Tuesday, December 28, 2010

Some Observations in the Week between Christmas and New Year’s


The White House and the Congress have done the hard part, which is getting majorities in both chambers to pass “Don’t Ask Don’t Tell.” Now they should undertake something easy, inviting all of those former service men and women--who were booted from the military services, when they disclosed their sexual orientation—to rejoin the Armed Services and bring their skills back into the fold.

I have no idea how many individuals are involved, who they are or where they served, but I remember hearing how enforcing DADT—and discharging gay men and women--cost the military lots of their interpreters including their Middle Eastern language specialists.

That’s a good place to start fixing skill gaps with a retroactive “DADT” amnesty approach.

If that is/was the situation, let’s get that talent back, since the obstacle to those men and women serving now has been removed by an act of Congress.

“The Dream”

In killing “The Dream Program,” in the Senate, how does the GOP hope to erase its consistent sorry record on Hispanic priorities? (To be fair, a Democrat handful voted “no,” making it easier for the Republicans to scuttle the plan.)

The GOP can cheer the latest census numbers but Hispanics are the fastest growing ethnic group in the nation and the Republicans keep dissing them and politically handing them to the Democratic Party on a platter. Those new “Texas congressional seats” might produce new Democratic congressmen rather than GOP.

I wonder how all of those GOP business groups—who manage to hire so many immigrants—would be supportive if the GOP seriously advanced some of the more outrageous anti-immigrant proposals, especially of the Tea Party variety. Lots of American businesses thrive on that source of high quality but low cost labor.

The “Dream Act,” which would permit children of “illegals” to automatically qualify for citizenship if they have managed to get into college and meet other minimal age and character criteria.

President Obama vows to bring it up, again, in the 112th Congress and he should.

Good Duck

As a citizen, I would love to see the sprit and record of the “Lame Duck” congressional session move forward, where the Congress did so much in so little time and with obvious political concession on both sides producing that success. I just can’t believe that the ascending GOP will want to give President Obama too many opportunities to look successful and statesmanlike.

They want to tarnish him so that he loses interest in seeking a re-election or marches on as a much weakened candidate. As I’ve written, the Republicans are going to have to accommodate, if not overcome, the very conservative slug of new Senators and Members who won in November’s elections.

We’ll quickly see if that group is a “fresh breath” voting on spending and budget issues as they campaigned or just more warmed over “same-o, same-o.”

Cut the Money, Kill the Regs

The Republican plan to attack, in 2011, legislation they failed to stop in 2010, by trying to deny appropriations and stymie the necessary regulations need to go with the new laws, is an understandable strategy, but could be short sighted.

While they may be targeting lots of different issues, the GOP announced that definitely they are going after the new independent Consumer Office set up in the Fed and regulations association with the new healthcare law.

Once again, the beneficiaries of the proposed Republican attacks are the big financial institutions and the big insurance companies. Surprise, surprise!

I am sure the GOP will wrap their assaults in rhetoric chastising big government and claiming they are helping the American people. But a good slug of the American public will get medical insurance when none existed before and potentially have their health care costs drop. There also is a good chance that the vipers on Wall Street and the banks on Main Street could see some of their predatory actions blunted by the Consumer Affairs office initiatives.

Maybe the “public” will wake up before November 2012, to who seems to benefit most from the GOP’s actions.

Good Drones

I don’t know about others, but I wouldn’t care how POd Pakistan’s North Waziristan gets over CIA drone weapon attacks. Those targeted missiles seem to be a very effective against Taliban Terrorists. The fact that they complain about the bombing campaign shows me it’s having the desired effect.

Bad News for Fannie Bashers

I just had an opportunity to review some Fannie Mae (and Freddie Mac) lending data, from public sources (most importantly a recent St Louis Fed study), which details the types of loans that were in their portfolios in the period that the GOP and others excoriated them for being loading up with anti-consumer subprime mortgages.

The facts are that neither company had large holdings of the 2-28 and 3-27 “killer mortgages,” or Hybrid Adjustable Rate Mortgages (ironically nicknamed “HARMS”), which had very small initial interest rates but leaped to market rates in 2 or 3 years, depending on the version the borrower chose (or talked into).

The new loans with much higher interest rates led to record numbers of defaults and foreclosures.

These crippling mortgage loans were originated in the hundreds of thousands by Wall Street and others. Fannie and Freddie didn’t buy or securitize many of them. The former GSEs “crimes” were buying other Wall Street subprime securities.

Speaking of Fannie and Freddie, “All the Devils Are Here,” the Bethany McLean and Joe Nocera book about the financial meltdown—which spends pages showing why Fannie and Freddie hardly were in the forefront of originating subprime loans—has jumped to #2 on the New York Times “Business Best Sellers” list.

I’ll have more to say on the St. Louis Fed study in coming weeks.

Maloni, 12-28-10

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