Archive for the ‘Wall Street’ Category

THEY WANT YOUR IRA

Saturday, April 9th, 2016

 

www.wsj.com/articles/they-want-your-ira-1459985170

THE WALL STREET JOURNAL

They Want Your IRA

The White House pushes investors toward government accounts.

Secretary of Labor Thomas Perez in Washington D.C. on April 30, 2015.
Secretary of Labor Thomas Perez in Washington D.C. on April 30, 2015. Photo: CQ-Roll Call,Inc.

The Department of Labor says its so-called fiduciary rule will make financial advisers act in the best interests of clients. What Labor doesn’t say is that the rule carries such enormous potential legal liability and demands such a high standard of care that many advisers will shun non-affluent accounts. Middle-income investors may be forced to look elsewhere for financial advice even as Team Obama is enabling a raft of new government-run competitors for retirement savings. This is no coincidence.

Labor’s new rule will start biting in January as the President is leaving office. Under the rule, financial firms advising workers moving money out of company 401(k) plans into Individual Retirement Accounts will have to follow the new higher standards. But Labor has already proposed waivers from the federal Erisa law so new state-run retirement plans don’t have the same regulatory burden as private employers do.

This competitive advantage could be significant. Last month the board of California’s new “Secure Choice” retirement plan wrote to state legislators about their “exciting win” in Washington. They reported that employers enrolling workers in the new government-run plan “would have no liability or fiduciary duty for the plan.” Score! The California bureaucrats added that “we have been given the green light to auto-enroll workers into an Individual Retirement Account (IRA).”

(more…)

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FANNIE AND FREDDIE FOREVER

Thursday, December 31st, 2015

 

THE WALL STREET JOURNAL
FANNIE AND FREDDIE FOREVER
Prior to the financial crisis of 2008, these two government-created behemoths owned or guaranteed more than $5 trillion in mortgage debt. When the housing boom went bust, taxpayers were forced to provide a $188 billion bailout to the toxic twins—and endure an historic financial crisis. So the taxpayer interest is in shrinking and eventually shutting down Fan and Fred.
But these days the Federal Housing Finance Agency that supervises the twins under federal “conservatorship” seems to view itself as the official preserver of Fan and Fred’s market share. So instead of simply telling the mortgage giants to stop buying and guaranteeing so many mortgages, the regulator has been encouraging the use of ever more complex financial instruments to keep Fan and Fred at the center of this multi-trillion-dollar market.

One Fan and Fred innovation—check your wallet when that word is used in government—is to use synthetic collateralized debt obligations (CDOs) to offload some of the mortgage risk they are holding. These new instruments are essentially a way for the mortgage giants to buy insurance against the possibility that lots of mortgage borrowers don’t repay the money they owe. But how about simply not holding these risks in the first place? Then taxpayers would have no need for insurance.
Fan and Fred are selling the CDOs to private investors, who are getting compensated with juicy yields in return for theoretically accepting much of the default risk in Fan and Fred’s bundles of mortgages. The program is ramping up and now covers at least some of the risks on more than $800 billion in mortgages of the more than $4 trillion that Fan and Fred still own or guarantee.
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COMMITTED TO SHATTERING THE AMERICAN DREAM

Tuesday, January 28th, 2014

 

THE WASHINGTON TIMES
COMMITTED TO SHATTERING THE AMERICAN DREAM

American dream in trouble from president’s policies

President Obama has all but announced that this fall’s House and Senate campaigns should focus not on the collapse of American influence abroad, or on the continuing disaster that we know as Obamacare, or even on the apparent inability of his policies to create jobs, but on “income inequality.”

The mantra from the administration, like the rantings of the “Occupy” crowd and the new finger-pointing quasi-Marxist mayor of New York City, is that in today’s United States, it is impossible to get ahead unless one is born rich, works on Wall Street or finds some other way to profit from the misery of others.

Their rhetoric and proposed policies play on envy and remind one of the class warfare that has dominate European politics for so long.

Historically, betting on class warfare as a way to win a U.S. election is a bad bet. The United States is not Europe, and Americans have never been envious of the success of others. Americans have always believed in what almost from the beginning has been known as the American dream. The president is betting this is no longer true.

The belief that a political focus on “income inequality” and the politics of class envy will work is, in reality, a challenge to the very concept of the American dream.

Class envy and class warfare have never appealed to many Americans for the simple reason that most Americans of every background have always believed that through hard work, they or their children and grandchildren would achieve a freer, happier and more prosperous life than that enjoyed by their parents and grandparents. (more…)

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THE YEAR OF THE WASHINGTON POWER GRAB AND COMMON CORE DOESN’T ADD UP TO STEM SUCCESS

Friday, January 3rd, 2014

 

The Wall Street Journal is making it very difficult to forward their articles in print mode as I have always done.  Some of you have told me that the links do not always open up for you.    Please give me some feedback if you are having difficulty opening up the links.  I am persisting in trying to send out these articles because the Journal’s op-ed page covers so many complex  issues with in-depth information.   The following two articles are exceptional.   Nancy

THE YEAR OF THE WASHINGTON POWER GRAB  – Wall Street Journal  by Kimberley A. Strassel

COMMON CORE DOESN’T ADD UP TO STEM SUCCESS  by Sandra Stotsky – Ms. Stotsky was a member of Common Core’s Validation Committee from 2009 – 20010.  She is professor emerita at the University of Arkansas.    My Stotsky was also one of our expert panelists at the September 19, 2013
 ICON Lecture Series on Common Core in Durham, North Carolina.
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OBAMA’S POLICIES HAVE HELPED WALL ST. FAT CATS

Monday, November 25th, 2013

 

Obama’s Policies Have Helped Wall St. Fat Cats

By Jack Kellyhttp://dyn.realclearpolitics.com/authors/jack_kelly/ – November 24, 2013

Jack Kelly is a columnist for the Pittsburgh Post-Gazette and The Blade of Toledo, Ohio.

Page Printed from: www.realclearpolitics.com/articles/2013/11/24/obamas_policies_have_helped_wall_st_fat_cats_120768.html at November 24, 2013 – 08:37:14 PM CST

The number of Americans living in poverty rose by the equivalent of the population of Massachusetts during President Barack Obama’s first term. By the time his second ends, “black people will have lost ground in every single leading economic indicator category,” television talk show host Tavis Smiley said last month.

From 2009 to 2012, the top 1 percent received 95 percent of income gains, a study by University of California-Berkeley economist Emmanuel Saez indicated.

That’s where you find the “superstars” who make megabucks in sports, entertainment, technology and finance, said economists Steven Kaplan and Joshua Rauh. You’d expect them to do better.

But during the presidency of George W. Bush, the top 1 percent garnered just 65 percent of income growth, Prof. Saez said.

The stock market has set all-time highs despite mostly dismal economic news — thanks to “quantitative easing” (money creation) by the Federal Reserve Board. The top 1 percent own 83 percent of U.S. stocks.

The boon to Wall Street has been a blow to the middle class. Near-zero interest rates undermine savings.

QE was supposed to make credit available to “Main Street” businesses crunched by the recession. That didn’t happen, said Andrew Huszar, point man for the Fed’s bond purchases. (more…)

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THE CLINTON-ERA ROOTS OF THE FINANCIAL CRISIS

Wednesday, August 14th, 2013

 

  • The Wall Street Journal

The Clinton-Era Roots of the Financial Crisis

Affordable-housing goals established in the 1990s led to a massive increase in risky, subprime mortgages.

    By

  • PHIL GRAMM
  • AND MIKE SOLONMr. Gramm, a former Republican chairman of the Senate Banking Committee, is senior partner of US Policy Metrics and a visiting scholar at the American Enterprise Institute. Mr. Solon, a former economic policy adviser to Senate Republican leader Mitch McConnell, is a partner at US Policy Metrics.

EXCERPT FROM THIS ARTICLE:  Effective in January 1993, the 1992 housing bill required Fannie and Freddie to make 30% of their mortgage purchases affordable-housing loans. The quota was raised to 40% in 1996, 42% in 1997, and in 2000 the Department of Housing and Urban Development ordered the quota raised to 50%. The Bush administration continued to raise the affordable-housing goals. Freddie and Fannie dutifully met those goals each and every year until the subprime crisis erupted. By 2008, when both government-sponsored enterprises collapsed, the quota had reached 56%. An internal Fannie document made public after the financial crisis (“HUD Housing Goals,” March 2003) clearly shows that by 2002 Fannie officials knew perfectly well that these quotas were promoting irresponsible policy: “The challenge freaked out the business side of the house [Fannie] . . . the tenseness around meeting the goals meant that we . . . did deals at risks and prices we would not have otherwise done.”
The mortgage market shows the dramatic results of this shift in policy. According to the nonprofit National Community Reinvestment Coalition, total CRA lending rose to $4.5 trillion in 2007 from $8 billion in 1991. The American Enterprise Institute’s Ed Pinto found that in 1990 80% of the residential mortgage loans acquired by Fannie and Freddie were solid prime loans with healthy down payments and a well-documented capacity by borrowers to make mortgage payments. By 1999 only 45% of their acquisitions met this standard. That number fell to 15% by 2007. By 2008, roughly half of all outstanding mortgages in America were high-risk loans. In 1990, very few subprime loans were securitized. By 2007 almost all of them were.

 

Simply put, the financial crisis of 2008 was caused by a lot of banks making a lot of loans to a lot of people who either could not or would not pay the money back. But this explanation raises two key questions. Why did private lenders, whose job it was to assess credit risk, make those loans? And why did the army of financial regulators, with massive enforcement powers, allow 28 million high-risk loans to be made?

There’s a strong case that the answers can be traced to Sept. 12, 1992. On that day presidential candidate Bill Clinton proposed, in his campaign book “Putting People First,” using private pension funds to “invest” in government priorities, such as affordable housing, to “generate long-term, broad based economic benefits.” Seldom has such a radical proposal been so ignored during a campaign only to later lead to such devastating consequences. After his election, President Clinton tapped Labor Secretary Robert Reich to lead the effort to extract, as Mr. Reich put it in 1994 congressional testimony, “social, ancillary, economic benefits” from private pension investments. Mr. Reich called on pension funds to join the administration’s “Economically Targeted Investment” effort. Housing and Urban Development Secretary Henry Cisneros assured participants that “pension investments in affordable housing are as safe as pension investments in stocks and bonds.”

(more…)

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AN OUT OF CONTROL SPITZER?

Thursday, July 25th, 2013

 

Out of Control?

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ELIOT SPITZER’S RETURN

Wednesday, July 10th, 2013

 

The Wall Street Journal

The Spitzer Method

The AG who abused power now wants to control NYC’s money.

Eliot Spitzer couldn’t be trusted to responsibly enforce or even to obey New York’s laws in the state’s highest offices. Yet now the disgraced ex-Governor is running for comptroller so he can control New York City’s money.

He is no doubt hoping that New Yorkers have forgotten that even before his use of prostitutes forced him to resign in 2008 (see “Notable & Quotable” nearby), his popularity was falling thanks to his abuse of power. His staff had been caught using New York’s state police to gather dirt on a political adversary. Mr. Spitzer, who as a candidate promised to reform Albany, had quickly become its most disturbing symbol, a man who would destroy opponents for his own political agenda.

This was the same Eliot Spitzer who as Attorney General called John Whitehead after the former Goldman Sachs chairman published an article on this page defending former AIG CEO Hank Greenberg. “I will be coming after you,” Mr. Spitzer said, according to Mr. Whitehead’s account. “You will pay the price. This is only the beginning and you will pay dearly for what you have done.”

Jack Welch, the former head of GE, said he was told to tell Ken Langone—embroiled in Mr. Spitzer’s investigation of NYSE chief Richard Grasso—that the AG would “put a spike through Langone’s heart.”

Encouraged by a press corps that largely adored Mr. Spitzer and profited from his leaked smears, some New Yorkers applauded Mr. Spitzer for his willingness to take on the titans of Wall Street. Only later would it be clear how much damage he had done.

After he used the threat of a corporate indictment and death penalty to force AIG’s board to fire Mr. Greenberg, the new management made the giant mortgage bets that would inflame the financial crisis. Shareholders also suffered greatly when Mr. Spitzer forced a management decapitation at insurance broker Marsh & McLennan and installed as CEO Mike Cherkasky, a nice guy who knew nothing about insurance.

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Eliot Spitzer (more…)

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UNCERTAINTY IS THE ENEMY OF RECOVERY

Sunday, May 5th, 2013

 

The Wall Street Journal

Uncertainty Is the Enemy of Recovery

At Vanguard, we estimate that policy uncertainty has created a $261 billion drag on the U.S. economy.

Mr. McNabb is chairman and CEO of the Vanguard Group.

EXCERPT FROM THIS ARTICLE:  Investor anxiety is a critical component in all of this. We’d be foolish to take comfort in the strength of recent stock-market performance. Until the U.S. debt issue is resolved for the long term, market gains and losses will be built on an unstable foundation of promises that cannot be kept.

Anyone hoping for signs of a healthy economic recovery was disappointed by lower-than-expected GDP growth for the first quarter of 2013—a mere 2.5%, far short of the forecast 3.2%. Meanwhile, the stock market continues to soar, hitting record levels in recent weeks. It’s a striking disconnect, and one that is discouraging and confusing for Americans as they seek to earn a living and save for the future.

Companies and small businesses are also dealing with the same paradox. Many are in good shape and have money to spend. So why aren’t they pumping more capital back into the economy, creating jobs and fueling the country’s economic engine?

Quite simply, if firms can’t see a clear road to economic recovery ahead, they’re not going to hire and they’re not going to spend. It’s what economists call a “deadweight loss”—loss caused by inefficiency.

Today, there is uncertainty about regulatory policy, uncertainty about monetary policy, uncertainty about foreign policy and, most significantly, uncertainty about U.S. fiscal policy and the national debt. Until a sensible plan is created to address the debt, America will not fulfill its economic potential. (more…)

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VIDEO – THE MONARCHS OF MONEY – THE UNPRECEDENTED POWER OF THE CENTRAL BANKERSS

Wednesday, May 1st, 2013

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