American Elephants

Look Out. Here Comes the “Financial Crimes Unit.” by The Elephant's Child

President Barack Obama announced a new unit to be devoted to major financial crimes during his State of the Union speech.  The Orwellian sounding “Financial Crimes Unit” is to be staffed with “highly trained investigators” and charged with tracking “large-scale fraud.”He also urged Congress to strengthen the penalties for financial wrongdoing.

The president also announced that Attorney General Eric Holder has been tasked with establishing a special team of federal prosecutors and state attorneys general devoted to investigating abusive mortgage lending and the packaging of risky mortgages that contributed to the financial crisis.  He is apparently not going after Barney Frank and others in Congress who forced banks to lend to borrowers who did not qualify for mortgages under normal prudent rules of banking.

Banks are the most heavily regulated entities in the business world. The Democrat Congress used suspicions of “redlining” as an excuse for requiring banks to make mortgages more available for minorities, and to specifically to reduce their standards to encourage home ownership. Obama said:

I am asking my attorney general to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into abusive lending and packaging of risky mortgages that led to the housing crisis.

We’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them.” Now, it’s lenders’ turn to pay the price.

It was Washington that ordered lenders to make those risky loans. Now they are to be punished for doing too well what they were ordered to do before the crisis. Democrats injected risk into the financial system.  Beginning in the 1990s they socialized the mortgage industry after declaring that traditional prudent standards of lending were “racist.”

Obama doesn’t care if it drives many banks out of business. That will further his claims of predatory lending and class warfare where rich bankers made fraudulent loans — as they were required to do by Congress.  These risky loans were bundled by Fannie Mae and Freddie Mac and sold as high-yielding securities to Wall Street and other nations as worthy investments in an era of fairly low-interest rates.

At a time when money is tight for small business, this will help to dry up credit at a time when contractors, entrepreneurs, growing small businesses are already having a hard time securing credit. Financial institutions will be even more afraid to deplete their capital, at a time when they might need it to pay protection money to this governmental scam. It’s an Alice in Wonderland world, Chicago version.

We even have an entrepreneur locally advertising on the radio seminars on how to make money “flipping houses.” Washington is still pushing for lowered mortgage requirements, which are what got us into this mess in the first place. What you are supposed to understand is that none of this is Obama’s fault — it’s the banks, it’s Wall Street, it’s the rich, and our valiant president is trying really hard to save us from predatory lenders who are trying to get rich by making loans that won’t be paid back.  Though just how that works remains a mystery.

Economist Dr. Loren Scott Explains Why the Moratorium is Worse Than the Spill. by The Elephant's Child

Dr. Loren Scott, Louisiana State University Emeritus Professor of Economics explains why Obama and Salazar’s moratorium on drilling in the Gulf of Mexico is worse than the spill. This is a wonderful conversation with someone who knows and understands the Gulf and the oil industry and can explain the economic effects of the administration’s misguided moratorium.

He points out that there have been 50,000 wells drilled in the Gulf with no problems.  When there is a ski-lift accident in one resort, do they shut down all the ski runs in the country?  There are around 8,000 people employed on the rigs 24/7.  Their  unemployment will result in at lest 32,000 lost jobs.  Dr. Scott’s explanation of cause and effect is devastating, and a disaster for the whole region.  Do take the time for this deeply interesting video, you will be glad you did.

The arrogance of the administration as it plays with the lives of the people of Louisiana and the stunning disinterest in the effects of their actions is breathtaking.

ADDENDUM: The video, no longer available here, is available at the Heritage blog.  It is worth your time and quite informative.

%d bloggers like this: