Your Government, Totally Out Of Control

Barney Frank: Let’s spend TARP profits before taxpayers can get them

When President Obama announced on June 9 that some financial institutions would be allowed to repay Troubled Asset Relief Program dollars, he said the massively expensive TARP bailout had made money for the federal government. “It is worth noting that in the first round of repayments from these [TARP recipients], the government has actually turned a profit,” the president said. Indeed, TARP supporters have long held out the hope that the program might be profitable.

But now Rep. Barney Frank, the chairman of the House Financial Services Committee, has come up with a proposal to spend any TARP profits before they can be returned to the taxpayers. Last Friday, Frank introduced the “TARP for Main Street Act of 2009,” a bill that would take profits from the program and immediately redirect them toward housing proposals favored by Frank and some fellow Democrats.

In exchange for receiving TARP money, financial institutions were required to hand over shares of preferred stock that paid a dividend for the government. In theory, if a financial institution paid the dividend faithfully, and then repaid the TARP money, then the government would turn a profit. Last month, the General Accountability Office (GAO) reported that, through June 12, 2009, the government had received $6.2 billion in dividend payments. The original TARP legislation required that money made from the program “shall be paid into the general fund of the Treasury for reduction of the public debt.”

Frank, however, wants to spend the money before it can be used to pay down anything. First, the “TARP for Main Street” proposal would take $1 billion “from dividends paid by financial institutions that have received financial assistance provided under…the Emergency Economic Stabilization Act” and apply it to a trust fund that Frank has long wanted to create for low-income rental housing. (The measure, unfunded, was part of last year’s bailout of Fannie Mae and Freddie Mac.) Next, Frank would take $1.5 billion from TARP dividends for a so-called “neighborhood stabilization” fund. Republican critics have charged that both measures might allow federal dollars to be distributed to activist groups like the Association of Community Organizers for Reform Now, or ACORN.

The “TARP for Main Street” bill would also spend $2 billion, apparently from remaining TARP funds, to subsidize people who are delinquent on their mortgages, and another $2 billion to “stabilize multifamily properties that are in default or foreclosure.”

Congress’s Travel Tab Swells

Spending by lawmakers on taxpayer-financed trips abroad has risen sharply in recent years, a Wall Street Journal analysis of travel records shows, involving everything from war-zone visits to trips to exotic spots such as the Galápagos Islands.

The spending on overseas travel is up almost tenfold since 1995, and has nearly tripled since 2001, according to the Journal analysis of 60,000 travel records. Hundreds of lawmakers traveled overseas in 2008 at a cost of about $13 million. That’s a 50% jump since Democrats took control of Congress two years ago.

The cost of so-called congressional delegations, known among lawmakers as “codels,” has risen nearly 70% since 2005, when an influence-peddling scandal led to a ban on travel funded by lobbyists, according to the data.

Mortgage-Rescue Plan to Cover More Borrowers

The Obama administration is expanding the number of borrowers who can refinance home loans under its housing-rescue program, an acknowledgment that more needs to be done to help people who are upside down on their mortgages.

The administration said Wednesday that borrowers with mortgages worth up to 125% of their home’s value will now be eligible to refinance under its program, up from a 105% limit.

To be eligible, borrowers must be current on their mortgages and have loans owned or backed by government-controlled mortgage companies Fannie Mae and Freddie Mac.

/had enough Hope and Change yet?

The Shot Heard Round Chicago And Spreading

Santelli’s Chicago Tea Party

A must see TV rebellion.

NRO Talks to CNBC’s Rick Santelli

Earlier today, Kathryn posted a link to the video of CNBC’s Rick Santelli giving voice to what he described as a groundswell of discontent over the president’s new mortgage plan. I caught up with Santelli just moments ago and talked to him about what he says has been “kind of a crazy day.”

National Review Online: Were you expecting anything like this reaction?

Rick Santelli: Not at all, not at all. It was just, after 48 hours of listening to hundreds of people trying to approach me on floors, on trains, everywhere, the opinions were almost unanimous, and I just tried to pick up that thread. The pits weren’t open at the time and the traders that were on the floor getting ready for the opening all started to gravitate to where I was talking, and it just took on a life of its own.

NRO: When we posted a link to the video, we were swamped with e-mails in support, including a couple from traders at the Board of Trade in Chicago, who have been saying right on. How have the e-mails that you’ve been getting, how have they been running?

Santelli: I’ll be honest with you, I think I’ve gotten somewhere between 850-900, and I think I had three that were negative.

NRO: What are that small group of critics saying? Where do they think you went wrong?

Santelli: They thought I was uncharitable, got up on the wrong side of the bed, had no compassion for people who are going through rough times, and that isn’t at all the issue. The issue is, you can’t pick out 8 or 9 percent and give them things that weaken the 90 or 92 percent who are carrying the water. You need to come up with legislation that may help the people that need it but not hurt the people that… listen, my 401k’s a 201k, my kid’s college tuition is going up 10 percent. This is tough for everybody. Maybe a tax break, maybe everybody who has a house gets something. They need to quit picking winners and losers, and they have to quit alienating the classes. You have to figure out a way to float all boats, and I think that’s where the administration has gone wrong, and I think that’s the nerve I hit.

NRO: You were also skeptical of the original bailout plan, specifically the way that it seemed to be a “Let’s rush through this and figure out the details later” kind of approach. Do you think your predictions on that have been borne out by events?

Santelli: I remember this all started roughly in the summer of ’07, and at that point, that Halloween that followed in ’07, I think I said something like, Frankenstein derivatives aren’t going to be resuscitated. These bad positions are going to hang around until they’re taken out. As an ex-trader—I traded for 20 years—bad positions don’t go away. There’s not enough money for many of these banks to sell them, because of what it does to their balance sheets. At the end of the day, whether it’s housing or whether it’s toxic derivatives, I just don’t think you can spend your way into correcting something that’s going to be painful and make it not painful. So I think I’ve been kind of spot-on in many ways as to the spending plans.

At the end of the day, it’s simple. A lot of the president’s advisers are saying that there’s a multiplier effect to the government money, and it’s over one. Now if that’s true, then the government should spend non-stop for the rest of our lives, because we’ll get a positive return. And it makes no sense.

NRO: Right. And now it seems we passed this bailout bill without specifying any of the details, it’s kind of become a blank check, and they say that Barack Obama can do something like 80 percent of his homeowner-assistance plan without even asking Congress. So how do you think that plays out in the future?

Santelli: I guess in the end, I believe in the founding fathers, and I believe that in America… the pursuit of happiness and to work hard and keep the fruits of your labor is something I believe in. And I’m not saying we should forget people who need help. But at the end of the day, Americans are strong and they’re charitable. I think what they have a problem with is that it’s force-fed via the government.

See also:
Obama Unveils Mortgage Plan
Obama Proposes Package To Stave Off Foreclosures
Obama unveils $75B mortgage relief plan

Good luck finding any actual, official details of this plan on the White House website or anywhere else on the internet, they don’t exist as far as I can tell. I guess, for now, we’ll all just have to take Obama’s word for it.

/Rick Santelli is the most sane person in America