The Fakeover

Our dear President is out on the Campaign trail yet again, touting how great he is. And he saved America! Rejoice!
It’s Hope 2.0!
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They passed a sweeping Financial Reform bill. But like the Health Care bill where one the biggest problems was totally ignored for political reasons, Tort Reform, in the Financial Reform bill, Fannie & Freddie and the shadow of the subprime mortgages still out there, was ignored.
The Democrats, who created this mess, want to ignore the 800 lb Gorilla Cancer in the body.
With good reason, they were the main force behind creating it!

You can’t talk about the housing crisis or reforms without talking about the affordable-housing goals HUD slapped on Fannie and Freddie. That is, unless you’re Tim Geithner.
The Treasury secretary hosted a summit Tuesday to discuss redesigning the mortgage-finance system — 75% of which is still controlled by Fannie and Freddie, which are still bleeding billions at taxpayer expense.
Geithner vowed to fundamentally “change” the failed government-sponsored mortgage giants. Yet, suspiciously, he didn’t offer how. Nor did he explain why they lowered their underwriting standards and collapsed under the weight of subprime loans and securities. So here’s a refresher:
• In 1996, as part of Clinton housing policy, HUD required that 42% of Fannie’s and Freddie’s mortgage financing go to “underserved” borrowers with unproven or damaged credit.
• To help them meet that goal, HUD, their regulator, authorized them to relax their lending criteria.
• HUD also authorized them to buy subprime securities that included loans to uncreditworthy borrowers.
• Unhappy with the results — despite Fannie and Freddie committing trillions in risky low-income loans — HUD in 2000 raised its affordable-housing target again, this time to 50%.
• By 2008, HUD’s target had topped out at 56%. And Fannie and Freddie had drowned in a toxic soup of bad subprime paper.
HUD Secretary Shaun Donovan insists that affordable-housing goals aren’t to blame. “We should be careful not to learn the wrong lesson from this experience,” he said, “and sacrifice an important feature of the current system: wide access to mortgage credit.”
This is revisionist history. Fannie and Freddie e-mails confirm that executives then were under huge pressure to meet “HUD goals.”
But as Orwell warned, whoever controls the present controls the past. And right now, the people who pushed Fannie and Freddie — along with our entire financial system — off the cliff in the name of “affordable housing” are running the show.
Just look at some of the experts Geithner invited to his Potemkin summit. Like ex-Clinton aide Ellen Seidman, who became head of the Office of Thrift Supervision. She aggressively enforced Clinton’s beefed-up Community Reinvestment Act, which codified the “flexible” underwriting that Fannie and Freddie adopted.
You can’t talk about the housing crisis or reforms without talking about the affordable-housing goals HUD slapped on Fannie and Freddie. That is, unless you’re Tim Geithner.
The Treasury secretary hosted a summit Tuesday to discuss redesigning the mortgage-finance system — 75% of which is still controlled by Fannie and Freddie, which are still bleeding billions at taxpayer expense.
Geithner vowed to fundamentally “change” the failed government-sponsored mortgage giants. Yet, suspiciously, he didn’t offer how. Nor did he explain why they lowered their underwriting standards and collapsed under the weight of subprime loans and securities. So here’s a refresher:
• In 1996, as part of Clinton housing policy, HUD required that 42% of Fannie’s and Freddie’s mortgage financing go to “underserved” borrowers with unproven or damaged credit.
• To help them meet that goal, HUD, their regulator, authorized them to relax their lending criteria.
• HUD also authorized them to buy subprime securities that included loans to uncreditworthy borrowers.
• Unhappy with the results — despite Fannie and Freddie committing trillions in risky low-income loans — HUD in 2000 raised its affordable-housing target again, this time to 50%.
• By 2008, HUD’s target had topped out at 56%. And Fannie and Freddie had drowned in a toxic soup of bad subprime paper.
HUD Secretary Shaun Donovan insists that affordable-housing goals aren’t to blame. “We should be careful not to learn the wrong lesson from this experience,” he said, “and sacrifice an important feature of the current system: wide access to mortgage credit.”
This is revisionist history. Fannie and Freddie e-mails confirm that executives then were under huge pressure to meet “HUD goals.”
But as Orwell warned, whoever controls the present controls the past. And right now, the people who pushed Fannie and Freddie — along with our entire financial system — off the cliff in the name of “affordable housing” are running the show.
Just look at some of the experts Geithner invited to his Potemkin summit. Like ex-Clinton aide Ellen Seidman, who became head of the Office of Thrift Supervision. She aggressively enforced Clinton’s beefed-up Community Reinvestment Act, which codified the “flexible” underwriting that Fannie and Freddie adopted.
Seidman argued that Fannie’s and Freddie’s support for “low-income and minority communities” — especially now amid a wave of foreclosures — is “absolutely critical.” She wants government to take an even larger role in pushing housing for “underserved markets.”

The “underserved” were the poor, and minorities, that couldn’t pay them anyhow. But what the hell, if you can get a million dollar house with a multi-thousand dollar mortgage and a job at 7-11 for nothing down, why not.
Let’s buy some votes. Then when it all blows up in our face, blame it on “the rich” and George W. Bush!!
Yeah, that’s the ticket!!


Comment on the article: It’s simple! Underserved means undeserved but we will give it to you anyway in exchange for your vote. Problem is it works, for the short term but with h*** to pay in the long term.
Seidman argued that Fannie’s and Freddie’s support for “low-income and minority communities” — especially now amid a wave of foreclosures — is “absolutely critical.” She wants government to take an even larger role in pushing housing for “underserved markets.”
“The private sector will not do it on its own,” Seidman said, “and we should just stop having that debate.”
Excuse us, but homes aren’t a right. People who lost their homes can go back to renting. There’s no shame in that. The shame came when government pushed them into homes they couldn’t afford. And the housing bubble it created hurt everybody in the end.
Echoing Seidman, Geithner asserted that whatever replaces Fannie and Freddie must continue to “provide access to affordable housing for lower-income Americans” and to guarantee loans.
In other words, Fannie and Freddie aren’t going anywhere. They’ll just be absorbed into the government, most likely Treasury or HUD, or both.
Why must taxpayers continue subsidizing homeownership through a government-guaranteed secondary mortgage market run by a government-protected duopoly?
Within the proper framework, we’re confident that private firms can originate and securitize mortgages more efficiently — and do so without the politically injected risk or taxpayer liability.
Wells Fargo, for one, would gradually replace Freddie and Fannie with private “mortgage conduits” that buy loans on the primary market and roll them into a common mortgage-backed security.
They’d assume the risk on the underlying mortgages, while the government would guarantee only the MBSes. To protect taxpayers, the conduits would pay into an insurance fund.
The plan maximizes the use of private capital while limiting Washington’s role to assuming catastrophic risk.
Other charter privileges enjoyed by Fannie and Freddie would be eliminated, including their Treasury line of credit, state and local tax exemptions, and weak capital requirements.
Above all, the plan would curb HUD’s interference in the mortgage market. No more unrealistically high affordable-housing goals. No more NINJA — no income, no job or assets — loans.
After years of dissembling and denial, Rep. Barney Frank has finally come out. He now says bankrupt government mortgage giants Fannie Mae and Freddie Mac “should be abolished.” Better late than never.
‘There were people in this society who for economic and, frankly, social reasons can’t and shouldn’t be homeowners,” Frank said in an interview with the Fox Business Network and sounding a lot more like an elephant than a donkey. “I think we should, particularly, stop this assumption that you put everybody into homeownership.”
After years of blaming heartless Republicans and Wall Street for the crisis caused by Fannie Mae and Freddie Mac — and their predominantly Democratic supporters in Congress — it’s refreshing to hear a member of the Democratic Party admit his mistakes.
It’s especially true of Frank, who, more than any other elected official, championed the cause of the government-sponsored enterprises Fannie Mae and Freddie Mac. Indeed, Frank is most responsible for stopping GSE reform in the early 2000s, at a time when such a move might have prevented the financial meltdown.
Maybe Frank, like so many others in his party, is feeling the heat in this November’s election. Democrats’ popularity is plunging after years of economic incompetence that has left America’s once-thriving economy a shambles.
But give him his due: Frank’s comments mark a major departure.
In 2000, when Rep. Richard Baker proposed more oversight for the GSEs, Frank called concerns about Fannie and Freddie “overblown,” claiming there was “no federal liability whatsoever.”
In 2002, again, Frank said: “I do not regard Fannie Mae and Freddie Mac as problems. I regard them as assets.”
In 2003, he repeated himself in opposing reform, saying he did not “regard Fannie Mae and Freddie Mac as problems.”
Even after a multibillion dollar accounting scandal hit Freddie Mac just a month after those remarks, Frank insisted nothing was wrong. “I do not think we are facing any kind of crisis,” he said.
By 2004, Fannie had its own accounting scandal. Frank again insisted it posed no threat to the U.S. Treasury. Even if the two went belly-up, he said, “I think Wall Street will get over it.”
Of course, he had it exactly backward. We’ve already spent $148 billion of taxpayer money on the two losers. The Congressional Budget Office estimates it will ultimately cost taxpayers $389 billion to bail them out. Even that may be too little; at least one private estimate put the final toll at $1 trillion.
No surprise here. Even today, more than half of all mortgages are funded or underwritten by Fannie and Freddie. They hold more than $5 trillion of the $10.7 trillion or so in total U.S. mortgages.
We’ve spent a lot of money for Barney Frank’s education in financial reality. Today, he’s basically saying he and his party were wrong all along.
That’s a good start. But how about an apology? Or even a frank admission that his party’s indefatigable support of Fannie and Freddie — which, prodded by the Community Reinvestment Act, created and funded the massive subprime market that later collapsed — was to blame for our multitrillion dollar meltdown and the loss of millions of jobs?
Others are edging in that direction. Treasury Secretary Tim Geithner this week held a conference on Fannie’s and Freddie’s future, and he too seems chastened. “We will not support returning Fannie and Freddie to the role they played before conservatorship, where they fought to take market share from private competitors while enjoying the privilege of government support,” he said.
That, too, is good to hear. As we have advocated for years — since 1996, to be exact — Fannie and Freddie should be dismantled or privatized.
We hope actions match the rhetoric — that Geithner’s “conference” on Fannie and Freddie wasn’t just political window dressing before November’s midterm elections.
Let’s get government out of the business of encouraging homeownership, an undertaking at which it has failed miserably.
Now that the idea is dead, let’s bury it once and for all.
As late as 2008, after the tide of losses and foreclosures washed away Fannie’s and Freddie’s remaining capital, Frank was adamant that it was all Wall Street’s fault: “The private sector got us into this mess … the government has to get us out of it.” (IBD)

But dear, Barney, it was thy.

“Slowly but surely, we are moving in the right direction. We’re on the right track,” Obama told a group of about 40 in the backyard of Rhonda and Joe Weithman’s home, a Cape Cod on quiet E. Kanawha Avenue in Clintonville,OH. “After 18 months, I have never been more confident that our nation is headed in the right direction,” Obama said.
Rasmussen:  Twenty-eight percent (28%) of Likely Voters say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, August 15.
While down slightly from the last two weeks, confidence in the nation’s current course has ranged from 27% to 35% since last July. Following Congress’ passage of the national health care bill in late March, the number of voters who said the country was heading in the right direction peaked at 35%, the highest level of optimism measured since early September 2009.
Fifty-four percent (54%) of Democrats feel the country is heading in the right direction. Eighty-eight percent (88%) of Republicans and 77% of voters not affiliated with either political party feel the country is heading down the wrong track.
Sixty-seven percent (67%) of all voters say the country is heading down the wrong track, up two points from last week.
So let’s review: 60+% are against the Health Care Bill. 60+% are for a secure border. 60+% are against the Ground Zero Mosque. 60+% are saying we are on the “wrong track”.
Sixty percent (60%) of U.S. voters say most members of Congress don’t care what their constituents think, according to a new Rasmussen Reports national telephone survey.
So that’s why Democrats think they are doing a good job!


After all, your alternative is… REPUBLICANS! <> and we all know that is the way to Hell itself!
Personally, I’d rather just have Conservatives. Which leaves out Democrats anyhow but also leaves out the RINOs.
What we don’t need now is to go from a Progressive Cancer to a RINO Virus.
But we really don’t need is more government “involvement”.

Lies, Damned Lies, and Medicare

First off, the Old Gray Lady, the Propaganda Mistress of Liberals, The New York Times: Here’s the bottom line: The recently passed health care reform bill is promising to have a positive effect on Medicare, assuming Republican opponents don’t succeed in killing the reform in court or otherwise undermining its main provisions. Social Security is holding up even in the face of a weak economy.
Would it be a surprise that they are lying.


NEW YORK (CNNMoney.com) — It’s official: Social Security will reach its tipping point this year. For the first time in nearly 30 years, the system will pay out more benefits than it receives in payroll taxes both this year and next, the government officials who oversee Social Security said on Thursday.
This is “holding up”??
CNN: The controversial Affordable Care Act extends the life of the Medicare Trust Fund to 2029, from 2017.

The actuary of the Medicare Trustees memo attached to the report disagrees:

“(T)he financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range. . . or the long range. . . . I encourage readers to review the ‘illustrative alternative’ projections that are based on more sustainable assumptions for physician and other Medicare price updates.”
These remarkable words are found, in all places, in the “Statement of Actuarial Opinion” in the back of the 2010 annual Medicare Trustees’ Report.
The actuary’s alternative memo explains that “the projections in the report do not represent the ‘best estimate’ of actual future Medicare expenditures.” Worse than that, they are not even in the ballpark of reasonability. The official 2010 Trustees’ Report tells us that total Medicare expenses will be total 6.37% of GDP by 2080. The CMS actuary’s alternative memorandum explains that 10.70% of GDP is a more reasonable estimate for that year – though one that is roughly 68% higher.
If the 2010 report’s projections were arguably within the range of plausibility, perhaps the actuary could have agreed to sign off on them. But this was clearly prohibited by the magnitude of the deviations from reality. (For additional perspective, consider that the previous 2009 Trustees’ Report projected that program costs by 2080 would be 11.18% of GDP – more than 75% higher than this year’s projection.)
The actuary’s memo identifies two principal reasons why the official report’s projections are so far afield from reality.
One is that the official scoring presumes that payments to Medicare physicians will decline on December 1 by 23%, followed by a further 6.5 percent decline in January, 2011, and another 2.9 percent decrease in 2012. The Obama administration and the Congressional leadership are on record as opposing these enormous payment reductions, and no one seriously expects them to happen. The Medicare actuary’s memo refers to this physician payment formula as “clearly unworkable and almost certain to be overridden by Congress.”
The other major source of projection error is the assumption, enshrined in the recent health care law, that future program cost growth will be contained by downward adjustments in annual price updates, reflecting in turn the assumption that health service productivity growth will parallel “economy-wide productivity.” The actuary states, however, that “(t)he best available evidence is that most health care providers cannot improve their productivity to this degree – or even approach this level – as a result of the labor-intensive nature of these services.”
The actuary’s memo provides greater detail on the point. The memo notes the long-acknowledged phenomenon that productivity growth in services industries is generally not as rapid as in industries affected more by technology improvements. It is possible, for example, for productivity in personal computer manufacturing to improve several-fold in a short time. It is not similarly possible for productivity in nursing services to mushroom in the same way. The actuary’s memo rightly notes the generally slower pace of productivity growth in the health care field, which has been slowest of all in such labor-intensive venues as skilled nursing facilities and home health services.
As a result, the memo finds, it “very unlikely” that Medicare productivity growth can mirror productivity growth in the larger economy. The chief consequence of the legislated productivity adjustments, therefore, would be to render 15 percent of hospitals, skilled nursing facilities, and home health agencies unprofitable by 2019 — up to 25 percent in 2030 and 40 percent by 2050.
The actuary concludes that “neither of these update reductions is sustainable in the long range, and Congress is very likely to legislatively override or otherwise modify the reductions in the future to ensure that Medicare beneficiaries continue to have access to health care services.”
This is a key point; the glowingly optimistic projections in the official Trustees’ Report assume that we as a nation will be content to have 40% of our medical facilities go under within the next 40 years, and that we will happily accept these severe constraints upon beneficiaries’ access to health care. If that is not in fact the societal will after the enactment of health care reform, then the official cost estimates should be tossed into the nearest receptacle.
Bad though all of this is, none of it is actually the worst gimmick in the official report’s advertised improvement in Medicare solvency. That involves the double-counting of Medicare savings. Earlier this year, Congress passed a health care bill containing various new Medicare taxes and constraints on program expenditures. Such savings are assumed in the official report to extend the solvency of Medicare. But Congress chose instead to spend the savings on a new health care entitlement.
The Medicare actuary wrote a memorandum on April 22 of this year calling attention to this “double-counting.” “In practice,” he stated, “the improved Part A financing cannot simultaneously be used to finance other Federal outlays (such as the coverage expansions under the PPACA) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions.”
In other words, money can only be used once. Since the Medicare savings is being spent elsewhere on expanded health care coverage, it is not really being employed to extend Medicare solvency. To claim an improvement in Medicare financing is to mislead about the effects of recent legislation.
All that can be responsibly done is for those associated with the Trustees’ Report is to note the limited utility of the “official projections” and to simultaneously provide their best projections for actual reality. The rest of us, for our part, must take appropriate note of the alternative findings of the scorekeepers. This was an ethic too-little observed during the health care debate, when health care reform’s proponents continued to cite CBO’s purported sign-off on the fiscal gains of health care reform — despite the repeated caveats issued by CBO refuting the validity of such claims.
Treasury Secretary Geithner’s statement on the occasion of the report’s release mischaracterized it as follows:
“The Affordable Care Act has dramatically improved projected Medicare finances. Medicare’s Hospital Insurance (HI) Trust Fund is now expected to remain solvent until 2029, 12 years longer than was projected last year, which is a record increase from one report to the next. In addition, the 75-year financial shortfall for HI has been reduced to 0.66 percent of taxable payroll from 3.88 percent of taxable payroll in last year’s report, and the projected costs for the Medicare Supplementary Medical Insurance (SMI) program over the next 75 years, expressed as a share of GDP, are down 23 percent relative to the projections in the 2009 report Nearly all of these improvements in projected Medicare finances are due to the Affordable Care Act President Obama signed into law in March.”
Perhaps it is too much to expect the Secretary’s statement to acknowledge the double-counting at the root of this purported solvency extension, or to delve into the full extent to which the Medicare actuary has explained the inapplicability of these particular numbers. But as the Managing Trustee of the Trust Funds, the Secretary bears a duty to represent program finances as accurately as possible, which this statement fails to do.
The implausible projections in the official Trustees’ report will need to be revised downward almost immediately, after the next extension of Medicare physician payments expected later this year. By next year’s report, this year’s official projections may well look silly. It is unfortunate that the Treasury Department statement grotesquely spins the analysis in the Trustees’ report, especially given the clarifying corrections that the CMS actuary has already publicized.
The final page of the Trustees’ report states that “The Board of Trustees will convene an independent panel of expert actuaries and economists to consider these issues further and to make recommendations to the Board regarding the most appropriate long-range growth assumptions for Medicare projections.” Clearly, to be credible, this panel should be assembled with the active guidance of the Medicare actuary’s office, to avoid any appearance that the panel has been convened to over-ride rather than support the non-partisan analytical work of the Medicare actuary. The last thing needed is for the long-respected Trustees’ process to be tainted by its own version of the Gruber episode. (It was revealed that last June the Department of Health and Human Services (HHS) had awarded a no-bid contract worth nearly $300,000 to MIT professor Jonathan Gruber, the Administration’s star witness for the superior cost-containment features of health care reform.  Obama Administration officials, and most of the journalists celebrating Gruber’s findings, had neglected to mention this detail when trumpeting his supposedly independent confirmation of the Administration’s policy arguments).
There is, regrettably, a striking contrast between the Treasury Department’s statement on the Medicare Trustees’ Report, and the Medicare Actuary’s own repudiation of it. In time, the Treasury Secretary may very well come to regret his statement even as the Medicare Actuary comes to take pride in his own principled stand. (e21)

Gee, I wonder who’s telling the Truth?  The Liberals or the Actuary of Medicare?
Gee, I don’t know…