Barney Frank (One Man Wrecking Team) [Political? You bet!]

[Handprints]

AIG would be better off if the insurance company was separated and allowed to continue while the troubled parts are sold for scrap.

The problem you face is that the troubled parts are, in fact, some of the largest parts of AIG's insurance business. The soundbite that AIG had become "a hedge fund attached to a large and stable insurance company" - thanks Ben! - makes for a good line but isn't prescriptively useful. What was insured, and what is now crippling the company, is the value of billions+ of dollars worth of collateralized obligations. AIG became - willingly - the insurers of everybody else's hedging.

The hedge insurance and the other insurance lines are all backed by the same pool of AIG capital - the pool that your government has been topping up so regularly. If you want to separate the "troubled" part (a bit like calling Jaffrey Dahmer troubled, in my view), you also have to give that new entity its far share of the remaining AIG capital. In this instance, that's far more than 100%. You can't unbreak this stuff by artificially separating the parts. You just wind up with two broken things instead of one. I understand why this looks like a clean solution but, if you'll take my word for it, this is the equivalent of a doctor saying: "Because of the 200 bullets it took, this body's ruined, but we can cut that arm off to enjoy a life of its own."

Another thing to remember when considering any move to tank out the toxic asset insurers: the guys who insured CMOs, CDOs and what have you - the AIGs who are now bleeding out from the volume of the credit default swap insurance payments - are the last line in the sand before the lawsuit fiesta kicks off. These companies are providing the only payments that prevent holders of repackaged mortgages from suing everyone involved in their creation. Right now, the CXO problem is horrible, but relatively local. Make a move that stops CDS payments, however well-intentioned, and every bank in the US that sold a mortgage over the past ten years (ie 75%+) has, immediately, to begin reserving capital to deal with future legal claims, further reducing their ability to lend. You may feel that this exploding grenade isn't properly the government's business, but I don't think the government should take actions that set off equivalent grenades in every bank branch in the country.

Hope that's of interest,
H

 

[trysail]

Michael Lewis is usually readable and is knowledgeable. Like myself, once upon a time, he worked in the investment field ( he on the "dark side" [ i.e., Salomon Bros and Wall Street ], myself for a fiduciary [ a/k/a the "buy side" ] ). Both of us eventually departed, unable to suppress our respective nauseated consciences and sense of ethics. Unlike Michael Lewis, I haven't authored a best-selling exposé. Unlike Lewis, I had the benefit of experienced and informed elders who, when I was still an impressionable youth, succeeded in instilling the idea that "Wall Street ethics" is an oxymoron. Lewis had to figure that out for himself. *Sigh*

His sojourn as a bond salesman for Solly was demonstrably effective at establishing that truth to his satisfaction; witness Liar's Poker.

A new career and writer was launched.
________________________


( Fair Use Excerpt )
http://www.bloomberg.com/apps/news?pid=20601039&sid=atlHxXH7FweQ&refer=home

Mass Hysteria Over AIG Obscures Simple Truths
Commentary by Michael Lewis
March 20 (Bloomberg)

"Last September, the U.S. government began to dole out the first of $173 billion to American International Group. A big chunk of it passed right through to banks that had bought insurance from AIG against mortgage and corporate defaults -- foreign banks such as Deutsche Bank and Societe Generale but also some domestic ones, such as Goldman Sachs and Bank of America.

U.S. government officials then went to great lengths to disguise from the public exactly what they had done, and why, going so far as to declare the ultimate list of recipients of taxpayer funds off limits to the taxpayer. To its immense credit, the media -- or, rather, a handful of diligent reporters, the New York Times’ Gretchen Morgenson chief among them -- prevented the public officials from getting their way.

This incredible act triggered hardly any political backlash. In effect, the U.S. taxpayer had paid off AIG’s gambling debts. The end recipient of the money was not AIG, but Goldman Sachs, Deutsche Bank and the others..."

*********​

"... But when AIG itself pays out $165 million in bonuses -- money it is contractually obliged to pay -- the entire political system goes insane. President Barack Obama says he’s going to find a way to abrogate the contracts and take the money back. A U.S. senator says that AIG employees should kill themselves.

Every recriminatory bone in the political body is aroused; the one thing you can do right now in Washington without getting an argument is to rail against the ethics of AIG’s bonus payment.

Apart from Andrew Ross Sorkin at the New York Times, it occurs to no one to say that a) the vast majority of the employees at AIG had as little as you or I to do with its quasi- criminal risk taking and catastrophic losses; b) that the most- valuable of those employees can easily find work at AIG’s competitors; and c) that if the government insists on punishing those valuable employees they will understandably leave, and leave behind a company even less viable than it is, and less likely to give the taxpayer back his money.

And also -- oh, yes -- that if the government can arbitrarily break contracts made by firms in which it has taken a stake no one in his right mind will ever again make a contract with one of those firms. And so all of the banks in which the government has investment will be damaged... "

********​

"...we can observe several general truths about the financial crisis, and the attempt to end it:

1) To the political process all big numbers look alike; above a certain number the money becomes purely symbolic. The general public has no ability to feel the relative weight of 173 billion and 165 million. You can generate as much political action and public anger over millions as you can over billions. Maybe more: the larger the number the more abstract it becomes and, therefore, the easier to ignore. (The trillions we owe foreigners, for example.)

2) As the financial crisis has evolved its moral has been simplified, grotesquely. In the beginning this crisis was messy. Wall Street financiers behaved horribly but so did ordinary Americans. Millions of people borrowed money they shouldn’t have borrowed and, not, typically, because they were duped or defrauded but because they were covetous and greedy: they wanted to own stuff they hadn’t earned the right to buy..."

 

[trysail]

http://www.treasury.gov/press/releases/tg65.htm

Sample Investment Under the Legacy Loans Program

Step 1: If a bank has a pool of residential mortgages with $100 face value that it is seeking to divest, the bank would approach the FDIC.
Step 2: The FDIC would determine, according to the above process, that they would be willing to leverage the pool at a 6-to-1 debt-to-equity ratio.
Step 3: The pool would then be auctioned by the FDIC, with several private sector bidders submitting bids. The highest bid from the private sector – in this example, $84 – would be the winner and would form a Public-Private Investment Fund to purchase the pool of mortgages.
Step 4: Of this $84 purchase price, the FDIC would provide guarantees for $72 of financing, leaving $12 of equity.
Step 5: The Treasury would then provide 50% of the equity funding required on a side-by-side basis with the investor. In this example, Treasury would invest approximately $6, with the private investor contributing $6.
Step 6: The private investor would then manage the servicing of the asset pool and the timing of its disposition on an ongoing basis – using asset managers approved and subject to oversight by the FDIC.

*******​

Sample Investment Under the Legacy Securities Program

Step 1: Treasury will launch the application process for managers interested in the Legacy Securities Program.
Step 2: A fund manager submits a proposal and is pre-qualified to raise private capital to participate in joint investment programs with Treasury.
Step 3: The Government agrees to provide a one-for-one match for every dollar of private capital that the fund manager raises and to provide fund-level leverage for the proposed Public-Private Investment Fund.
Step 4: The fund manager commences the sales process for the investment fund and is able to raise $100 of private capital for the fund. Treasury provides $100 equity co-investment on a side-by-side basis with private capital and will provide a $100 loan to the Public-Private Investment Fund. Treasury will also consider requests from the fund manager for an additional loan of up to $100 to the fund.
Step 5: As a result, the fund manager has $300 (or, in some cases, up to $400) in total capital and commences a purchase program for targeted securities.
Step 6: The fund manager has full discretion in investment decisions, although it will predominately follow a long-term buy-and-hold strategy. The Public-Private Investment Fund, if the fund manager so determines, would also be eligible to take advantage of the expanded TALF program for legacy securities when it is launched.

 

[DesertPirate]

Turbo Tax Tim was in front of Congress asking for the power to take over failing companies today
He hasn't shown the ability to pour piss out of a boot with the instructions on the heel yet and he wants more power?

 

[Dragonlipz]

The bikini barista at the expresso stand

is puzzled as to why these folks are so upset?
"Don't they know that the election was over, like, before it started?"
"True, my love, but it takes some longer to understand....and others even longer!"
Long live Barak and polka-dots.......

 

[DesertPirate]

Govt. seizing financial institutions, and people think this administration isn't socialist?

 

[Liar]

Govt. seizing financial institutions, and people thing this administration isn't socialist?

Which ones, that they actually didn't pump so much capital into that they are now majority owners of? And that woudn't have existed today if they didnt?

...which is not seizing, it's buying. And not socialism.

Show me one, or go back to school.

 

[DesertPirate]

Which ones, that they actually didn't pump so much capital into that they are now majority owners of? And that woudn't have existed today if they didnt?

...which is not seizing, it's buying. And not socialism.

Show me one, or go back to school.

Geithner was asking Congress for the power to seize failing institutions yesterday, not pump money into, seize!
I was against all the bailouts from the start.
As far as it goes they shouold be allowed to fail. The FDIC would cover depositers and speculators that caused the problem can suffer.

 

[Kev H]

Which ones, that they actually didn't pump so much capital into that they are now majority owners of? And that woudn't have existed today if they didnt?

...which is not seizing, it's buying. And not socialism.

Show me one, or go back to school.

Even though your tone is a little combative, this point bears repeating. Overarching capitalism still works when a govt of "we, the people" buy troubled assets to keep them around. If that gov't fails to help the company and they still tank under this new ownership, then the people rightfully lose the money. It's not a scenario we want to see happen, but neither is this an unprovoked power grab, as implied by DP.

Simply stated, the companies fucked up and were going to die; some of those companies seemed like good deals for us (as opposed to losing any of their worth to someone like China), so we bought them. We can now clean house and try to resurrect them; whether or not this does goes well, this is still not socialism.

If you have an informed/reasoned rebuttal, DP (or even just justification for your viewpoint), I'd like to hear it. BTW, if you take exception to Liar's tone and miss the point, we'll all know why. If you're only interested in spouting garbage to reflect your way of thinking, then carry on (though, personally, I'll be sad if you choose this course of action).

 

[Liar]

Geithner was asking Congress for the power to seize failing institutions yesterday, not pump money into, seize!

And do what, you think? Cackle manically?

Look, you're stuck on a word here. Ok, he said sieze. But sieze what? Major means of production to tie more economic power to the political power of Government? And sieze where? Straight from the hands of a private legal owner? And sieze how? By gunpoint?

From what I can see, this looks like he's asking for permission to dig through the scrap heap and salvage whatever remaints he can. Seems a bit stupid to me. I agree with you that "too big to fail" is mostly bull - if a company is too big to fail, it has failed and should collapse from its own weight.

But socialism? Not by a long shot.

 

[DesertPirate]

And do what, you think? Cackle manically?

Look, you're stuck on a word here. Ok, he said sieze. But sieze what? Major means of production to tie more economic power to the political power of Government? And sieze where? Straight from the hands of a private legal owner? And sieze how? By gunpoint?

From what I can see, this looks like he's asking for permission to dig through the scrap heap and salvage whatever remaints he can. Seems a bit stupid to me. I agree with you that "too big to fail" is mostly bull - if a company is too big to fail, it has failed and should collapse from its own weight.

But socialism? Not by a long shot.

First step in nationalizing the banks? Quite possible with this crowd. I do not trust them at all.

 

[Liar]

First step in nationalizing the banks? Quite possible with this crowd. I do not trust them at all.

I see you have no intention to talk about this rationally.

Don't let the tin foil hat chafe your ears.

 

[DesertPirate]

I see you have no intention to talk about this rationally.

Don't let the tin foil hat chafe your ears.

I have seen stumbles and fumbles by everyone in this administration for 60+ days, just no signs of honesty or competence. Since there is not a single one qualified to run a bank or any other business it would be a catastrophe for them to seize anything.

This is the problem when theoreticians with zero practicle experience get positions of power.

Even the EU Pres. said that this spending by the Administration was going to take the entire financial world to hell!

 

[Handprints]

As far as it goes they shouold be allowed to fail. The FDIC would cover depositers and speculators that caused the problem can suffer.

Just a primer on how the US banking system's relationship with FDIC works, as a lot of people here and in the press are making comments that betray a fundamental misunderstanding of 60+ years of US banking law.

When a bank realizes it can't cover a withdrawal, funding requirement or bill, it is required, by law, to inform the FDIC immediately. The FDIC is required, by law, to take immediate control of that bank and liquidate it in an orderly fashion. Creditors and shareholders, from the moment the FDIC steps in, are in (more or less) the same position as they would be if the bank filed for bankruptcy (in reality, they have far less influence over the FDIC's decisions than they would over a receiver in bankruptcy.)

The FDIC is required, by law, to make whole any depositors and to wind down (or sell, although that's a rarity) the bank in an orderly fashion. Because the FDIC has, essentially, limitless funds and more influence over counterparties than any receiver, it gets substantially better terms from anyone it deals with during the wind-down. As a result, it produces returns for creditors that are better than any receiver in bankruptcy could dream of obtaining. That's one of many reasons that every global FDIC equivalent visits the FDIC at least annually: they are the state of the global art for bank resolution.

So let's be completely clear: it is illegal, in the US, for a bank to go bankrupt. Any bank about to miss a payment immediately surrenders total control of itself to the FDIC and the shareholders/creditos are zeroed pending resolution. In other words, the only legal thing that can happen in the US to a failing bank is full nationalization. This has been the law of the land since FDR and neither party has ever wanted to mess with it. Indeed, one of the few presidents ever to spend a lot of time and energy praising the FDIC was Ronald Reagan.

When someone says: "Just let them fail," it is a sure sign that they have no idea about any of the above. (And, for my part, instantly disqualifies them as people likely to have an opinion worth hearing.)

And for anyone interested: the FDIC could be a textbook case of how to preserve a public good (a stable, dependable banking system) without inflicting any taxes on broader society. 100% of the FDIC's budget comes from a levy on member banks' deposits. That levy is paid - wait for it - directly out of the P&L. The banks' shareholders - the prime beneficiaries of bank profits - are the ones paying for the security for the system. (If anyone thinks seriously that the banks just subtract the levy amount from the interest that they pay depositors, try to remember your basic economic lessons about what costs can and can't be passed through in a competitive market where there sellers have no pricing power.)

Hope that's of interest,
H

 

[JAMESBJOHNSON]

HANDPRINTS

Your presupposition is the FDIC is immune from political interventions and manipulations. Theyre not Vestal Virgins and Oracles of Delphi, existing apart from their masters. It's this sort of thinking that sets up failure and exploitation by the rats.

 

[DesertPirate]

Just a primer on how the US banking system's relationship with FDIC works, as a lot of people here and in the press are making comments that betray a fundamental misunderstanding of 60+ years of US banking law.

When a bank realizes it can't cover a withdrawal, funding requirement or bill, it is required, by law, to inform the FDIC immediately. The FDIC is required, by law, to take immediate control of that bank and liquidate it in an orderly fashion. Creditors and shareholders, from the moment the FDIC steps in, are in (more or less) the same position as they would be if the bank filed for bankruptcy (in reality, they have far less influence over the FDIC's decisions than they would over a receiver in bankruptcy.)

The FDIC is required, by law, to make whole any depositors and to wind down (or sell, although that's a rarity) the bank in an orderly fashion. Because the FDIC has, essentially, limitless funds and more influence over counterparties than any receiver, it gets substantially better terms from anyone it deals with during the wind-down. As a result, it produces returns for creditors that are better than any receiver in bankruptcy could dream of obtaining. That's one of many reasons that every global FDIC equivalent visits the FDIC at least annually: they are the state of the global art for bank resolution.

So let's be completely clear: it is illegal, in the US, for a bank to go bankrupt. Any bank about to miss a payment immediately surrenders total control of itself to the FDIC and the shareholders/creditos are zeroed pending resolution. In other words, the only legal thing that can happen in the US to a failing bank is full nationalization. This has been the law of the land since FDR and neither party has ever wanted to mess with it. Indeed, one of the few presidents ever to spend a lot of time and energy praising the FDIC was Ronald Reagan.

When someone says: "Just let them fail," it is a sure sign that they have no idea about any of the above. (And, for my part, instantly disqualifies them as people likely to have an opinion worth hearing.)

And for anyone interested: the FDIC could be a textbook case of how to preserve a public good (a stable, dependable banking system) without inflicting any taxes on broader society. 100% of the FDIC's budget comes from a levy on member banks' deposits. That levy is paid - wait for it - directly out of the P&L. The banks' shareholders - the prime beneficiaries of bank profits - are the ones paying for the security for the system. (If anyone thinks seriously that the banks just subtract the levy amount from the interest that they pay depositors, try to remember your basic economic lessons about what costs can and can't be passed through in a competitive market where there sellers have no pricing power.)

Hope that's of interest,
H

That is exactly why they should have let all of the banks fail instead of the bailout. The FDIC would have delt with the important parts. Anytime a company goes into bankruptcy the judge can change the leadership.

Most of these investment groups need a reminder that the customers money needs to be treated BETTER than your own!

 

[trysail]

Banks Get New Leeway in Valuing Their Assets
By FLOYD NORRIS
April 2, 2009

A once-obscure accounting rule that infuriated banks, who blamed it for worsening the financial crisis, was changed Thursday to give banks more discretion in reporting the value of mortgage securities.

Robert H. Herz, chairman of the Financial Accounting Standards Board, said the new disclosures would help investors.

The change seems likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is now willing to pay for them. But critics objected that the change could further damage the credibility of financial institutions by enabling them to avoid recognizing losses from bad loans they have made.

Critics also said that since the rules were changed under heavy political pressure, the move compromised the independence of the organization that did it, the Financial Accounting Standards Board.

During the financial crisis, the market prices of many securities, particularly those backed by subprime home mortgages, have plunged to fractions of their original prices. That has forced banks to report hundreds of billions of dollars in losses over the last year, because some of those securities must be reported at market value each three months, with the bank showing a profit or loss based on the change.

Bankers bitterly complained that the current market prices were the result of distressed sales and that they should be allowed to ignore those prices and value the securities instead at their value in a normal market. At first FASB, pronounced FAS-bee, resisted making changes, but that changed within a few days of a Congressional hearing at which legislators from both parties demanded the board act.

“There is a perception that we are yielding to political pressure,” one board member, Lawrence W. Smith, said as he voted for the changes.

“We are an independent standard setter, and it is important that we maintain our independence,” Mr. Smith added. “At the same time, how can we ignore what is going on around us?”

A group headed by two former chairmen of the Securities and Exchange Commission, one who served under President Bill Clinton and one who was appointed by President George W. Bush, said that it feared that politicization of accounting standards would destroy the credibility of the board.

It is not clear how much bank profits will improve as a result of the change; that will depend on how much the banks use their newly approved discretion to set values. Nor is it clear whether investors will put much faith in the new figures.

Early answers to those questions may become available within a few weeks. The board said banks could apply the new rules to their financial statements for the quarter that ended this week.

One major bank, Citigroup, said the new standard would not cause any change in its statements.

It is rare that the application of an accounting rule becomes a political issue, but that happened this year in both the United States and Europe, where the International Accounting Standards Board held an emergency meeting to change its rule after such a move was demanded by the French president.

In the United States, FASB acknowledged the investor criticism of the rules the board proposed after the Congressional hearing and responded on Thursday by voting to require banks to make additional disclosures about the assets in question.

The five-member board approved three changes to the rules, two by unanimous votes and one with two dissents. That disputed change makes it possible for banks to keep some declines in asset values off their income statements.

Robert H. Herz, the board’s chairman and the man who faced the Congressional pressure, said he voted for the changes because he thought the improved disclosures would help investors.

Mr. Smith said he had considered changing his vote as recently as Thursday morning. That would have led to the defeat of one change sought by the banks and perhaps set off a confrontation with Congress. “But,” he said, “I ultimately decided this is an improvement, because we have significantly improved the amount of information” being disclosed.

The American Bankers Association, which pushed legislators to demand the board make changes, praised the board. “Today’s decision should improve information for investors by providing more accurate estimates of market values,” said Edward Yingling, the association’s president.

One change adopted by the board would require banks to disclose the effect of the changed interpretation, although the final wording has not been released and it is not clear how detailed that disclosure will be.

For some other assets, banks must write them down to market value only if they conclude that the decline is “other than temporary.” The measure that drew dissents will allow banks to keep part of such declines off their income statements, although the decline would still show on the institutions’ balance sheets.

One of the dissenters, Thomas J. Linsmeier, argued that accounting rules already allowed the “fiction all banks are well capitalized,” adding that the changes would “make them seem better capitalized.”

The adoption of the rules was widely expected. It came on the same day that the stock market soared, but that rally began in Asia, well before the board met, and seemed to be tied to indications that the world economy might no longer be getting worse, even if recovery was not imminent.

While it was the banks who pressed for the rule, it will affect all financial institutions. But the board said it would make small changes to assure that it did not change accounting in mutual funds, which must mark their assets to market value every day.

Bank regulators already have the power to adjust accounting in computing capital, and some investor groups argued they should do that, rather than give the banks more freedom to value assets at what they think they should be worth, rather than what someone will pay for them.

The board added to the latest rule a statement that the goal of reflecting market value remained the same, but the rules will still allow more judgment by managers, and thus gives them more ability to control the numbers they report.

The vote drew condemnation from an organization called the Investors Working Group, and the two former S.E.C. chairman who lead it — William H. Donaldson, appointed by the second President Bush, and Arthur Levitt Jr., who served in the Clinton administration.

“In order to create high-quality accounting standards, it is critical that the process be independent and free from political pressure,” the group said in a statement. “This will ensure that such standards are neutral and faithfully represent economic reality. To the extent that these new FASB proposals reduce the free flow of transparent and reliable financial information, they undermine investor interests and weaken their ability to make sound investment decisions.”

 

[JAMESBJOHNSON]

NOW THAT THE BANKS CAN REPORT HIGHER PROFITS LET'S SEE IF THAT TRANSLATES TO HIGHER TAXES ON THE PROFITS. NOT LIKELY.

Smells like a gimmick to inflate the value of the bank.

 

[trysail]

Barney Frank and Chris Dodd are political Siamese twins. Somehow persons with absolutely no knowledge or understanding of banking became, respectively, chairman of the House Financial Services Committee and chairman of the Senate Banking Committee ( and, god help me, I do not understand how ).
________________________________________
Chris Dodd's Credit Card Bill Will Help Consumers? Don't Count On It
Unless you think higher interest rates and fees count as help. It's a shameful piece of grandstanding.
By:Thomas Brown

Chris Dodd says he’s doing consumers a favor by pushing his nutty Credit Cardholders’ Bill of Rights, which passed the House yesterday. He’s not. If Dodd’s bill becomes law, some consumers will have a harder time getting credit cards on any terms, while others will face steeper interest rates and fees. That’s a high price we’ll all have to pay just so the Senate’s most vulnerable Democrat can hang on to his seat.

In an article yesterday on The Huffington Post, Dodd claims he’s been fighting the card lenders for twenty years, “waging what was then a lonely fight.” Actually, if you compare what the card industry looked like 20 years ago to how it looks today, you’ll be astonished at how much better a deal consumers are lately getting. And government regulation isn’t what drove the improvement; free-market innovation and competition, did. Twenty years ago, all consumers paid the same interest rate—and it wasn’t low (19.8%). Twenty years ago, everyone paid an annual fee. There were few rewards programs.

So, again, while Chris Dodd was fighting what he admits was a fruitless and lonely fight, card companies were coming up with ways to profitably deliver a better and better deal to consumers. (Some of those deals were so good, in fact, that the lenders that offered them are now out of business.) And, again, Dodd’s lonely crusade on behalf of the consumer had nothing to do with it.

But if the bill Dodd is pushing becomes law, some of those benefits will disappear. The bill would, for instance, prohibit card companies from changing the rates they charge “at any time, for any reason.” Translation: instead of a borrower’s interest rate varying up and down, it will just stay up. Or fees will rise, to offset issuers’ loss of pricing flexibility.

Dodd’s misbegotten bill would reduce competition and raise costs for the consumer—all so his office can generate press releases that say things like “Dodd Fights Card Companies.” In fact, his fight will end up hurting his own constituents. (In his Huffington Post piece, Dodd writes that his legislation “will prevent card companies from tricking customers.” If the press were better-educated on the topic, we’d also read that Dodd is trying to “trick” consumers into believing his legislation will help them, when it won’t.)

In fairness, the past year has not been kind to Dodd; I can see why he wants to change the subject. First came word he’d received a sweetheart loan from Countrywide—a company under the purview of the Senate Banking Committee, which he chairs. He has yet to provide any details about the loan, despite promises otherwise. Next was the news he’d been ably to buy a cottage in Ireland at a well-below-market price, in a deal arranged by a pal who’s also a convicted felon. Most recently, Dodd snuck language into the stimulus bill that enabled those AIG bonuses—then denied knowing anything about it.

Given all this, you won’t be surprised to learn that Dodd’s poll numbers have been sagging. One recent poll puts his disapproval rating at 58%. In the runup to his reelection bid next year, Dodd trails one potential Republican opponent by 16 points. So, yes, he would benefit from a distraction.

Unfortunately, the distraction he’s come up with, this cussed cardholder’s bill of rights, will do more harm than good for the people he says he’s trying to help.

As it happens, Chris Dodd is my Senator. But I don’t have a sense that he represents me, or has my interests at heart. (I especially didn’t feel that way when he moved his entire family to Iowa for a year when he was running for president.) He just loves the power that comes from being a Senator, and loves being a professional politician. He’s more than willing to engage in some demagoguery that actually hurts his constituents, if that’s what it takes to get reelected. Just the sort of pol, that is to say, that should be shown the door by voters next election.

 

[sr71plt]

Somehow persons with absolutely no knowledge or understanding of banking became, respectively, chairman of the House Financial Services Committee and chairman of the Senate Banking Committee ( and, god help me, I do not understand how ).

This is a trick question? It's called the seniority system.

 

[DeeZire]

Since Trysail mentioned the Huffington Post, but then proceeded to spin the information to conform with right wing talking points, here's a link:

http://www.huffingtonpost.com/2009/04/30/house-passes-credit-card-_n_194126.html

The important part (for the consumers):

The measure would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.

The important part (for the bankers):

The credit card changes could cost the banking industry more than $10 billion a year in interest payments, according to a study by the law firm Morrison & Foerster.

Is it any wonder the banking lobby is in a panic, trying to spin the reforms into impending disaster?

Upon further reflection, I suppose that's what this thread is all about - propaganda. I hope an opposing POV is acceptable in this context. If not, I apologize for interrupting the disinformation with a few facts.

 

[Boxlicker101]

Years ago, my wife and I were putting our oldest granddaughter, who lived in The Philippines, through college. Rather than send her money, we found it to be cheaper and easier to send her a credit card on an account we had, and let her pay bills with it and get cash advances.

After a while, the girl, who was about 17 or 18, started getting offers of credit cards in the mail, addressed to her at our home. Some of them described her credit rating as outstanding, and guaranteed acceptance. We always just shredded them and threw them away, but we often wondered what would have happened if we had forged her signature and accepted one in her name. I think they ask for social security numbers, and she didn't have one, so it probably would have been turned down, even though it was supposedly guaranteed.

 

[sr71plt]

My cats get credit card offers--and my dad continued getting offers at the family house we took over when he died for the eight more years we lived there.

And posters here keep telling me that credit card companies will drop you (and your credit rating will go down) if you don't carry balances on your cards--but I haven't carried over a balance on a credit card in at least thirty years, and my credit rating is 920 (on the new 1,000-point scale) and I get more credit card offers than my cats do. Methinks there's a big difference in the responses of the credit card companies to the lower middle class and the well heeled.

 

[Boxlicker101]

My cats get credit card offers--and my dad continued getting offers at the family house we took over when he died for the eight more years we lived there.

And posters here keep telling me that credit card companies will drop you (and your credit rating will go down) if you don't carry balances on your cards--but I haven't carried over a balance on a credit card in at least thirty years, and my credit rating is 920 (on the new 1,000-point scale) and I get more credit card offers than my cats do. Methinks there's a big difference in the responses of the credit card companies to the lower middle class and the well heeled.

That credit rating is a slipperey thing. They will also go down if you carry too high of a balance. Besides that, those who do the rating accept as true anything they are told. If some disgruntled company were to report to them that you owe them a lot of money and refuse to pay, it will go on your credit report as a negative factor. That's even if it is a bogus complaint.

 

[trysail]

The idiot is at it again.

The man is a member of an odious and meretricious species— homo politicus and is wholly incapable of keeping his cotton-pickin' fingers out of stuff that isn't properly his business ( and— god knows— stuff that he is utterly clueless about ). As a horror story, Friday the 13th has nothing on Barney Frank Runs An Auto Manufacturer or Barney Frank Runs A Bank.

http://www.npr.org/templates/story/story.php?storyId=105565087



...Recently, GM told workers it would close a parts distribution center in Massachusetts. The facility sits in the congressional district of Democrat Barney Frank. Frank chairs the House Committee on Financial Services, which oversees the very government money that has kept GM alive.

Frank didn't want to see more of his constituents out of work in a deep recession, so he e-mailed the White House.

"I also called somebody at General Motors on Monday and said I think this is a bad idea, this is a bad time to do this," he says...


..."If you have 535 congressmen and senators, all of whom know nothing about building cars and have other larger interests in mind, telling GM and Chrysler how to design, build and sell cars — they're almost guaranteed to fail."

Last week, Lamar Alexander even gave Frank a mock "Car Czar" award on the floor of the Senate.

"That's a lot of political hooey," says Frank. He says the distribution center employs only about 80 people and keeping it open a while longer won't break the budget. Frank also says that with the government propping up GM with $50 billion, politicians are within their rights to scrutinize decisions.

"Now what we should do is not burden them in ways that would make it impossible for them to get through in the long haul," he says.

Asked if he was concerned about the government meddling in General Motors, Frank had this response: "That's a very odd question. If the government hadn't 'meddled' in General Motors, there would be no General Motors. 'Meddle' is what you say when you don't like it. 'Involve' is what you say when you do."... [ Which is, of course, total bullshit. If the effin' government hadn't meddled in GM ( in EVERY possible way from labor relations to benefits to design requirements to the threatened 1960s anti-trust action to manufacturing geography ) it is not unlikely that GM would be a perfectly healthy enterprise today ]

As lawmakers fight to save dealers, the United Auto Workers union has been lobbying to get new GM jobs.

"We quite frankly put pressure on the White House,' " says Ron Gettelfinger, who runs the union. When GM said it wanted to build a small car in China, Gettelfinger told the White House he wanted it in the U.S.