Friday, January 20, 2012
Michael Savage: Don't punish brave Marines
http://www.usatoday.com/news/opinion/editorials/story/2012-01-19/Michael-Savage-Marines-Taliban/52685194/1
Thursday, January 5, 2012
Monday, January 2, 2012
front lines: The Year We Lost Afghanistan, Iraq, Egypt, Turkey,...
front lines: The Year We Lost Afghanistan, Iraq, Egypt, Turkey,...: Sultan Knish - About the only people having a Happy New Year in the Muslim world aren't the Christians who are huddling and waiting out the...
Thursday, December 29, 2011
In Obama he trusts - Washington Times
There’s something profoundly tragic about the failed presidency of Barack Obama. He was supposed to be a new kind of president, a man who embodied hope and would transcend petty politics and even race. Instead, we’re left with a downgraded America that is stagnating under the weight of its bloated government. As tragic as that alone is, even this is but a mere symptom of Mr. Obama’s larger fundamental failure: He simply does not trust the Americans who entrusted him with the presidency.
Most presidents, we believe, ascend to the Oval Office, but for the 44th president, the reverse seems true. Whatever majesty the White House can muster must rise to the grandiosity of Barack Obama. “We are the ones we have been waiting for,” said the man who writes autobiographies and later would claim to control the rise of the oceans.
As recently as this month, the food-stamp president of 13 million unemployed Americans declared himself the fourth-most-accomplished president in the history of the United States, eclipsing, in his own mind, President Reagan and even our nation’s father, George Washington. That in only three years. Barack the Magnificent won’t allow trivialities like $15 trillion debts or historic national credit downgrades dissuade him.
Mr. Obama may care deeply for America, but he believes in only one thing: Barack Obama. And you are not Barack Obama.
Where once the American flag was hailed universally as the ultimate symbol of freedom, we who live under it have slowly but surely surrendered our liberties to an insatiable government. Consider our decline in just the past two generations. Our grandfathers, who stood against evil and shed their blood to stop it, never would have tolerated their own government becoming so totalitarian that it would dictate to them what car they should drive, what (if any) health insurance they should choose or even what light bulb they should buy.
Has our generation been worthy of earlier Americans’ sacrifices? Or have we surrendered their hard-fought victories in return for false promises of a big-government utopia that never materializes? Look no further than the politicians we elect. We have chosen as our president a man who believes we are unworthy, not of the previous generations’ sacrifices, but rather unworthy of freedom itself.
The sum total of Mr. Obama’s political philosophy, the unifying theme of his presidency, amounts to this: You cannot be trusted to live as a free American.
President Obama’s first major legislative action, the failed $787 stimulus, revealed his fundamental distrust of free Americans. A president who actually trusts his people would stand aside as they freely chose how to invest their capital and their labor. Mr. Obama, on the other hand, simply doesn’t believe you are smart enough to know what’s best for you. He commandeered nearly $1 trillion dollars from the taxpayers and redirected it as he saw fit. That he squandered billions on crony boondoggles such as the Solyndra solar-panel company or laughable efforts to measure the malt-liquor habits of Buffalonians and the like is evidence merely of his incompetence. That he trusted only himself to allocate taxpayers’ money in the first place - even if he had had the capacity to do so brilliantly - is evidence of a much larger offense: This president distrusts his subjects.
Obamacare is a modern-day monument to government arrogance. So untrustworthy are Americans that they cannot be allowed to decide for themselves whether to purchase health insurance or, if so, how much. Likewise, physicians are too untrustworthy to provide you with care without first consulting the government’s “best practices” guidelines. Obamacare would solve both.
Untrustworthy bankers would become angelic under the restrictions of Dodd-Frank. Untrustworthy bloggers would fall in line under the Stop Online Piracy Act. Untrustworthy manufacturers would create the only jobs worth having under the dictates of the National Labor Relations Board. And untrustworthy energy consumers would act responsibly only under the restrictions of “cap and trade” or at least a dictatorial Environmental Protection Agency.
For statists like Mr. Obama, no matter how bloated our government has become, America is forever just one legislative act away from utopia, if only those untrustworthy Americans would just get in line. The man who ran on hope has instead embraced a tragic pessimism that views all free Americans with disdain as either incompetent rubes in need of his salvation or unrighteous villains in need of his rules. Either way, Mr. Obama embraces a command-and-control government and rejects American freedom.
Mr. Obama’s distrust of Americans is his fatal flaw, and Republicans would be wise to exploit it fully. The GOP should resist the temptation simply to become a cleverer version of autocrats who pull the same powerful levers of government but in different directions. Instead, they should become the party that embraces liberty.
If the 2012 election is between Republicans and Democrats or even between conservatives and liberals, Republicans might win. But if the election is instead between a bloated, ineffectual government that distrusts its subjects and Americans who still yearn to breathe free, Republicans will win. Only then will voters have a dramatic choice between a party that trusts Americans to be free and a party that does not.
Dr. Milton R. Wolf, a Washington Times columnist, is a radiologist and President Obama’s cousin. He blogs at miltonwolf.com.
Most presidents, we believe, ascend to the Oval Office, but for the 44th president, the reverse seems true. Whatever majesty the White House can muster must rise to the grandiosity of Barack Obama. “We are the ones we have been waiting for,” said the man who writes autobiographies and later would claim to control the rise of the oceans.
As recently as this month, the food-stamp president of 13 million unemployed Americans declared himself the fourth-most-accomplished president in the history of the United States, eclipsing, in his own mind, President Reagan and even our nation’s father, George Washington. That in only three years. Barack the Magnificent won’t allow trivialities like $15 trillion debts or historic national credit downgrades dissuade him.
Mr. Obama may care deeply for America, but he believes in only one thing: Barack Obama. And you are not Barack Obama.
Where once the American flag was hailed universally as the ultimate symbol of freedom, we who live under it have slowly but surely surrendered our liberties to an insatiable government. Consider our decline in just the past two generations. Our grandfathers, who stood against evil and shed their blood to stop it, never would have tolerated their own government becoming so totalitarian that it would dictate to them what car they should drive, what (if any) health insurance they should choose or even what light bulb they should buy.
Has our generation been worthy of earlier Americans’ sacrifices? Or have we surrendered their hard-fought victories in return for false promises of a big-government utopia that never materializes? Look no further than the politicians we elect. We have chosen as our president a man who believes we are unworthy, not of the previous generations’ sacrifices, but rather unworthy of freedom itself.
The sum total of Mr. Obama’s political philosophy, the unifying theme of his presidency, amounts to this: You cannot be trusted to live as a free American.
President Obama’s first major legislative action, the failed $787 stimulus, revealed his fundamental distrust of free Americans. A president who actually trusts his people would stand aside as they freely chose how to invest their capital and their labor. Mr. Obama, on the other hand, simply doesn’t believe you are smart enough to know what’s best for you. He commandeered nearly $1 trillion dollars from the taxpayers and redirected it as he saw fit. That he squandered billions on crony boondoggles such as the Solyndra solar-panel company or laughable efforts to measure the malt-liquor habits of Buffalonians and the like is evidence merely of his incompetence. That he trusted only himself to allocate taxpayers’ money in the first place - even if he had had the capacity to do so brilliantly - is evidence of a much larger offense: This president distrusts his subjects.
Obamacare is a modern-day monument to government arrogance. So untrustworthy are Americans that they cannot be allowed to decide for themselves whether to purchase health insurance or, if so, how much. Likewise, physicians are too untrustworthy to provide you with care without first consulting the government’s “best practices” guidelines. Obamacare would solve both.
Untrustworthy bankers would become angelic under the restrictions of Dodd-Frank. Untrustworthy bloggers would fall in line under the Stop Online Piracy Act. Untrustworthy manufacturers would create the only jobs worth having under the dictates of the National Labor Relations Board. And untrustworthy energy consumers would act responsibly only under the restrictions of “cap and trade” or at least a dictatorial Environmental Protection Agency.
For statists like Mr. Obama, no matter how bloated our government has become, America is forever just one legislative act away from utopia, if only those untrustworthy Americans would just get in line. The man who ran on hope has instead embraced a tragic pessimism that views all free Americans with disdain as either incompetent rubes in need of his salvation or unrighteous villains in need of his rules. Either way, Mr. Obama embraces a command-and-control government and rejects American freedom.
Mr. Obama’s distrust of Americans is his fatal flaw, and Republicans would be wise to exploit it fully. The GOP should resist the temptation simply to become a cleverer version of autocrats who pull the same powerful levers of government but in different directions. Instead, they should become the party that embraces liberty.
If the 2012 election is between Republicans and Democrats or even between conservatives and liberals, Republicans might win. But if the election is instead between a bloated, ineffectual government that distrusts its subjects and Americans who still yearn to breathe free, Republicans will win. Only then will voters have a dramatic choice between a party that trusts Americans to be free and a party that does not.
Dr. Milton R. Wolf, a Washington Times columnist, is a radiologist and President Obama’s cousin. He blogs at miltonwolf.com.
The dirty secret in Uncle Sam’s Friday trash dump
Releasing information on the Friday before a big holiday is a time-tested way to bury bad news. So when the Government Accountability Office’s fiscal 2011 financial statements for the federal government were released on the Friday before Christmas, it made sense to read them closely.
Since 1997, the United States has been a rare example of a government willing to publish financial statements using accrual accounting, which counts the cost of promises made as well as cash paid out. And the GAO’s professionalism over the years has won it a reputation for impartiality and effectiveness.
That professionalism is evident in the GAO analysis of the net present value of the Social Security and Medicare promises Washington has made to Americans. “Net present value” means the total that would have to be set aside today to pay the costs of these programs in the future. The government puts these numbers in appendices, rather than in headlines. But the costs are real.
In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.
If the government followed corporate accounting rules, that $2.9 trillion increase would be added to the $1.3 trillion cash deficit for fiscal 2011 that has been widely reported. And a $4.2 trillion deficit is something that Americans need to know about.
The Treasury acknowledges the need to show an accrual-based deficit, but the only retirement accruals it includes in its “Citizen’s Guide” to the GAO numbers are for promises to direct government employees and veterans. Promises to the rest of Americans are excluded, even though they are multiples larger than the $10.2 trillion of government debt held by the public.
The latest GAO numbers are particularly interesting because of a change in accounting standards that requires the government to explain why the cost grew by $2.9 trillion. Fully $1.5 trillion of that reflects the aging of all 312 million Americans by one year. In the GAO report from fiscal 2001, the cost of promises was $17 trillion. The growth in the cost from $17 trillion to $33.8 trillion averages about $1.7 trillion per year. The GAO doesn’t specify numbers for the other nine years, but one suspects that aging has driven most of the growth in the cost of the promises.
The cost would have been a lot worse but for two assumptions that the GAO found questionable.
First, Medicare’s cost projections assume legally required decreases in reimbursement rates to doctors that Congress has ignored for years — the so-called doc fix. For these projections to be realized, Congress would have to abide by its own cost controls and allow an immediate 27 percent cut to doctors’ rates, which is very unlikely.
Second, the Medicare projections assume that the 2010 Affordable Care Act (ACA) will reduce health-care cost growth by 1.1 percent per year, despite doubts voiced by the GAO and a panel appointed by the Medicare board of trustees.
The panel and the GAO recommended including an alternate scenario in the year-end figures, in which the doc fix continues and the ACA cost reductions do not materialize. The result is a $12.4 trillion increase in the cost of the promises, to more than $46 trillion. Given Congress’s history with the doc fix, and the general paralysis in Washington, it’s hard to argue with the GAO’s lack of confidence in Congress’s ability to honor its own cost controls.
If the government were a company, its huge and growing off-balance-sheet liabilities would set off alarm bells. But investor confidence has not been lost — Treasurys can still be sold at very attractive yields.
Confidence has been shaken, though, among the American people. Congress’s approval ratings are at record lows. Anger is flaring across the political spectrum, reflecting a sense that something has broken in our country.
In such an environment, is it right to release critical financial information the Friday before Christmas? Is it acceptable that politicians are not required to describe the cost of the promises they have made?
In 1990, the government required that companies begin to account for the net present value of retirement promises, not just current-year cash flows. General Motors began complying in 1992; and it recorded a $33.1 billion (pretax) charge to reflect the value of its promises up to that point, which led to what was then the largest annual loss in U.S. corporate history. Seventeen years later, the “free until accounted for” promises were a major factor in GM’s bankruptcy.
The United States is stronger than General Motors. And the good news is that small changes in health-care cost trends have a large impact on the government’s long-term promises. Our system is fixable. But our politics are toxic, and each side is dug into an ideological trench. In such an environment, when hard choices need to be made about promises and taxes, why should information be buried in an appendix?
Americans deserve better. One way for Washington to start earning back our trust is by giving us all the information, even if it is unpleasant.
Since 1997, the United States has been a rare example of a government willing to publish financial statements using accrual accounting, which counts the cost of promises made as well as cash paid out. And the GAO’s professionalism over the years has won it a reputation for impartiality and effectiveness.
That professionalism is evident in the GAO analysis of the net present value of the Social Security and Medicare promises Washington has made to Americans. “Net present value” means the total that would have to be set aside today to pay the costs of these programs in the future. The government puts these numbers in appendices, rather than in headlines. But the costs are real.
In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.
If the government followed corporate accounting rules, that $2.9 trillion increase would be added to the $1.3 trillion cash deficit for fiscal 2011 that has been widely reported. And a $4.2 trillion deficit is something that Americans need to know about.
The Treasury acknowledges the need to show an accrual-based deficit, but the only retirement accruals it includes in its “Citizen’s Guide” to the GAO numbers are for promises to direct government employees and veterans. Promises to the rest of Americans are excluded, even though they are multiples larger than the $10.2 trillion of government debt held by the public.
The latest GAO numbers are particularly interesting because of a change in accounting standards that requires the government to explain why the cost grew by $2.9 trillion. Fully $1.5 trillion of that reflects the aging of all 312 million Americans by one year. In the GAO report from fiscal 2001, the cost of promises was $17 trillion. The growth in the cost from $17 trillion to $33.8 trillion averages about $1.7 trillion per year. The GAO doesn’t specify numbers for the other nine years, but one suspects that aging has driven most of the growth in the cost of the promises.
The cost would have been a lot worse but for two assumptions that the GAO found questionable.
First, Medicare’s cost projections assume legally required decreases in reimbursement rates to doctors that Congress has ignored for years — the so-called doc fix. For these projections to be realized, Congress would have to abide by its own cost controls and allow an immediate 27 percent cut to doctors’ rates, which is very unlikely.
Second, the Medicare projections assume that the 2010 Affordable Care Act (ACA) will reduce health-care cost growth by 1.1 percent per year, despite doubts voiced by the GAO and a panel appointed by the Medicare board of trustees.
The panel and the GAO recommended including an alternate scenario in the year-end figures, in which the doc fix continues and the ACA cost reductions do not materialize. The result is a $12.4 trillion increase in the cost of the promises, to more than $46 trillion. Given Congress’s history with the doc fix, and the general paralysis in Washington, it’s hard to argue with the GAO’s lack of confidence in Congress’s ability to honor its own cost controls.
If the government were a company, its huge and growing off-balance-sheet liabilities would set off alarm bells. But investor confidence has not been lost — Treasurys can still be sold at very attractive yields.
Confidence has been shaken, though, among the American people. Congress’s approval ratings are at record lows. Anger is flaring across the political spectrum, reflecting a sense that something has broken in our country.
In such an environment, is it right to release critical financial information the Friday before Christmas? Is it acceptable that politicians are not required to describe the cost of the promises they have made?
In 1990, the government required that companies begin to account for the net present value of retirement promises, not just current-year cash flows. General Motors began complying in 1992; and it recorded a $33.1 billion (pretax) charge to reflect the value of its promises up to that point, which led to what was then the largest annual loss in U.S. corporate history. Seventeen years later, the “free until accounted for” promises were a major factor in GM’s bankruptcy.
The United States is stronger than General Motors. And the good news is that small changes in health-care cost trends have a large impact on the government’s long-term promises. Our system is fixable. But our politics are toxic, and each side is dug into an ideological trench. In such an environment, when hard choices need to be made about promises and taxes, why should information be buried in an appendix?
Americans deserve better. One way for Washington to start earning back our trust is by giving us all the information, even if it is unpleasant.
Wednesday, December 21, 2011
Where No Mortgage News Is Fit to Print
The New York Times op-ed page and the left-wing echo chamber.
When Joe Nocera was given a regular op-ed column in the New York Times, there was kind of a collective “uh-oh” among people who have watched the gradual slide of that page into Krugmanism and ideological irrelevance. I was one of them, but thought there might be some hope. Some of his columns in the Times business section had suggested a glimmering of a willingness to consider other points of view and even facts.
At first, I was disappointed. As he said in today’s column, he called my dissent from the majority report of the Financial Crisis Inquiry Commission “lonely” and “loony.” That was fairly nasty, but I have been called much worse by the hard Left. We had a few more skirmishes, and then he made a truly serious error, blindly following his lefty views in calling the Tea Party “terrorists.” At that point, I wrote him:
Joe: Weren’t you one of the ones on the left who blamed Gabby Giffords’ shooting on right-wing rhetoric? As the victim of some very vicious and threatening e-mails from the left, I find it somewhat peculiar that you and your colleagues would be stirring up the dogs of war by calling your opposition terrorists at war on America. This sounds a bit hypocritical (or worse) to me. Wouldn’t it be better for someone in your position—writing for a newspaper that (given your recent attack on the WSJ) must stand for sober non-ideological discussion—to call for civility, rather than stirring up hatred? Would I be wrong to consider you no better than those who send me equally unbalanced e-mail? Peter
His response, I agreed, would be confidential; but a little while later, he publicly retracted the charge, and I wrote him again to note the praise he then received from the New York Times ombudsman.
I thought, at this point, that he would avoid following his colleague Paul Krugman over the ideological cliff. It was Krugman who famously wrote—when Fannie and Freddie were coming apart—that all the right-wing talk about those two firms acquiring subprime loans were lies. They weren’t even allowed by law to do so, said Krugman, once again following ideas he’d heard in the left-wing echo-chamber rather than doing even the most basic research into the facts. Krugman has disgraced himself as a scholar, but I still had some hope for Nocera.
During the past summer, I pointed out to him that another of his colleagues, Gretchen Morgenson, along with Josh Rosner, had written a book, Reckless Endangerment, that blamed the financial crisis largely on Fannie Mae and Freddie Mac. That certainly didn’t penetrate; he’s now back in full-blinder mode refusing to look at facts—indeed, not even reading the things he cites as facts—in order to make an ideological point that will keep him in tune with the editorial position of his employer.
Nocera’s column today follows the SEC’s suit against Fannie and Freddie executives for “materially false” disclosures about the exposure of each firm to subprime loans. News articles over the weekend make clear what the SEC is arguing, so I won’t do it in this piece. Suffice it to say that in order to claim that Fannie, Freddie, and their executives misstated their exposure to subprime loans, the SEC had to decide what a subprime loan was. Reasonably, as is clear from the complaints, they concluded that a subprime loan was one that had a higher rate of serious delinquency (more than 90 days overdue) than a prime loan. It turns out that the standards used by the SEC are more inclusive than those my American Enterprise Institute colleague Ed Pinto and I have been using, and more inclusive than those I used in my dissent from the majority report of the Financial Crisis Inquiry Commission. Fannie and Freddie had even more low quality loans than we’d thought.
But Nocera’s column is full of errors that show he has not—as he claimed—read the complaints. For example, he states that there are “no damning e-mails in the complaint, with executives contradicting their public statements.” No. No e-mails, but the complaint against Freddie has something worse—that, over many years, the firm coded hundreds of billions of dollars in mortgages it was acquiring as “subprime” or “subprime-like,” even though its executives were reporting to the public and investors that their exposure to subprime loans was “less than 1 percent.” As to e-mails, those have already been published in an article by Charles Calomiris in the Wall Street Journal several weeks ago. He quoted from the chief risk officer of Freddie telling the chairman that the loans they were buying were poor quality and would cause losses. But the risk officer was ignored.
Even more seriously, he notes that the complaints didn’t have any “default data.” Leaving aside the question of whether that was necessary to show material misstatements about their subprime exposures, the complaints cite high rates of “serious delinquency,” which is of course a mortgage that is virtually in default, but not yet foreclosed. Since Fannie and Freddie are now insolvent, and have already cost the taxpayers about $150 billion, one would think there would be little argument about whether the loans they held were in fact subprime. But Nocera manages to do so, largely by following the absurd argument—another product of the left-wing echo-chamber—that Fannie and Freddie’s loans were not subprime because others were worse.
Now, in Noceraworld, even the SEC is part of the Wallison/Pinto cabal. Nocera writes: “The [SEC’s] complaint is extraordinarily weak. Taking cues from the Wallison/Pinto school of inflated data, it claims that Fannie and Freddie failed to reveal to investors the true extent of their subprime portfolios.” Ah, the power! I hope we can exercise it responsibly.
When Joe Nocera was given a regular op-ed column in the New York Times, there was kind of a collective “uh-oh” among people who have watched the gradual slide of that page into Krugmanism and ideological irrelevance. I was one of them, but thought there might be some hope. Some of his columns in the Times business section had suggested a glimmering of a willingness to consider other points of view and even facts.
At first, I was disappointed. As he said in today’s column, he called my dissent from the majority report of the Financial Crisis Inquiry Commission “lonely” and “loony.” That was fairly nasty, but I have been called much worse by the hard Left. We had a few more skirmishes, and then he made a truly serious error, blindly following his lefty views in calling the Tea Party “terrorists.” At that point, I wrote him:
Joe: Weren’t you one of the ones on the left who blamed Gabby Giffords’ shooting on right-wing rhetoric? As the victim of some very vicious and threatening e-mails from the left, I find it somewhat peculiar that you and your colleagues would be stirring up the dogs of war by calling your opposition terrorists at war on America. This sounds a bit hypocritical (or worse) to me. Wouldn’t it be better for someone in your position—writing for a newspaper that (given your recent attack on the WSJ) must stand for sober non-ideological discussion—to call for civility, rather than stirring up hatred? Would I be wrong to consider you no better than those who send me equally unbalanced e-mail? Peter
His response, I agreed, would be confidential; but a little while later, he publicly retracted the charge, and I wrote him again to note the praise he then received from the New York Times ombudsman.
I thought, at this point, that he would avoid following his colleague Paul Krugman over the ideological cliff. It was Krugman who famously wrote—when Fannie and Freddie were coming apart—that all the right-wing talk about those two firms acquiring subprime loans were lies. They weren’t even allowed by law to do so, said Krugman, once again following ideas he’d heard in the left-wing echo-chamber rather than doing even the most basic research into the facts. Krugman has disgraced himself as a scholar, but I still had some hope for Nocera.
During the past summer, I pointed out to him that another of his colleagues, Gretchen Morgenson, along with Josh Rosner, had written a book, Reckless Endangerment, that blamed the financial crisis largely on Fannie Mae and Freddie Mac. That certainly didn’t penetrate; he’s now back in full-blinder mode refusing to look at facts—indeed, not even reading the things he cites as facts—in order to make an ideological point that will keep him in tune with the editorial position of his employer.
Nocera’s column today follows the SEC’s suit against Fannie and Freddie executives for “materially false” disclosures about the exposure of each firm to subprime loans. News articles over the weekend make clear what the SEC is arguing, so I won’t do it in this piece. Suffice it to say that in order to claim that Fannie, Freddie, and their executives misstated their exposure to subprime loans, the SEC had to decide what a subprime loan was. Reasonably, as is clear from the complaints, they concluded that a subprime loan was one that had a higher rate of serious delinquency (more than 90 days overdue) than a prime loan. It turns out that the standards used by the SEC are more inclusive than those my American Enterprise Institute colleague Ed Pinto and I have been using, and more inclusive than those I used in my dissent from the majority report of the Financial Crisis Inquiry Commission. Fannie and Freddie had even more low quality loans than we’d thought.
But Nocera’s column is full of errors that show he has not—as he claimed—read the complaints. For example, he states that there are “no damning e-mails in the complaint, with executives contradicting their public statements.” No. No e-mails, but the complaint against Freddie has something worse—that, over many years, the firm coded hundreds of billions of dollars in mortgages it was acquiring as “subprime” or “subprime-like,” even though its executives were reporting to the public and investors that their exposure to subprime loans was “less than 1 percent.” As to e-mails, those have already been published in an article by Charles Calomiris in the Wall Street Journal several weeks ago. He quoted from the chief risk officer of Freddie telling the chairman that the loans they were buying were poor quality and would cause losses. But the risk officer was ignored.
Even more seriously, he notes that the complaints didn’t have any “default data.” Leaving aside the question of whether that was necessary to show material misstatements about their subprime exposures, the complaints cite high rates of “serious delinquency,” which is of course a mortgage that is virtually in default, but not yet foreclosed. Since Fannie and Freddie are now insolvent, and have already cost the taxpayers about $150 billion, one would think there would be little argument about whether the loans they held were in fact subprime. But Nocera manages to do so, largely by following the absurd argument—another product of the left-wing echo-chamber—that Fannie and Freddie’s loans were not subprime because others were worse.
Now, in Noceraworld, even the SEC is part of the Wallison/Pinto cabal. Nocera writes: “The [SEC’s] complaint is extraordinarily weak. Taking cues from the Wallison/Pinto school of inflated data, it claims that Fannie and Freddie failed to reveal to investors the true extent of their subprime portfolios.” Ah, the power! I hope we can exercise it responsibly.
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