AP story notes Republican involvement in GSE mess
December 7, 2008
I’m fully on board with blaming Democrat lawmakers in Washington for contributing to the mortgage crisis that started with Freddie Mac and Fannie Mae. Republicans introduced legislation that would more closely regulate the government sponsored entities (GSEs). Democrats – including Barney Frank (D-Mass.) – blocked that legislation, all but calling those asking for the changes racist.
Fox News and bloggers brought those stories to light, and now the Associated Press has written a story targeting former Republican lawmakers and staffers who were hired in 2006 by the GSEs to help keep Congress off their back. I’m willing to hear the evidence from 2006, but remember that the damage was already done by this time.
How does a 4.5% mortgage sound to you?
December 4, 2008
As I walked through the living room just now, I heard talk of a 4.5 percent fixed rate mortgage on Fox News. Financial industry lobbyists are knocking on Hank Paulson’s door at the Treasury Department with a plan in hand to lower interest rates to help “stabilize” the housing market. Will everyone be able to refinance their mortgages at 4.5 percent?
Small banks wondering what they did wrong
November 25, 2008
Citibank is a big bank, one of those companies that are just too big to fail. When the government steps in to help a single bank – like Citibank – with an infusion of $20 billion in cash and more than $300 billion in loan guarantees, you’ve got to wonder how Citi’s competitors feel about all of this.
Let’s say you ran a small business the right way, with a solid business plan, focused leadership and sound financial principals. A large competitor in town is failing, and the government is going to provide them with some cash and guaranteed loans to help them out. How does that change your business model?
State legislatures really know how to lead
November 21, 2008
Early this week, I wrote about how corporate leaders were changing their business plans to take advantage of government handouts. Everyone is getting in line, and you really can’t blame them for doing so. If they don’t come and ask for the cash, someone else will.
Word from Malkin that a local department store is asking for a bailout and the Pennsylvania state legislature wants them to have it. At the same time, they are accepting their COLA pay raise this year.
Everyone lines up for a bailout
November 17, 2008
The day the $750 billion dollar federal bailout figure was mentioned, every single Fortune 100 company, state and city chief financial officer started planning. Not only would this level of federal involvement in these institutions be unprecedented, it would actually dramatically change the way everyone did business.
Let’s say you owned a small ice cream stand in a city with three other ice cream stands. The owners of those stands paid their employees too much, offered crappy service and featured ice cream that tasted terrible; they were going bankrupt. But since those stands employed a total of 100 people, the government came in and offered grants and subsidized loans to these owners so they could continue to keep the doors open. How would this government action change your business plan?
