What did he know and when did he know it?
When Democrat Andrew Romanoff made noises about mounting a primary challenge to Senator Michael Bennet (D-CO), the White House contacted Romanoff and made an interesting — and arguably corrupt — counteroffer:
Jim Messina, President Barack Obama’s deputy chief of staff and a storied fixer in the White House political shop, suggested a place for Romanoff might be found in the administration and offered specific suggestions, according to several sources who described the communication to The Denver Post.
…several top Colorado Democrats described Messina’s outreach to Romanoff to The Post, including the discussion of specific jobs in the administration. They asked for anonymity because of the sensitivity of the subject.
I’m from Illinois. I’ve lived in Chicago. This is typical of the dirty political culture Obama hails from. And it’s almost exactly the same act of political corruption that led to Governor Rod Blagoyevich’s arrest and removal from office.
As Ed notes, apparently “Hope and Change” really means “Chicago on the Potomac.” Will Obama and his MSM bootlickers be able to squash the notion of an independent investigation, or might Barry and Rod someday share a cell?
UPDATE: Dem fundraiser Norman Hsu gets 24 years. When will the other Hsus drop?
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You’re stretching this way too far. Nobody’s ever going to jail a sitting or former president of the United States, even it were proven that he had oral sex and oral-anal contact with one of his young interns in an anteroom off the Oval Office.
Arnold Harris
Mount Horeb WI
Come a little south, Arnold. Our last two governors are in prison or soon to be.
Indictment is certainly possible, though I agree jail is unlikely.
No. Don’t indict him. Not for something that happened after he took office. Impeachment, yes, indictment, no.
Article II, section 4, and nothing else. Down that road leads ruin.
I think I said a long time ago that one of my main concerns about Obama is that we’ll see the same thing that we saw with Clinton. One reason the political environment is so polarized and personal in Washington today is because that’s the way they did it in Little Rock, and when Clinton came to Washington, he brought Little Rock with him. I voiced my concern back a year ago that we would see the same thing with Obama and that he would run Washington like a Chicago ward-heeler.
I think that’s yet another case of vindication of my predictions about Obama. He clearly is a political thug of the first order. He plays politics just like the Daley political machine taught him to do.
As to whether he will be indicted, I would say such an action is virtually impossible. Not unless Republicans win the house back in 2010 and the proper approach would be impeachment, not indictment. As to whether I think this particular event will lead to impeachment? I doubt it, but it’s possible. I consider it much more likely that he’ll be impeached for abuse of power. In fact I’d say that there are already several actions of his that enterprising Republican attorneys are teeing up just in case we get Republicans back in power in 2010. I can think of a couple that might even fly.
I must register a dissent — I don’t wanna criminalize/legalize issues of public policy or politics. I don’t think Holder’s effort to try and indict CIA officials and possibly Bush-era lawyers is a good thing. Likewise, I don’t think raising this specter with Obama is warranted either.
We still have to figure out Cap and Trade and Health Care and Afghanistan — lotta big issues abound.
–HB
It’s not even clear to me that this it’s a violation of the statute, let alone something likely to be brought for prosecution or impeachment. For goodness sakes, every administration makes appointments for political reasons. Even if Republicans sweep the elections in 2010 on a “let’s get Obama” platform, it’s unlikely that THIS would be something they’d go after him for. Even if it happened exactly as alleged. Because this stuff is common, and always has been.
Ed Morrissey is right though: it does point out that Obama’s claims to be all about change were, well, basically nonsense.
Hank:
I don’t want to politicicize policy differences either. And that is what I see Eric Holder doing.
But if we want to examine Obama’s actions against the constitutional powers invested in the President, I think he has clearly stepped over the line many times already, with some of those events allowing for serious consideration for impeachment. My short list:
Firing the CEO of General Motors.
Firing the Inspectors General under questionable circumstances.
Bribing health insurance companies to cooperate with health care “reform” and then extorting from them billions of dollars to pay for an advertising blitz.
Asking artists seeking grants from the NEA to create Obama propaganda.
I can come up with more. Every single one of these is significantly more concerning than any of the accusations against GW Bush.
If I wanted to play the snarky game, I’d list all the things the Left wanted to impeach Bush for that Obama has continued to do, such as the rendition, interrogations, Gitmo (or Gitmo like places), bombing civilians, etc…
Hank,
Let me be clear: this is NOT policy, this is corruption.
When you offer a job in the U.S. government to keep someone out of a Senate race, that is both bribery and an illegal use of taxpayer funds.
Dean,
Yes, “every administration makes appointments for political reasons.” But it is ILLEGAL to do so quid pro quo.
You can appoint whom you like. You cannot call someone and say “Hey, if you do political favor X, I will give you job Y.” That is when the FBI swoops in and arrests you.
I am somewhat concerned that people don’t understand this. This is essentially how Blagoyevich ended up in prison.
We understand it. We are arguing a different thing. The president shouldn’t even get jail time for murder. He should be immediately impeached, but Art II Sec 4 should be the only thing the President has hanging over him.
I think conservatives need to wander in the wilderness a bit more before they can raise points that actually make sense.
Phelps,
That’s a valid concern but separate from those raised above by Dean and Hank.
Mikeca,
Shrug. I don’t expect idiot leftists like you to understand corruption any more than I expect you to understand markets. Hell, I’d settle for you learning to use Google.
I’m sure Blago never thought he was doing anything wrong either. Probably still doesn’t think it makes any sense. In fact, he says so quite openly.
Fortunately , the good folks over at the FBI and DOJ do understand.
Corrupt, yes. Ugly Chicago style politics, yes.
Still, the only appropriate venue for bringing charges against a sitting President or Vice-President is the House of Representatives.
Anyone who wishes to press for that is free to do so (redress of grievances) including any US Attorney or state Attorney General.
Other persons, including the White House staff are subject to criminal indictment, but not the President.
Every President at least since Andrew Jackson has used the appointment power to reward allies and supporter for playing ball. Abuses of the power have occassionally been a campaign issue (as it should be), but it comes nowhere near being an impeachable or indictable offense.
Dishman,
The Founding Fathers did NOT make the President immune from prosecution.
Here’s a nice summary.
http://citizenspook.blogspot.com/2005/10/treasongate-sitting-president-can-be.html
If Obama committed a crime, he should be prosecuted, just like a Governor. Again, this has nothing to do with politics; I’m not advocating Obama be put on trial for his policies a la the CIA issue but for a non-policy action that everyone agrees is illegal.
Yeah, I think several of us have now made the point that indictment is not possible, but in a sense that’s sort of semantics, because impeachment is essentially being indicted by the House of Representatives.
What Dave is saying is that he is not getting a sense that any of us commenters is understanding that this is a serious issue of political corruption whether we call it indictment or impeachment.
I said it was possible he could be impeached over this. But that would require some Democrats testifying against him, including the one who received the favor. Is that possible? Yes. Is that likely? Not really. Will a House of Representatives with a 57 seat Democrat majority even entertain the notion of impeaching Obama over this? You must be kidding.
As I said twice now, the only way Obama will be impeached over this is if Republicans take the House and Senate back in 2010 and decide THIS is a more important “crimes or misdemeanors” issue than the several I’ve listed, or the dozen or so more I expect Obama to commit between now and then.
So he will NOT be indicted, because Presidents aren’t indicted. He will NOT be impeached as long as his own party controls Congress. He will NOT be convicted unless there is a consensus that this is not an isolated event, but instead is an example of a pattern of corrupt behavior.
As I said, by 2010 we may very well have such a pattern identified and a team of Republican Lawyers working with a Republican Congress to drive this corrupt, lying neo-socialist thug from office.
I’m OK with that.
But I’m not holding my breath.
I think people are confused: the worst the political system can do is impeach and remove the President. The House and Senate, cannot, for instance, order the President imprisoned.
But the President is NOT above the law. If, for instance, Bush had started personally shooting protestors, he could have been arrested for murder.
OTOH, a President may be able to pardon himself, rendering prosecution moot.
Dave: What I’m trying to say is that no sitting President will be indicted. He will be impeached FIRST and then indicted after being removed from office.
Does that make it clearer? All of this is hypothetical, I doubt Obama will ever get impeached, in spite of his obvious corruption.
CC: Yes, I agree on both counts.
But don’t count this crowd out yet. No one believed Blago could be caught on tape doing the things he did, esp. after what happened to his predecessor. The sense of entitlement and lack of ethics of the Chicago Machine shock even those of us who have watched it for decades.
Eric,
Every President at least since Andrew Jackson has used the appointment power to reward allies and supporter for playing ball
Again, there’s nothing wrong with that (technically, at least). It doesn’t become illegal until someone offers an explicit quid pro quo, which is what is being alleged here.
And if someone gets caught on tape, people go to jail.
My 2 cents:
1. Talk about impeachment and indictment is extremely counterproductive.
2. Toning down talk to reach levels of civility remains the best way to address the pressing POLICY ISSUES of the day.
–HB
The word “corruption” has a different meaning in different parts of the country (and VASTLY different meaning indifferent parts of the world).
To my way of thinking, this is corruption. But to someone form Chicago, or New Jersey, say, this is just politics as usual.
Hell, I’m about a 2 hour drive from John Murtha’s district. And I’m sure he would have been voted out of office years ago if he would have pulled his crap here. But when I talk to folks who live in his district, I get things like “That’s the way politics works.” Or “He’s just looking out for his constituents.” So there is a frame of reference issue at work here.
But still, even if it turns out to be 100% legal (and that question is above my pay grade), it’s certainly ethically questionable. And the R’s should make as much hay with it as they possibly can, just as the D’s did for years.
Hank:
How is it “counterproductive” to talk about impeachment and indictment? Hell the Left started that refrain back in 2000 within hours of the SCOTUS decision that ended the disputed 2000 election. How counterproductive was that? Well, Democrats now control all of Washington and a majority of state Legislatures and Governorships.
Real counterproductive, eh?
Took them six – eight years, CC. I’m thinking more on the two-four timeline.
Did typing that make you feel better? You know, name calling means you have run out of rational arguments.
Is it corrupt to offer someone a job in the administration so they don’t mount a primary challenge?
How about making a big campaign contributor the Ambassador to Luxembourg? That strikes me as far more corrupt, but it seems to be standard practice in American politics.
How about firing US Attorney’s for not prosecuting phony voter fraud cases right before an election?
How about having White House political aids give lunch talks to federal employees explaining where the battle ground congressional districts are and then asking the employees how they can help the White House in the next election cycle?
In the perspective of corruption in American politics, this does not merits even being mentioned.
Look, I’ll be completely honest here, I used to feel like Hank. I used to say “well, the Left can act like children, but we adults on the right are above that.”
But that attitude has given us the Obama/Reid/Pelosi triumverate, and the very serious threats to our future that I have outlined on multiple posts.
I no longer consider it to be “polite” to use Marquis of Queensbury rules while my opponent uses a broken beer bottle. I’m no longer “above” all that.
Obama is a nightmare. He is a lying, corrupt neo-socialist who is hell-bent on turning this country into some sort of liberal fantasy land. By the time he and his cronies realize (if they care) that there are no magic ponies, it will be too late and we’ll be left picking up the pieces for decades after their failed socialist experiments.
I intend to speak out against this unilateral restructuring of American society and to point out every hypocritical, lying, corrupt and collectivist act that Obama is perpetrating.
You can be the nice guy. I’m looking for results.
Luxembourg ambassadors you say?
Achem.
http://www.opensecrets.org/news/2009/09/major-obama-campaign-bundlers.html
…. and by the way, I do blame Bush for this. It was his incredible inability to defend his policies and his decisions, and explain what he was doing while the Left simply hammered him unmercifully, painting him as every sort of evil demon, that led to Obama’s election. Had Bush been willing or able to at least defend himself and his decisions we would not be in this mess now.
Think about it. Obama’s MAIN CAMPAIGN ISSUE which got him through the Democrat primaries was that we should abandon Iraq immediately and concentrate on Afghanistan. This is an issue where GW Bush was DEMONSTRABLY and BRILLIANTLY correct, while Obama was DEMONSTRABLY and CRAVENLY wrong, and yet Bush was never able to make his case, even as his generals were winning the war in Iraq.
I have a ton of respect for GW Bush for a lot of things, but I will never forgive him for giving us Barack Hussein Obama. Never.
You know, name calling means you have run out of rational arguments.
And I suppose claiming conservatives need to be in the wilderness because my ideas “don’t make sense” is an argument? You can add “hypocrite” to “idiot.”
If you want to be an asshole, fine. But for God’s sake, don’t be a whining asshole who complains when someone punches back.
Anyways, are you really too stupid to understand the difference between a campaign contributor getting the position of ambassador to Luxembourg and calling someone up and saying “Hey, for $200K in bundled contributions you can be ambassador to Luxembourg!” This isn’t rocket science. An explicit quid pro quo is illegal. I’m not explaining this again.
As for your other irrelevancies: I will see your “phony” voter fraud and raise you some Black Panthers intimidating voters. I will see your aides giving talks and raise you the NEA.
Sigh. I am going to seriously enjoy the look of amazement on your crowd’s faces when they’re being frogmarched off in handcuffs.
As for Hank, I respectfully disagree. Civility is all well and good on matters of policy, but it’s not a reason to ignore illegal acts of corruption.
Could it have had something to do with the near total melt down of the financial system throwing millions of people out of their jobs and plunging the country into the worst recession since the great depression ya think?
This is after 8 years of tax cuts that the administration and conservatives had promised would lead to robust economic growth.
This is your opinion, and it is not shared by a majority of Americans. So much of the information the administration used to justify the Iraq war turned out to be incorrect. While the administration was busy concentrating on Iraq, the Talaban and Al Qaeda managed to regroup in Afghanistan and Pakistan. They now are serious threats in both of those countries, and are still able to mount terrorist attacks in Europe and the US.
The Bush administration and his foreign policy team in the aftermath of 9/11 simply did not understand the threat of international terrorist groups. They were convinced that groups like Al Qaeda must have state sponsors and if the rouge states of the region were dealt with, then that would remove the threat of terrorism. It was fundamental misunderstanding of trans-national terrorism that lead to the worst strategic error in American history.
Bush should be given credit for finally finding a way to work with the Sunnis and improving the security situation in Iraq from awful to just bad.
Yeah, well, this thread is pretty heated — that’s not the worst thing on the planet, mind you. I don’t wanna be Sweet Polly Purebread at the picnic.
But….
For me personally, as an amateur, arm-chair historian, I try to compare the modern day foibles with what was happening 70 or so years ago in Europe, and the battle with Nazis, and subsequent battle with Soviets, and cultural spasms in the 60s, and I find that much of the angst expressed by both sides falls a wee bit short.
I’m not a big fan of Glen Beck, nor of ACORN. I’m not try to convert anyone or preach — if some of you are riled up, that’s ok with me. I’m just sayin’ health care and climate change are huge complex issues, that need to be fully vetted, digested and debated –with civility — because they effect so many people.
Ditto Honduras, Afghanistan, and the War on Terror.
–HB
So you agree with John Perry that a military coup is the possible solution to the Obama problem ?
I did actually read this column last night when it was up on Newsmax. They pulled it by this morning. I wonder if it is illegal or treason to suggest that a military coup would be a good solution?
mikeca:
“Could it have had something to do with the near total melt down of the financial system throwing millions of people out of their jobs and plunging the country into the worst recession since the great depression ya think? “
No, because Bush didn’t do this, as has been exhaustively pointed out to you on multiple occasions. You can BELIEVE this, you can ASSERT this, but it doesn’t make it so. This is, however ANOTHER case of Bush letting the infantile left DEFINE him, which is what I’m pointing out. The only difference between you and an intelligent liberal is intelligent liberals KNOW they scammed on Bush. You just believe their trash talk.
“While the administration was busy concentrating on Iraq, the Talaban and Al Qaeda managed to regroup in Afghanistan and Pakistan. They now are serious threats in both of those countries, and are still able to mount terrorist attacks in Europe and the US.”
And Obama has done NOTHING about this because he has learned that despite his idealistic, ignorant campaign rhetoric, there’s a REASON Bush focused on Iraq, and that was because Iraq was a war he could WIN and a battleground he could draw Al Qada forces out where he could fight them. Which was a very good strategy, frankly, and was one of the main reasons we haven’t had a major attack on US soil in Bush’s remaining term. You call Bush an idiot for not fighting the war in Afghanistan while your savior and hero does the exact same thing for the exact same reasons. You crack me up mikeca. The main difference between Bush’s strategy and Obama’s is that once Iraq was stabilized, Bush would have turned to Afghanistan with a solid presence in Iraq to back him up, while Obama will just cut and run and leave Afghanistan to revert to pre-9/11 status.
And since when have you heard me call the majority of Americans smart or correct mikeca?
“It was fundamental misunderstanding of trans-national terrorism that lead to the worst strategic error in American history.”
This is so hilariously hyperbolic and pathetic that it’s not worth anything but an example of how a human mind can be completely divorced of any historical or rational relevance. Thanks for the opportunity to point that out.
No, and if it was, Gore Vidal would be in the clink, because he suggested the same thing on the same day.
Financial bubbles are a natural occurrence in free, unregulated markets. They have been happening for hundreds of years. Following the Great Depression the US tried to regulate the financial markets to reduce the height of bubbles and therefore the depth of the collapse that follows. As time passed, people forgot the dangerous of completely free unregulated markets, and the markets became progressively less regulated and what regulators remained were increasing brought under the influence of the industry they were suppose to be regulating.
The result was a series of increasing larger bubbles. We had the tech stock bubble in the late 1990s followed by the subprime mortgage bubble.
Both Democrats and Republicans have been supporters of market deregulation and advocates of market self-regulation, but Republicans are the stronger advocates of this. The Bush administration did nothing following the tech stock bubble crash to prevent future market crashes or to prevent the rapid increase in very risky investments by large, too big to fail, banks and other financial institutions.
Did Bush come into office and ask his financial people to come up with a plan to cause a melt down of the world financial system? Of course not. The melt down was caused by 30 years of a steady push for less regulated financial markets. Bush, however, was a strong advocate of less regulated financial markets and the melt down did start on his watch, so I think it is fair that voters blamed him and Republicans for the failure.
As to the theory repeated here that the CRA, ACORN and Barney Frank caused the melt down, well, if they were able to cause the near complete collapse of the world’s financial system, I would hate to see what a wood pecker would have done. I guess the Republican Noise machine has to feed something to the useful idiots so they don’t realize that financial bubbles are a natural occurrence in free, unregulated markets.
mikeca, is someone else logging in and using your account?
’cause it sure looks like you posted a message a few hours ago accusing Bush of causing the financial crisis.
But when I laughed at that and said it was just a bunch of moonbat demagoguery, your rebuttal is that bubbles are a “natural occurrence in free, unregulated markets”?
I mean, seriously do you even remember your own posts when you try to rebut something?
Bubbles are a natural occurrence in free, unregulated markets. Gee, I wish we had some of those. In the heavily regulated markets we have, bubbles occur too. Some of them are “natural” and some of them are not.
If you think markets don’t react to speculative moves by major players, perhaps you should go review the activities of the Hunt brothers who manipulated the precious metals markets in the 70s.
Yes, bubbles are naturally occurring things, but they can be artificially created too, and naturally occurring ones can be mitigated or exacerbated by government activities.
Are you now going to rebut THIS by going back to your previous argument that “Bush did it?”
Indicted? I hardly think so.
This strikes me as something pretty much every political officeholder with the power of appointment has done, though maybe less overtly. Maybe Obama’s people are just a little more obvious about it.
Ron:
I disagree. Rewarding a longtime friend or political contributor is a time-honored tradition. Obama’s appointments as ambassador, in fact, are an extreme case in point where he has put fund raisers in some pretty critical ambassadorships, and I think that will come back to haunt him.
This is different. This is a direct quid pro quo where Obama’s representative called up some guy and said “Hey, if you do us a favor, there’s a cushy, career-advancing government job waiting for you.”
That’s a criminal act. An overt and prosecutable criminal act.
Whether it WILL be prosecuted is another thing, but it’s not remotely “business as usual.” If Bush, Reagan or any other Republican had done something remotely similar, the NY Times and every major media outlet would be hysterically screaming for immediate impeachment.
If nothing else this is just another boring example of how far the media has climbed up in Obama’s rectum.
You need to work on your reading comprehension. What I said was:
I was simply suggesting that many voters blamed Republicans for the economic melt down because they had been running the government for most of the last 8 years and they had claimed that the tax cuts they had passed would make the economy strong. I never said Bush caused it, although he certainly was one of the people who did nothing to prevent it.
Oh, I see. So when I said the Left had hammered Bush and painted him as an evil person and blamed him for everything and he never defended himself, you responded with “maybe that’s because of the meltdown” but you didn’t mean to suggest that Bush was the cause of the meltdown, even though Bush was the complete and total focus of the discussion at the time. That’s MY reading comprehension problem and not YOUR writing skills problem.
Fine. Whatever. I guess I should have known that you meant something else entirely. Well, thanks for clearing it up anyway.
And again, you suggest I have reading comprehension problems while demonstrating for about the umpteen millionth time that you can’t comprehend simple Engish. Sigh, after several people have repeatedly told you that Bush TRIED to stop the mess and even proposed LEGISLATION to stop it, but was demonized by Barney Frank and others as a racist hatemonger (charges you no doubt cheered at the time) and Congress refused to act on them, this constitutes “doing nothing” in your world.
Again, fine. Take the Bizarro bus back down the bizarro expressway to your bizarro home where you are comfortable.
You know CC, I’m really worried about your stability. Obama has only been in office less than a year, and you have already become irrational. I’m not sure you can handle what going to happen in the next few years.
Have you considered going Galt?
lol :)
When I start making effigies of Obama and hanging them, or start printing pictures of him and painting devil horns, or overlay a gunsight, then you can worry about my sanity mikeca, because then I’ll be acting like the loony moonbats of the Left have been acting for the past 8 years.
For now I’m just sending out a warning to those who are able to hear it.
Obama is no ordinary politician. He is dead serious about remaking this country in the image of his Saul Alinsky and Bill Ayers inspired left wing fantasies.
As I have repeatedly said, more and more people are coming to my side on this. Ann Althouse, an Obama voter (or as I call her “sucker”) is whining today about how Obama “lied” to her about his moderate goals and his plans to leave the poor middle class alone.
Some suckers are waking up.
Others will wake up in the future. Some will never wake up, they have invested too much of their own self into the illusion Obama created. You are most likely one of the latter.
Oh, and my comments about Obama are imminently rational. I back every one of them up. When I say he lies, I give specific examples of his lies. When I say he endangers national security, I give specific examples of how. When I say he is lurching this country to the Left, I list the specific policies he has implemented or has publicly announced his intention to implement. I don’t manufacture nefarious, moonbat rumors about how Obama is secretly plotting with the Russians to murder 3,000 Americans in order to advance some business associate’s profit margin. I don’t say that Obama hates white people. I don’t say that Obama is stupid, or that he is seeking revenge for what happened to his daddy or granddaddy.
I leave that sort of fruitcakery to the Left, and they never disappoint.
Your inability to understand it is not my problem. Well, actually it is, because you and people like you are the reason he is President now.
Let’s check back in another nine months and see where things stand mikeca. Then we can judge how “irrational” my concerns turned out to be when Iran is openly flouting the UN and sneering at Obama as they put nuclear bombs on missiles and Europe starts freaking out about being in their range with no mid-range missile shield. I’ll remind you about this when the rumors of terrorists gaining access to Iranian nuclear bombs start to surface.
I’ll remind you of this when your energy bills double or triple. I’ll remind you of this when your health insurance folds and you find yourself in the “government option” with interminable lines.
Unless we stop him, I am dead certain that these things will come to pass. And more.
Plus, I am dead sick of his constant denigration of this nation and its history. I am dead sick of his self-aggrandizement and apparent belief that he is some sort of divine redeemer of the nation. I’m dead sick of his straw men arguments and his cries for “bipartisanship” as he viciously attacks his opponents.
I admit it mikeca. After nine months I’ve had more of Barack Hussein Obama than I can stand. And I am dead angry about having to deal with His Arrogance for another three+ years because of brain-dead idiots like Ann Althouse who BELIEVED his lies even in the face of a flood of her own supporters begging her to stop believing them and do some simple math to see what the inevitable outcome of his promises had to be.
I also admit that a significant part of me gains a bit of satisfaction every time I see an Ann Althouse whine about how she never thought his policies would affect HER! Poor, poor gullible Ann.
Idiots. A nation of idiots. You could definitely argue that we deserve this mess. But I still don’t like it.
Several people here seem to believe that the crises was caused by one or more of Fannie Mae, Freddie Mac, FHA, CRA, ACORN, Barney Frank, pimps and prostitutes buying houses and/or poor people in general. As I have explained over and over, I have seen no basis for blaming those organization for the crises.
To me this kind of argument represents the most shallow kind of guilt by association reasoning. Fannie Mae was a government backed corporation that bought MBS, government backed corporations are bad because they interfere with the free market, therefore Fannie Mae must have caused the crises. The leap from Fannie Mae is bad to Fannie Mae caused the crisis is simply received wisdom. Those of us that do not worship at the Fox News, Glenn Beck, Rush Limbaugh, Ayn Rand church of divine insight have not been given this piece of wisdom by our gods, so we have to use our own brains to figure it out.
What my brain notices is that a lot of Wall Street bankers got rich taking junk mortgages, repackaging them, sprinkling fairy dust on them, and presto turning them in AAA MBS. I am totally mystified how supposedly smart people could convince themselves that pooling a bunch of junk mortgages, suddenly turned them into Gold. I suspect that had a whole lot to do with the financial melt down.
Now the claim here is that Fannie Mae and Freddie Mac created the demand for these MBS by buying some of them and twisted the Wall Street bankers arms to make them do bad things and cause the financial melt down.
Did you know that starting in January 2002 the FDIC changed the rules for banks so that investments in AAA rated MBS only required 1/5 the capital of investments in other things? Do you think that rule change by the FDIC might have had something to do with creating a demand for all these AAA rated MBS? A bank needed only 1/5 the capital to invest in a AAA rated MBS that it did to actually hold the mortgage. By selling all its mortgages to Wall Street, letting them sprinkle the AAA fairy dust on them and selling them back to the bank, presto the bank could get 5x the leverage and increase its profitability.
Since it didn’t really matter how crappy the mortgages actually were, the Wall Street magicians could always turn them into AAA MBS, so you no longer needed to worry about lending standards. Isn’t magic wonderful?
Of course, now we woke up, we realize AAA fairy isn’t real. MBS based on junk mortgages are actually junk bonds.
Explain to me again how ACORN or Fannie Mae convinced all those smart people on Wall Street and in banks to believe in fairy dust?
mikeca: I’m not going to waste any more time on trying to explain simple economic realities to you like how a demand for apples creates a market for apples, even if that demand is an artificial one created by a government subsidy. You clearly can’t see anything except through some sort of bizarro world liberal filter no matter how eloquent, accurate and frequent the explanations are.
I’m not surprised you voted for Obama. You and he share a complete lack of understanding of fundamental economics.
Buying apples creates a demand for good apples, it does not create a demand for rotten apples labeled as grade AAA red delicious. When everyone gets sick from eating rotten apples, who do you blame? The government because it bought some apples or the guy that sold rotten apples relabeled as grade AAA red delicious.
Conservatives are suppose to believe in personal accountability. I think the guy that convinced himself fairy dust would turn a rotten apple into a grade AAA red delicious apple is to blame for getting everyone sick. You either can’t tell the difference between rotten apples and good apples or you are so blinded by your hated of the government that you can no longer see the obvious.
Update: Generous Republican donor pleads guilty to terror financing.
Gave $35,000 to Republican house and senate committees. Pleads guilty to transferring $152,000 to terrorist training camps in Afghanistan.
I’m just guessing if this guy had given $35K to Democrats, we would have heard a whole lot more about this.
Funny, we were told we were racists when we brought up Palestinian terrorists donating to Obama’s campaign.
Well does anyone know of a link to where someone familiar with the law being invoked here cites it and does some analysis?
Ron:
I’d just say do a google search on “Rod Blagoyevich”
;)
Mikeca, your reference to “fairy dust” shows that you truly have no understanding of how structured debt products are actually structured, and how that can affect the ratings of various tranches. Chalking up things you don’t understand to “magic” is what primitives do.
I was being whimsical.
I understand the principal behind these structured debt products, perhaps better than many of the Wall Street bankers that were creating them. They used detailed mathematical models to back up their credit rating. Clearly these models complete failed to accurately estimate the risk. The mathematical models were based on assumptions and the models were clearly applied in situations were the assumptions were not true. That happened because the people using the models didn’t really understand the models and the assumptions behind them. They viewed the models as if they were magic.
If the Wall Street bankers and rating agencies had really understood their models, they would not have misused them in cases where they did not apply and we could have avoided the worst of the financial melt down we have experienced in the last couple of years.
mikeca:
I bet you’re a big fan of computer models when it comes to Anthropogenic Global Warming, eh? Maybe you should think about those models as you point out the flaws of these models.
All models are based on assumptions. It is likely that some of the computer modeling done by the banks was flawed to some degree.
But that was not the root cause, nor the driving mechanism of the bubble. If you are asserting that the entire bubble was caused because people put too much trust in flawed computer models, I’ll just make you this offer.
Admit the same thing about Anthropogenic Global Warming, and I’ll concede you have a point on the banks. ;)
Nice try Mikeca, but speaking very generally about mathematical models doesn’t show that you have more than a superficial understanding of this subject.
However, that is quite a change in tone. All your past comments have been indicting Wall Street for conspiring to give these securities ratings that they did not deserve, but now you are just saying that the models were incorrectly specified? So are the ratings agencies evil or just incompetent, or does it depend on which argument suits your current agenda?
Paul! Hey! Give him a chance to disavow the AGW models before you point out his latest attempts to squirm out of your crushing grip of reason!
This is a silly question. Of course the models used in the Global Warming predictions should be examined very carefully and the assumptions should be questioned. That does not mean they are right or wrong, but they certainly need to be examined carefully.
NEWS FLASH: I am under no obligation to show that I have anything more than a superficial understanding of the subject.
If you have a though understanding of the subject, you have completely failed to demonstrate it. Your comments demonstrate a total lack of understanding of even basic economics.
The GSEs were buying what was represented as AAA rated MBS by the Wall Street banks and credit rating agencies. That should have been a safe investment. It wasn’t a safe investment, because the MBS were really junk bonds or at least much lower quality then they were represented to be.
Your argument seems to be that because the GSE’s wanted to buy some of these MBS, that forced Wall Street bankers to generate more and more AAA rated MBS and push their models into regions were they were not valid. Thus it was the GSE’s that forced the Wall Street bankers to stamp AAA ratings on junk bonds.
First off, that is an absolute nonsense argument in my opinion. It’s like the 5th grader who claims he had to cheat on the test because his parents wanted him to get a good grade. If you are using a mathematical model to assess risk, and you misuse the model, that is your mistake. You should be held accountable for not understanding the limits of the model you are using.
Your argument also completely neglects the other factors, like the FDIC bank capital ratio rule change in 2002, were creating a huge demand for AAA rated MBS.
I think the truth is that everyone was making so much money on Wall Street, both at the banks and at the rating agencies, that no one wanted to look carefully or question the models they were using to see if they were still valid for the next deal. If a deal had to be killed because the model didn’t apply, companies would get less revenue and people would get smaller bonuses. This is what always happens in a financial bubble. Until the bubble bursts, everybody sticks there head in the sand and ignores the obvious while they try to get as rich as possible as quickly as possible.
Blago actually demanded and took cash.
Someone got that link for me, maybe?
Why does cash make a difference Ron? Is cash the only valuable commodity in the universe?
It’s not “cash” that makes the difference it’s whether or not someone was influenced to take an action they would not otherwise have taken in exchange for anything “of value.” It is pretty clear, I think, to most people, that a cushy appointment in an administratin government job would qualify as something “of value.”
Anyway, here’s one federal statute on corrupt influence and here’s an excerpt:
” (b) Whoever–
(1) directly or indirectly, corruptly gives, offers or promises
anything of value to any public official or person who has been
selected to be a public official, or offers or promises any public
official or any person who has been selected to be a public official
to give anything of value to any other person or entity, with
intent–
(A) to influence any official act; or
(B) to influence such public official or person who has been
selected to be a public official to commit or aid in committing,
or collude in, or allow, any fraud, or make opportunity for the
commission of any fraud, on the United States; or
(C) to induce such public official or such person who has
been selected to be a public official to do or omit to do any
act in violation of the lawful duty of such official or person;
…”
Let’s see, Andrew Romanoff is the Speaker of the House of Colorado, so I think he qualifies as a public official. So here we have someone offering a public official something of value in order to influence an official act.
I think that’s pretty cut and dried, don’t you?
The statute is cut and dried and yes, CC, cash versus checks or of course other “value” are all the same.
But.
Cash is cash. When you have a freezer full of it, you have some ‘splainin’ to do.
Everything else, I think, you can explain away, short of someone wearing a wire and hearing you really make the quid pro quo offer.
Ron:
I believe I have said that I would be very surprised if this incident led to even impeachment (which is easier in some ways because it’s a political act, ask Bill Clinton) in part because people are so cynical about this sort of thing.
But that does not change the point that if this were a Republican, the press would be screaming hysterically about the obvious corruption and how this proves the President is just another evil Republican dirty trickster.
Besides the obvious point that the absolute best you can say about this is that Obama is not remotely a “hope and change” politician, at BEST he’s just another Chicago political thug playing from the Daly political machine deck of dirty tricks.
But you won’t see that in the NY Times, CBS, NBC, ABC, CNN, MSNBC or virtually any other media outlet either.
My opinion is that Obama’s OTHER abuses of power are more obviously impeachable, but nobody even TALKS about the sheer overreach of Obama firing the CEO of GM, for example. You tell me where the Constitution says he can do that.
MikeCA, I’ve asked on the Acron thread, understand if you haven’t gotten back to it over there & at the risk of transgressing some blogging rule or etiquette:
“Mikeca, just so I understand, in your view:
(1) did the government try to manipulate/alter the home market so that people with less than stellar credit could buy houses, and
(2) if so, was the government successful?
thanks”
The definition of ‘manipulate’ is “To influence or manage shrewdly or deviously” or “To tamper with or falsify for personal gain”. Clearly the government was not trying to manipulate the housing market.
I doubt that any court would find that running for the US Senate was an “official act” for a member of the state legislature. An official act is something a government official does as part of his job. Any resident of CO can decide to run for the US Senate. You don’t have to be in the legislature. Deciding to run for the US Senate is a personal decision not an official act.
mikeca:
I am absolutely certain you would have said the same thing if we were talking about George W. Bush. Right.
On the other hand, if it were George W. Bush, I WOULD have said the same thing.
Oh, and nice job of cherry-picking definitions of “manipulate” that you think will help you out, as if the rest of us don’t know that there are many other definitions of the word, and those don’t match your interpretation.
That was pretty weasely way to provide a non-answer to P Mike, bravo! We’re not fooled though, it’s obvious you don’t want to provide a good faith answer.
As for this:
Your argument seems to be that because the GSE’s wanted to buy some of these MBS, that forced Wall Street bankers to generate more and more AAA rated MBS and push their models into regions were they were not valid. Thus it was the GSE’s that forced the Wall Street bankers to stamp AAA ratings on junk bonds.
Nope, never made anything remotely close to that argument, you are just desperately making shit up now. All I’ve been doing is pointing out where you were factually incorrect (GSEs weren’t in subprime, GSE’s weren’t a large part of the market for subprime, etc) There were a lot of parties involved in this market, and they all deserve some blame. You blame it all on a “totally unregulated free market” which is a condition that does not exist here, and Wall Street bankers that “stamp AAA on junk bonds” – though of course, Wall Street bankers don’t rate their own securities, which I am positive you are aware of, and therefore are clearly being intentionally dishonest in your above sentence.
Lets quantify this Mikeca, would you agree that if these securities were truly deserving of junk ratings, then the default rate on these securities should be somewhere in the neighborhood of the default rate of junk bonds?
The Free Dictionary list 4 definitions for ‘manipulate’:
1. To move, arrange, operate, or control by the hands or by mechanical means, especially in a skillful manner: She manipulated the lights to get just the effect she wanted.
2. To influence or manage shrewdly or deviously: He manipulated public opinion in his favor.
3. To tamper with or falsify for personal gain: tried to manipulate stock prices.
4. Medicine To handle and move in an examination or for therapeutic purposes: manipulate a joint; manipulate the position of a fetus during delivery.
Definitions 1 and 4 do not appear to be relevant to P Mike’s usage, so I quoted the other two.
Perhaps manipulate does not mean what you think it means.
mikeca, you crack me up.
So you post the four definitions as if they support your argument. The VERY FIRST definition is the definition most reasonable people would agree with. That definition says NOTHING about nefarious intent, it simply says you DO it. Definition 1 is not only RELEVANT to P Mike’s post it is EXACTLY WHAT IT MEANT.
Your post implied that “manipulation” implied nefarious intent.
I ask again, do you even read your own posts?
Definition 1:
To move, arrange, operate, or control by the hands or by mechanical means, especially in a skillful manner
So you think the government used it hands or sent out its mechanical robots to control the home mortgage market?
mikeca:
How the hell do you think they wrote the bills?
You are seriously out of your league mikeca. Resorting to these sorts of pathetic semantic contortions to try to wriggle out of your own words is just pathetic.
I’ve told you before that the main reason I don’t “debate” with you much is that you seem incapable of rational discourse. This is an example of what I mean. I don’t mean you are incapable of “civil” disourse, I mean you simply aren’t capable of recognizing or fabricating a rational argument.
Oh, now you’re going to say that I misused “fabricating” because that means you have to use your HANDS.
I’ll let Paul get back to making you look like a fool.
Paul chose to use the word ‘manipulate’ in his question because it has the implication of nefarious intent. The government clearly had no nefarious intent. It was trying to bring stability to the housing market and insure that all people who could afford to buy a home, had a fair chance to obtain a home mortgage.
Now people who hate their government assign nefarious intent to anything the government does, but that is their problem.
Wrong. The main reason you don’t like to “debate” with me is that I am not overwhelmed by your childish, middle school caliber arguments.
mikeca:
I won’t speak for Paul, but I believe you INFERRED “nefarious intent” from Paul’s use of “manipulate.” I think Paul used it in its first definition sense, and implied only the best of (naive, soft-headed) intentions. You are simply projecting your prejudices onto your opponents. It’s that simple.
LOL, you can play whatever silly games with yourself that you like to mikeca, I let the record of the actual comments speak for themselves and let the readers judge who is using the childish, middle-school caliber arguments.
You. are. a. trip. I mean every time I tell myself that liberals can’t really be that soft-headed and ideologically blinded, you reaffirm my faith in leftists.
Rhetorical games are an American conservative specialty. They relabel every thing they oppose with nefarious sounding names. The inheritance tax becomes the “death tax”. Any government attempt to control heath care cost becomes a “death panel”.
If you want to play that game, go right ahead. Just don’t expect me to blindly agree with you.
lol, as so many times before, I’m done with you on this. You have vastly overrated your effectiveness in this (as in most other) argument. And now you’re just pissed because so many people have called you out on your inability to create a defensible position.
Not the first time. Surely not the last.
Have a nice weekend mikeca.
Wait, the two examples you cite are calling a tax that is triggered by someone dying a “death tax” and panels that recommend euthenasia standards as “death panels”?
Are you literally made of fail? As in, tangible fail in protein form?
Mikeca, you are reading so much into my comments that you are assigning things to me that were actually said by others! Go re-read and see who actually asked you about government manipulation. I’m sure it was an innocent mistake though…
So, again Mikeca, do you want to try and quantify this? Would you agree that if these securities were truly deserving of junk ratings, then the default rate on these securities should be somewhere in the neighborhood of the default rate of junk bonds?
Paul, it may have been me that assigned P Mike’s “manipulation” comment to you. Still, my points still stand on the use of the word.
There has never been a tax on dying. If you is leave a large estate, and that estate is transfered to your decedents, there is a tax on the transfer. If you leave your estate to charity, there is no tax on that. The inheritance tax is part of the American belief that wealth should be earned rather than an accident of birth.
There were no panels recommending euthanasia standards. Every insurance company has a procedure for deciding what treatments it will pay for. If some drug will on average add one month to the life expectancy of cancer patients, that is a good thing, right? What if the drug cost $100,000? Is one month longer life worth $100,000? What if the drug cost $1,000,000?
Those are difficult questions to wrestle with, but every health insurance company is already making those kinds of decision. Labeling the people making those decisions a “death panel” is super charging the rhetoric. It only brings out the mindless, screaming dittoheads and makes any intelligent discussion of what are very difficult issues impossible.
“Those are difficult questions to wrestle with, but every health insurance company is already making those kinds of decision. Labeling the people making those decisions a “death panel” is super charging the rhetoric. It only brings out the mindless, screaming dittoheads and makes any intelligent discussion of what are very difficult issues impossible.”
Because we all have seen in the past eight years that the Left would never demagogue an issue, resort to supercharged rhetoric or engage in screaming.
No, nothing but calm, rational discourse from the Left. We should all be more like the Left.
Oh wait, that’s what we’re doing!
lol
I’m not sure what your point is.
The fear of future defaults can reduces a bond to junk bond status just as easily as an actual default. If Company A has been losing money and there is speculation they will soon go bankrupt, their bonds may become junk bonds, even though the company has never defaulted on a bond in history.
In late 2008 the market for MBS securities locked up. There were almost no buyers that wanted to buy MBS at a price a holder was willing to sell. The holders of MBS thought they were worth far more than buyers were willing pay for then.
Part of the problem was the complexity of the securities. It was hard to look at a pool of mortgages with a large subprime component and estimate what the eventual default rate on those mortgages would be. There is speculation that almost all the subpime loans of the last few years will eventually default.
Since you seem to know so much, why don’t you tell us what the default rate has been?
Okay MikeCA, through out “manipulated” and leave in “altered,”
and answer the question please.
Yes, but Mikeca, even securities backed by subprime can have a senior tranche that is overcollaterlized or has some other type of credit enhancement so it can absorb a fair amount of defaults without any losses, which is why that particular tranche gets the higher ratings. You are saying that the ratings were all incorrect, so I am saying, if the ratings truly were incorrect, then the default rates should be more like those of lower rated securties. Do you disagree?
Obviously, fear of default can drive a price down, but if the bond pays out at par, there are no losses, and perhaps the fear of default was irrational and not the rating. Over the last few months, the prices of these securities have come roaring back.
I don’t know the default rate off the top of my head, though I don’t believe that any AAA rated MBS that were part of the BC Aggregate Bond Index (which is like the S&P 500 of the bond world) have defaulted. I can probably get to the number, I am just not going to spend the time if you don’t agree that it is valid metric.
First I doubt that any of the AAA MBS securities will totally default. Even if all the mortgages go into foreclose, some of the principal will be recovered eventually by sell the house. Some of the principal may be lost, but not all of it.
AIG and others were also selling CDSs to insure some of these AAA MBS. Perhaps those CDS will make good on the principal losses for people who bought the AAA MBS. Of course AIG is basically bankrupt, so it is the US tax payers making good on those CDS.
This Vanity Fair article on AIG is interesting. It is largely sourced to some AIGFP insiders trying to explain what happened, so it should be taken with a grain of salt. One interesting thing in this article is that near the end of 2005 one AIGFP executive looked into the MBS AIG was issuing CDS for. He discovered the mortgages in these pools were 95% subprime mortgages. He asked other AIGFP executives what percentages of the pools they thought were subprime. He got answers in the 10-20% range. AIGFP at the end of 2005 really had no idea how risky the MBS they were insuring with CDSs actually were.
After this discovery, AIGFP went to talk to all of the big Wall Street banks to ask them how a MBS based on 95% subprime mortgages could be a AAA security. The argument was simply that it was unlikely for housing prices to fall at the same time all over the country. The AIGFP executives were shocked at how little thought or analysis the Wall Street banks had given to the safety of these MBS. At the end of 2005 AIG stopped writing CDS on MBS securities because they decided they were simply too dangerous to insure.
In 2006 and 2007 the big Wall Street banks kept right on generating MBS, and they apparently insured them by writing there own CDS. This may be a big part of the reason Merrill Lynch, Lehman Brothers, and Bear Stearns all failed, and the other big banks needed bailouts.
To the extent the AAA MBS are paying off principal because it was insured with CDS, it is largely the Federal Government bailing out those MBS.
… when you die.
“It’s not a tax on gasoline. It’s a tax on selling petroleum products for use in vehicles on public roads. That’s not a gas tax.”
“It’s not a tax on income. It’s a tax on certain earnings that accrue as part of an employee employer relationship. That’s not an income tax.”
Seriously, what is the target for your ramblings? Men who suffered closed head injuries as boys?
One anecdote from Vanity Fair doesn’t do a whole lot to back up your claims.
Do you know the definition of the word default? I don’t think you do. A credit goes into technical default as soon as one payment is missed. Just because some amount of principal is collected after the sale of the collateral doesn’t mean that it didn’t default. Also, if a security defaults, it doesn’t matter if it is insured or not. A default is a default. To say that a security is not in default because a CDS was purchased to insure it, is to say your home actually didn’t burn down after a fire because you had fire insurance.
So, your attempt at insinuating that if AAA rated MBS are not in default, it is only because the Fed Government is bailing them out via CDS is completely incorrect.
1995: Community Reinvestment Act revised; a bank’s CRA rating could now be affected by complaints, affecting merger approvals, ability to open new branches; some banks joined partnerships with community groups (like ACRON) to distribute mortgage money to low-income borrowers previously considered noncreditworthy, or purchased special “CRA mortgage-backed securities,” packages of disproportionately nonprime loans certified as meeting CRA criteria and securitized by Freddie Mac.
1993: Department of Housing and Urban Development began bringing legal actions against mortgage bankers that declined a higher percentage of minority applicants than white applicants.
1996: HUD required Fannie Mae & Freddi Mac to make 12% of all mortgages be subprime. Fannie Mae and Freddie Mac had to borrow huge sums in wholesale financial markets which saw the organizations as backed by the U.S Government
2000: HUD sets a minimum of 12% subprime loans with a 20% target
2001: <10% subprime mortgages, FHA reduces down payment to 3% (vice 20%)
2003: Predsiental adminstration tried to change oversight of Fannie & Freddi, were rebuffed (with some outrageous name calling) by Congress
2005: HUD changes Fannie Mae & Freddi Mac subprime targets to 22%
2006: 34% subprime for new mortgages, 23% overall
Fannie & Freddi borrowed huge sums of money, made big profits, and other companies followed suit. Short term interest got cheaper than long term (Fed policy) that encouraged new innovative ways to get peopl into mortgages that they couldn't afford, like ARMs. I've seen numbers that range from 30% to 50% of bad mortages were "securitized" by Fannie & Freddi.
This is not a complete timeline and does not inlcude smoe pretty important historical facts, but there was a pretty clear and unambiguous intent of the Fed Gov to encourage people to buy houses when they did not have credit ratings for which the tradiational private lender market would not extend credit. It clearly worked. It also very unambigously generated private industry participation because there was money in it (hence the cries of "greed" and "speculation") and because law required it.
If the markets had not been influenced by Fed Gov policy to make subprime loans, subprime loans would not have caused the collapse of the finanical institutions supporting the housing market.
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