Paul Krugman: Wall Street Whitewash

Higher GSE Limits Would Hit Those Who Need Help
The GSEs are not doing the job they should for low-income homebuyers. We come from different political backgrounds and differ on the merits of government-sponsored enterprises, but we are in complete agreement that the government should not be subsidizing housing for the wealthiest in our society. Yet that would be the result of a provision in the GSE Reform Bill passed by the House this past fall. It would raise the “conforming loan” limit for Fannie Mae and Freddie Mac by a whoppi...

Americans Still Strongly Oppose Big Wall Street Bonuses
Bloomberg is out with a headline today that suggests that Main Street anger at Wall Street compensation practices remains pervasive in the United States. The article states that more than 70% of Americans believe that big bonuses should be banned this year at Wall Street firms that took Taxpayer Bailouts. The data comes from a Bloomberg National Poll. In addition, one in six of the respondents were in favor of enacting a 50% tax on bonuses exceeding $400,000. Only 7% of adults said that bonuses...

Foreclosure Rate Falls Thx to Fed Probe
The Foreclosure rate started dropping in October, when banks such as GMAC, then JPMorgan Chase and Bank of America announced they were halting any new foreclosures until they figured out whether they were processing paperwork correctly.  With over 300,000 foreclosures a month being processed for the last few years, it is unknown how many banks were too hurried to follow correct and legal procedures. How did this happen? One reasons was that the high volume of Mortgages pressured bank execs ...

Washington and the Regulators Are There To Serve the Banks
It is too obvious to bear saying, but I’ll say it anyway. At the urging of the administration, Congress passed a Financial Reform bill this past summer that expanded the theoretical powers of Regulators, but also gave those regulators the power to write the rules implementing the bill and then to enforce the rules. The bill’s sponsors fended off efforts to write specific constraints, whether size limits or leverage limits, into the statute. Yet the bill did nothing that I am aware of...

Invincible Ignorance
So Republican members of the Financial Crisis Inquiry Commission are going to issue their own report, placing primary blame on the government — because it’s always the government’s fault. And according to reporting at the Huffington Post, all four Republicans voted in favor of banning the phrases “Wall Street” and “shadow banking” and the words “interconnection” and “Deregulation” from the panel’s final report, according t...

Republican "Fifth Column" Strikes Financial Commission. Are YOU Next?
A sleeper cell of four Republicans struck the Financial Crisis Inquiry Commission this week, escalating what had been previously been a campaign of covert obstruction into an overt act of sabotage. That act should be seen for what it is: A "denial of service attack" on Bipartisan cooperation and public deliberation, designed to destroy the Commission's work and discredit its findings. The subversives also released a document which they characterized without any apparent embarrassment as a "pri...

Richard (RJ) Eskow: Republican "Fifth Column" Strikes Financial Commission. Are YOU Next?
A sleeper cell of four Republicans struck the Financial Crisis Inquiry Commission this week, escalating what had been previously been a campaign of covert obstruction into an overt act of sabotage. That act should be seen for what it is: A "denial of service attack" on Bipartisan cooperation and public deliberation, designed to destroy the Commission's work and discredit its findings. The subversives also released a document which they characterized without any apparent embarrassment as a "pri...

Reining in Fannie & Freddie
FT reports today that the Obama Administration is planning on cutting back on the role of Fannie Mae and Freddie Mac in the Housing Market. The administration wants to lower the cap on government-insurable Mortgages from the current nearly $730,000. It is also considering raising the fees charged by Fannie & Freddie, thus rendering them less competitive with private entities. These are ideas advanced by free-market housing reformers in the 1990s and 2000s, to tragically little effect. Inte...

The Kroog Versus The Amazing Disappearing Crisis
Paul Krugman details the Republican efforts to absolve Wall Street of any and all wrong doing in the Financial Crisis by literally eliminating the words "Wall Street" from their report on the meltdown. The Republicans on the government's Financial Crisis Inquiry Commission have decided to issue their own report, because how dare anyone blame our kindly banking overlords for the Trillions they cost us? Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commi...

GOPers seek to blame government for financial crisis
Ah, the sweet sound of Republican hacks doing the bidding of the people who bought and paid for their campaigns: The four Republicans appointed to the commission investigating the root causes of the Financial Crisis plan to bypass the Bipartisan panel and release their own report Wednesday, according to people familiar with the commission's work. The Republicans, led by the commission's vice chairman, former congressman and chair of the House Ways and Means Committee Bill Thomas, will likely fo...

Tanta on Fannie, Freddie and the Bubble
by CalculatedRisk on 12/16/2010 07:18:00 PM With some people once again trying to rewrite history, here is an excerpt from a piece Tanta wrote in 2008. This captures my view on the role of Fannie and Freddie: I think we can give Fannie and Freddie their due share of responsibility for the mess we're in, while acknowledging that they were nowhere near the biggest culprits in the recent credit bubble. They may finance most of the home loans in America, but most of the home loans in America aren'...

Financial Crisis Inquiry Commission
Mr. Wallison has held a number of government positions. From June 1981 to January 1985, he was General Counsel of the United States Treasury Department, where he had a significant role in the development of the Reagan Administration's proposals for Deregulation in the Financial Services industry. During 1986 and 1987, Mr. Wallison was White House Counsel to President Ronald Reagan. Between 1972 and 1976, he served first as Special Assistant to New York's Gov. Nelson A. Rockefeller and, subseq...

Why Unemployment Will Remain High For Years (Parts I and II)
.) There are 15.1 million workers unemployed in America (U-1). Another 9 million are working temp for economic reasons, and another 2.5 million are marginally attached or discouraged from the work force (U-6). That is about 26.6 million people in trouble. We can argue about the "true" number of unemployed but for the purpose of this article, the fact that it is high under any measure is sufficient. The labor participation rate, which shows what percentage of the Workforce is engaged in employmen...

Global bonus watch: Ireland to Wall Street
It's that time of year again -- time for holiday cheer, gift-giving, and Bonus checks. Unless you're a Banker in Ireland. At a time when big bonuses on Wall Street are once again expected to be plentiful, Ireland is reining in on bankers' bonuses as it deals with shoddy finances that nearly bankrupt the country. Earlier this week, Allied Irish Bank (AIB), the lender that is being bailed out by the Irish government, decided not to award senior staff about $53 million in deferred bonuses from 200...

Lack of Foreclosure Data Leaves Big Questions
by Jennifer LaFleur, ProPublica, and Sanjay Bhatt, The Seattle Times Dec. 17, 2010, 4 p.m. This story will also be published in The Seattle Times on Sunday. The worst Foreclosure crisis in the nation's history might have been detected earlier if the government had a better tracking system for Mortgage data, experts say. High levels of risk became apparent only after the Housing Market collapsed and loan defaults skyrocketed. "It's like Air Traffic control without a radar screen," said Keith E...

New House Financial Services chief may target troubling oil payments mandate
Incoming House Financial Services Committee Chairman Spencer Bachus (R-Ala.) may take aim at a provision tucked into the Wall Street reform law that forces oil and mining companies to disclose specific, project-level information about payments to foreign governments. Count Bachus among the critics of the provision authored by Sens. Ben Cardin (D-Md.) and Dick Lugar (R-Ind.), which was added to the bill during the marathon final negotiating session last summer. Bachus says it will put U.S. com...

Isakson urges Federal Regulators to create "Gold Standard" in mortgage reform
Paulding County, Georgia - Today, U.S. Republican Senator Johnny Isakson of Georgia urged federal Regulators to create a gold standard of "qualified residential Mortgages" that will pose less risk to borrowers, lenders and investors. This will result in fewer borrowers defaulting on a loan that has plagued Paulding County, the state, and the nation. Presently, there are 593 Foreclosures with an additional 1026 homes in pre-foreclosure, auction, sheriff sales, bankruptcies, and short sales ...

Extreme Inequality Helped Cause Both the Great Depression and the Current Economic Crisis
Most mainstream Economists dismiss the idea that wealth inequality causes economic crises. Of course, some ideologues will argue that even discussing inequality is waging class warfare, and smacks of an attack on Capitalism. However, the father of modern economics - Adam Smith - disagreed. And as Warren Buffet, one of America's most successful capitalists and defenders of capitalism, points out: There's class warfare, all right, but it's my class, the rich class, that's making war .... (And as ...

Treasury Guarantees Are Too Good to Be Free
A lesson that everybody has drawn from the debacle of Fannie Mae and Freddie Mac is that free guarantees from the Treasury Department, and therefore from the Taxpayers, are a bad idea. Everybody now agrees that Treasury guarantees should be both explicit and explicitly paid for. Now let's consider the Federal Deposit Insurance Corp., which benefits from a free Treasury guarantee. As originally conceived, deposit Insurance corporations, including the FDIC, were expected to stand on their ow...

Debt Factoids - CBO
on the topic. Some odds and ends I found interesting: ******************************* We know that there is a law called the Debt ceiling. We also know that we will (again) hit that limit early in 2011. Many think that this will be a line in the sand fight with the new Congress. Phooey. This from the CBO report: Options for the Treasury When Debt Approaches the Limit

Bethany McLean on This Year's Winners of the Stupidest Economists Alive Contest
Bethany Mclean: Why won't the GOP's financial-crisis report follow the money?: [O]n Dec. 15, defecting Republicans—former Calif. Rep. Bill Thomas; Keith Hennessey, who served on President Bush's National Economic Council; Douglas Holtz-Eakin, the former head of the Congressional Budget Office; and Peter Wallison, a fellow at the conservative American Enterprise Institute... released what they describe as their "preliminary findings and conclusions." This "primer" (in a blog, Wallison den...

Repeat A Lie Enough Times . . .
Barry Ritholtz: Repeat A Lie Enough Times . . . | The Big Picture: All last year, I kept getting emails from people asking me: “Why do you keep hammering on these issues? Why do you beat up on the eejits who push the Fannie Freddie CRA meme? Its dead, everyone knows its nonsense.” Except, not so much. That 4 members of the FCIC could push such as discredited meme reflects a broader strategy of Agnotology. Even Gretchen Morgenson, of that liberal media outlet NYTimes, began her colu...

Fannie and Freddies Regulator Opposes Reducing Mortgages for Struggling Homeowners
A housing development in Tucson, Ariz. (Chris Hondros/Getty Images) The Obama Administration has been pushing for banks and investors to cut Mortgage balances for Homeowners who owe more than their home is worth. But the regulator for the biggest investors of them all -- the government-controlled Fannie Mae and Freddie Mac -- won't let the two do it. The administration and some banks themselves have increasingly seen reducing the size of a borrower's loan -- what's known as principal reduction ...

Repeat A Lie Enough Times . . .
All last year, I kept getting emails from people asking me: “Why do you keep hammering  on these issues?  Why do you beat up on the eejits who push the Fannie Freddie CRA meme? Its dead, everyone knows its nonsense.” Except, not so much. That 4 members of the FCIC could push such as discredited meme reflects a broader strategy of Agnotology. Even Gretchen Morgenson, of that liberal media outlet, began her column on Sunday with this sentence: :”DECIDING what to do with Fanni...

Insiders Blame Financial Panel Rift on Dem Chair
The Financial Crisis Inquiry Commission was supposed to provide a bi-partisan explanation of the causes of the financial crisis, in a style similar to the 9/11 Commission Report. Instead, the body has failed to produce a document when it originally planned to and has now become part of the partisan divide that permeates across Washington. Some reporting has placed blame for this at some of the Republican members of the commission, but one commissioner who spoke to FrumForum said that it was t...