Archive for the ‘Dodd/Frank Financial Regulations’ Category

OBAMA’S VIRTUAL ECONOMY

Saturday, February 25th, 2012
The Wall Street Journal

  • FEBRUARY 23, 2012

It’s endless fun, fiddling with the dials on the real world.

  • By DANIEL HENNINGER

If you were a president who for three years presided over an economy with more than 13 million unemployed, a growth rate gasping around 2%, an historic credit downgrade and underwater home mortgages drifting like icebergs toward the American Titanic, what would you do?

With his recently announced campaign platform—An Economy Built to Last—President Obama has essentially constructed a virtual economy. Instead of the economy we all live in, he’s making one up and inviting us to pretend we are living in it. Welcome to the Sim City Economy.

Sim City, one of the most popular products ever in the imaginary world of video games, lets players bring to life towns of their own devising in great detail. It’s endless fun, fiddling with the dials on the real world.

In his State of the Union Address, Mr. Obama described what will be a major claim of his re-election campaign—that he renewed the American dream by bailing out General Motors. About the defensibility of this policy we can argue. But as is his wont, Mr. Obama erected a generalized theory of social betterment atop this one event. “What’s happening in Detroit can happen in other industries.” Mr. Obama announced. “It can happen in Cleveland and Pittsburgh and Raleigh.”

It can? (more…)

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ADDITIONAL FACT CHECKING OF OBAMA’S STATE OF UNION

Wednesday, January 25th, 2012
Washington Post

Fact checking the 2012 State of the Union speech

01/25/2012
A State of the Union address is often difficult to fact check, no matter who is president. The speech is a product of many hands and is carefully vetted, so major errors of fact are so relatively rare that they sometimes can become big news (think of George W. Bush’s “sixteen little words” about Iraq seeking uranium in Niger). At the same time, State of the Union addresses are very political speeches, an argument for the president’s policies, so context (or the perspective of opponents) is often missing.
Here is a guide through some of President Obama’s more fact-challenged claims, in the order in which he made them. As is our practice with live events, we do not award Pinocchio rankings, which are reserved for complete columns.

“For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.”

The killing of bin Laden, which Obama used to open and close his speech, is an achievement that few partisans would quibble with. But the story about Iraq and Afghanistan is much more muddled.

Yes, U.S. troops have left Iraq, in part because the Obama administration was unwilling or unable — take your pick — to extend a security agreement with Iraq. Since the U.S. departure, Iraq has descended into violence as the government of Prime Minister Nouri al-Maliki has targeted Sunni opposition figures. The country at times appears to teeter on the edge of a new outbreak of sectarian violence.

Meanwhile, the president’s claim that the Taliban’s “momentum has been broken” is a highly debatable claim. U.S. intelligence agencies, for instance, recently concluded in a secret assessment that the war in Afghanistan “is mired in stalemate” and that security gains from an increase in American troops “have been undercut by pervasive corruption, incompetent governance and Taliban fighters operating from neighboring Pakistan,” according to the Los Angeles Times. Other U.S. officials have dissented from the report’s conclusions, but the dispute is an indication of how fragile any momentum may be. (more…)

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THE METLIFE LESSON

Saturday, January 21st, 2012
The Wall Street Journal

  • JANUARY 20, 2012

Why 4,300 people are suddenly out of a job.

You know something’s wrong when a company like MetLife can’t find a buyer for its mortgage unit, fires 4,300 workers, and its stock rises. But such is the condition of America’s housing markets, where the risk of overregulation and litigation are so high that companies would rather abandon a business than take a risk on growing it.

MetLife is an illuminating example. Unlike Bank of America, which bought a shaky subprime lender in Countrywide and then had to take billions in losses when that market evaporated, MetLife got into the mortgage business in 2008 at the bottom of the market and snapped up a platform on the cheap. Its mortgage business soon spanned traditional loan origination, mortgage servicing and more.

Then came Dodd-Frank, the robo-signing pseudo-scandal, the state Attorneys General multibillion-dollar mortgage-servicing settlement talks, and the Obama Administration’s various efforts to halt foreclosures. Housing prices kept falling. In October, the Federal Reserve—which regulates MetLife’s banking subsidiary that backs its mortgage business—told the company it couldn’t return $4.8 billion to shareholders as dividends or stock buybacks until after a round of stress tests. MetLife sold the bank to GE Capital and wanted to sell its mortgage business too, citing an “uncertain marketplace and regulatory environment” despite its rising market share. (more…)

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