crisis, banks and regulators become more conservative, said Isaac, who is scheduled to speak Tuesday at the annual Wisconsin Bankers Association’s Bank Executives Conference at the Pfister Hotel in Milwaukee.
Fannie and Freddie Are Obviously SIFIs. Earth Calling FSOC by Alex Pollock
Posted: Jan 31, 2014
[My friend Alex Pollock is a resident fellow at the American Enterprise Institute. Here is piece he just published that packs a lot of punch in a very short space.]
Fannie and Freddie Are Obviously SIFIs—Earth Calling FSOC
Alex J. Pollock
The Financial Stability Oversight Council (FSOC), a big committee of regulators, is playing with making insurance companies and asset managers into “SIFIs” (Systemically Important Financial Institutions), regulated by the Federal Reserve in addition to others. There does not appear to be much of an argument for this, other than the Federal Reserve’s belief in its own ability to know what is right for everybody else—a belief for which the history of the Fed provides no support.
ISAAC ELECTED TO BOARD OF DIRECTORS OF TSYS
Posted: Jan 31, 2014
COLUMBUS, Ga.–(BUSINESS WIRE)–January 29, 2014–
TSYS (NYSE: TSS) announced today the election of two new members to its board of directors — William M. Isaac, senior managing director and global head of Financial Institutions for FTI Consulting and former Chairman of the Federal Deposit Insurance Corporation (FDIC); and Connie D. McDaniel, former senior executive at the The Coca-Cola Company and Ernst & Young. The appointments bring the number of TSYS directors to 15.
“We are excited and honored to announce that Bill and Connie have agreed to become the newest members of our board of directors,” said Philip W. Tomlinson, chairman of the board and chief executive officer, TSYS. “Both bring a wealth of knowledge and experience to our company that will be extremely valuable as we continue to grow and expand our role in the ever-changing payments industry.”
William M. Isaac
BERNANKE’S REAL LOST OPPORTUNITY By Robert Pringle, The Money Trap
Posted: Jan 29, 2014
[Robert Pringle is founder and chairman of Central Banking Publications, a financial publisher specializing in public policy and financial markets. Central Banking Journal, which he has edited for twenty years, has subscribers in 120 countries including the great majority of the world’s central banks. I recommend to you one of his latest articles on Fed Chairman Bernanke’s Lost Opportunity.]
Given that he was at the heart of monetary policy making before, during and after the biggest monetary disaster of all time, Ben Bernanke should be mightily pleased with the reviews he has been getting as he leaves office as Fed chairman. All but a disgruntled minority give him full marks for leading the efforts to combat the financial crisis of 2008 and the rapid onset of depression. Given the impotence of fiscal policy, monetary policy was ‘the only game in town’ – and it rose to the challenge. A few of the career obituaries criticise him – some for fuelling the bubble pre-crisis, others for taking undue risks in blowing up the Fed’s balance sheet post-crisis. Others say he should have pressed harder to strengthen the banking system post crisis – though financial system reform is inevitably a political matter. Most broadly accept his own vigorous defence of his record. Which, when you come to think of it, is pretty amazing. It means that most people broadly accept the Fed’s interpretation – that the crisis was down to causes outside the Fed’s control, such as China’s savings glut, irresponsible behaviour by the banks and/or equally irresponsible fiscal policies. The monetary policy-makers have come up smelling of roses; they are saviours of capitalism, their critics ill-informed outsiders.
HOUSING “WEALTH” AND ILLUSION By Alex J. Pollock
Posted: Jan 13, 2014
[My friend Alex Pollock of the American Enterprise Institution is always insightful and thoughtful in his political and economic analyses. He has done it again in the following article on the “illusion of wealth” created by the Federal Reserve and other central banks. I believe you will enjoy reading the article and very much recommend it.]
Modern fiat-currency central banks are in the money illusion business, which turns into the wealth illusion business, notably when it comes to housing and the “wealth” represented by houses.
Before 2007, central bankers in the U.S. and Europe managed to convince themselves they had created a new era, “The Great Moderation” — but what they actually presided over was the Era of Great Bubbles.
Here is the link to the full article
The Case for Repealing Dodd-Frank, by Peter J. Wallison, American Enterprise Institute
Posted: Dec 9, 2013
[Peter Wallison of the American Enterprise Institute and formerly White House counsel to President Reagan wrote the following article on the causes of the financial crisis of 2008-2009 and the Dodd-Frank Financial Reform Act. In my view the article is must reading for those concerned about future economic and employment growth in the U.S.]
Peter J. Wallison holds the Arthur F. Burns Chair in Financial Policy Studies at the American Enterprise Institute. Previously he practiced banking, corporate, and financial law at Gibson, Dunn & Crutcher in Washington, D.C., and in New York. He also served as White House Counsel in the Reagan Administration. A graduate of Harvard College, Mr. Wallison received his law degree from Harvard Law School and is a regular contributor to the Wall Street Journal, among many other publications. He is the editor, co-editor, author, or co-author of numerous books, including Ronald Reagan: The Power of Conviction and the Success of His Presidency and Bad History, Worse Policy: How a False Narrative about the Financial Crisis Led to the Dodd-Frank Act.
DAVID STOCKMAN SAYS CENTRAL BANKS CREATING WORLDWIDE BUBBLES
Posted: Dec 2, 2013
[David Stockman, former member of Congress and former director of the Office of Management and Budget under President Reagan, declared in a recent interview on CNBC that the Federal Reserve and other central banks are creating major asset bubbles that will end very badly and cause serious economic turmoil throughout the world. I recommend the interview to you.]
A link to the interview follows:
THE FED’S LAST TROUBLEMAKER By Nancy Cook
Posted: Nov 2, 2013
[Below is a link to an insightful article in the National Journal about Federal Reserve Board Governor Dan Tarullo’s drive to fundamentally alter the face of bank regulation in the U.S. and abroad. It is well worth reading as it provides a good profile of Dan Tarullo and his policy objectives. The article provides good insights into the regulatory environment banks have been and will be facing.]
When Daniel Tarullo arrived at the Federal Reserve Board in January 2009, the economy was still in a free fall. The country had shed 3.6 million jobs in the past year, with cuts at major companies like Home Depot, Microsoft, and Boeing. Across the U.S., home prices had dropped precipitously. And, two days after Tarullo assumed his post as one of seven Federal Reserve governors—some of the most powerful economic officials in the world—the stock market plunged and recorded one of its worst drops on record for the month of January.