Congress and NASCAR

Here's a great idea. Every member of Congress should wear a one piece uniform emblazoned with the icons of their corporate sponsors:

Some people wear their hearts on their sleeve. Members of Congress should wear their sponsors on their chest.

This isn’t an original idea. About a month ago, a friend forwarded me a post that was making its way around the blogosphere at the speed of light:

“Members of Congress should be compelled to wear uniforms like Nascar drivers, so we could identify their corporate sponsors.”

Great idea. Just imagine what that would look like.

Senator Chris Dodd, Democrat of Connecticut and ethically challenged head honcho at the Senate Banking Committee, files into a congressional hearing room, wields his gavel and calls the committee to order. The dress code is business casual: collared shirts, no jacket required.

Dodd is sporting a pink Lacoste shirt, with his “endorsements” emblazoned across his chest in large, black letters (the corporate logos go on the back):

  Citigroup Inc.                $428,294
United Technologies           $380,550
Bear Stearns                  $347,350
American International Group  $281,038
Deloitte & Touche             $270,220

And that’s just a list of Dodd’Top 5 lifetime contributors, according to the Center for Responsive Politics.

The list goes on: Goldman Sachs, Morgan Stanley, JPMorgan Chase, Merrill Lynch and Lehman Brothers.

From a company's standpoint, investing in a politician delivers a far higher return on investment than any other investment vehicle out there:

The companies that have been awarded taxpayers' money from Congress's bailout bill spent $77 million on lobbying and $37 million on federal campaign contributions, The Center for Responsive Politics finds. The return on investment: 258,449%.

Where does a regular guy like me find a ROI like that?

The New Republic has an article today that does a good job of naming a few of the more egregious hypocrites alongside their doublespeak who are currently serving in the 111th Congress.

There's that saying...

Oh you know the one, something about pictures and what they're worth in words...

Budget deficit: past, present and future (source: Wapo)



This one has words and pictures. That doubles its value!

It wouldn't be a day...

...without tax evaders in the news:

California Congressman Calls Maryland Home to Gain Tax Credit

Representative Pete Stark, the second-ranking Democrat on the Ways and Means panel, in 2007 and 2008 saved a total of $3,853 in state and Anne Arundel County taxes on a Maryland waterfront home that he claims as his primary residence, according to Maryland tax disclosures.

Homeowners in Maryland qualify for the tax credit for residences they use “for the legal purposes of voting, obtaining a driver’s license, and filing income tax returns,” according to the Maryland Assessment Procedures Manual.

Stark, 77, confirmed in a telephone interview last week that he and his wife, Deborah, are registered to vote in California’s 13th congressional district using the address of her parents in San Lorenzo, about 25 miles southeast of San Francisco. Stark also said both he and his wife have California driver’s licenses.

I have an idea. Why doesn't Pete Stark go back to Maryland and stay there, and quit pretending to speak for the people of California? He can take that other carpetbagger from Maryland, Nancy Pelosi, with him.

Lawmaker: TARP Companies Owe Back Taxes

Of the 23 top recipients of government capital through the Troubled Asset Relief Program, 13 owe unpaid federal taxes, a U.S. House oversight committee reported Thursday.

House Ways and Means Subcommittee on Oversight Chairman John Lewis (D., Ga.) said the companies owe a combined more than $220 million in unpaid federal taxes. Of those companies, two owe more than $100 million each.

Rep. Lewis accused the Treasury of engaging in poor documentation practices by failing to ask companies to prove they didn't owe federal taxes, a requirement for government aid.

It seems the House Ways and Means Committee has its hands full these days. Not only can at least one member not live up to the standards they are supposed to apply to others, they can't even do the job they're paid to do. Sounds like they deserve to be a part of the AIG bonus pool.

In other news, Intrade is currently predicting a >20% chance that Tim Geithner will leave his post at the Treasury Department before June, and a 33% chance he'll be out before the year ends.

The Dodd Amendment

I do believe that the Obama administration and his congressional enablers finally have a plan in place to remove the last vestiges of faith in the federal government any of us may still harbor exempt their campaign contributors from having to take unsavory responsibility for their bad business decisions:

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. The provision, now called “the Dodd Amendment” by the Obama Administration provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.

He was for the bonuses before he was against them. John Kerry would appreciate that. Also, it's pretty rich that they want to "tax" these bonuses. As the tax laws already stand the federal government will get about 35% of the gross amount. And depending on what state the recipients live in, they'll be lucky to see 55% of the gross amount after the local governments are through.

Dodd’s original amendment did not include that exemption, and the Connecticut Senator denied inserting the provision.

"Idunnoitwasn'tme!" Classic 3rd grade denial.

“I can't point a finger at someone who was responsible for putting those dates in,” Dodd told FOX. “I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.”

Of course he can't point a finger. If he did there would be three pointing back at at him. I bet even Senator Dodd can understand that 3>1.

This explains a lot (click to enlarge):




The WSJ has an editorial today that gets to the heart of the matter:

The Washington crowd wants to focus on bonuses because it aims public anger on private actors, not the political class. But our politicians and regulators should direct some of their anger back on themselves -- for kicking off AIG's demise by ousting Mr. Greenberg, for failing to supervise its bets, and then for blowing a mountain of taxpayer cash on their AIG nationalization.

The best insurance policy AIG ever invested in was political donations to the left side of the aisle.

UPDATE 3/19/09: Dodd admits Role in AIG Controversy

Why does this guy still have a job?

AIG's earmarks

The latest outrage washing across the political landscape is over AIG's decision to honor a commitment to pay out $165 million in bonuses to certain employees. Obama has said that he will "pursue every single legal avenue to block" the payout.

At issue are retention bonuses for employees of AIG's financial-products division, whose credit default swaps brought AIG to the brink of collapse. The government controls AIG through an 80% equity stake and as a major lender and doesn't have legal authority to freeze payments on its own. The U.S. has committed $173.3 billion to AIG, including $70 billion from Treasury's rescue fund.

I see no difference between this and the earmark-laden bills that regularly get passed through Congress with nary a peep. Now that AIG is a de facto government owned entity, the bonus payments--just like earmarks--are a form of patronage. We already know how Obama feels about the AIG earmarks, and he has repeatedly said he is against all earmarks, though it seems that some earmarks are worse than others. Namely the ones that originate in Congress are OK, but the ones that originate in the private sector are not. Seems he's just blowing hot air of out his yapper.

Lest you think that the banks who have taken TARP money are going to sit still and let the government dictate a new, equal and just pay structure, think again. Reminds me of a beggar with a stick.

For the record, I am against all earmarks and all bailouts. Does anybody think that AIG would be paying bonuses if they'd been allowed to go bankrupt?

The wisdom of Ogden Nash

In honor of our new socialist overlords, I though I would share a poem that was written during another era that has an increasing number of parallels to today; an era known as the Great Depression.

One From One Leaves Two

Higgledy piggledy, my black hen,
She lays eggs for gentlemen.
Gentlemen come every day
To count what my black hen doth lay.
If perchance she lays too many,
They fine my hen a pretty penny;
If perchance she fails to lay,
The gentlemen a bonus pay.

Mumbledy pumbledy, my red cow,
She’s cooperating now.
At first she didn’t understand
That milk production must be planned;
She didn’t understand at first
She either had to plan or burst,
But now the government reports
She’s giving pints instead of quarts.

Fiddle de dee, my next-door neighbors,
They are giggling at their labors.
First they plant the tiny seed,
Then they water, then they weed,
Then they hoe and prune and lop,
They they raise a record crop,
Then they laugh their sides asunder,
And plow the whole caboodle under.

Abracadabra, thus we learn
The more you create, the less you earn.
The less you earn, the more you’re given,
The less you lead, the more you’re driven,
The more destroyed, the more they feed,
The more you pay, the more they need,
The more you earn, the less you keep,
And now I lay me down to sleep.
I pray the Lord my soul to take
If the tax-collector hasn’t got it before I wake.

Ogden Nash

"History doesn't repeat itself, but it does rhyme."--Mark Twain

The mortgage plan is revealed

U.S. Sets Rules for Mortgage Modifications, 2% Mortgages

March 4 (Bloomberg) -- The Obama administration set loan modification guidelines for its $75 billion homeowner rescue plan, agreeing to pay lenders for altering troubled mortgages while reducing borrowers’ interest rates to as low as 2 percent.

2 percent? sign me up! Sadly, I do not think I'll qualify, as I am current in my mortgage payments and have chosen to not live beyond my means. However I am troubled by all of this government intervention in the mortgage market. Though I don't think that's the kind of "troubled mortgage" candidate they're looking for.

The voluntary initiative, announced on Feb. 18, would require applicants to fully document their income with pay stubs and tax returns, and sign an affidavit attesting to “financial hardship,” according to documents released by the U.S. Treasury in Washington today. The second, larger part of the plan relies on government-run Fannie Mae and Freddie Mac to refinance loans.

Here's a really stupid, naive question: how does one document the ultimate financial hardship--losing one's job--by providing pay stubs and tax returns?

I hope mentioning the fact that Fannie and Freddie will be relied upon to refinance these loans is not meant to inspire confidence.

“This is not going to save every person’s home,” presidential Press Secretary Robert Gibbs said during a briefing. The plan offers help “for those who have played by the rules.”

Mr Gibbs, I played by the rules. Can you please be more specific?

President Barack Obama’s initial proposal, the biggest federal foray into real estate since the Great Depression, ignited criticism from Republican lawmakers that the government would end up subsidizing homeowners who are financially capable of surviving the economic slump on their own.

It would be encouraging to see that the GOP has lately re-discovered that one of their founding principles used to be opposition to Big Government if it weren't so unabashedly pathetic.

Lenders likely won’t be able to offer the loan modifications for a few weeks as they update their technology to process the applications, a mortgage-industry official said on a conference call today with Obama administration officials.

Not surprising since they've laid off virtually all of their employees.

Obama is seeking to curb a jump in foreclosures that, along with a drop in consumer credit, is lowering property values, dragging down the economy and keeping prospective homebuyers away. The housing market lost $3.3 trillion in value last year, and almost one in six owners with mortgages owed more than their homes were worth, according to a report last month by Zillow.com.

“This plan will help make home ownership more affordable for 9 million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans,” Treasury Secretary Timothy Geithner said in a statement.

Please somebody--anybody--show me where it is written that housing prices are only allowed to go up. I'm sure it's written right under the rule that states certain banks and insurance companies are "too big to fail".

For a loan modification, lenders would have to reduce the mortgage payments to no more than 38 percent of the borrower’s income. Then, the Treasury would share the cost for lenders to cut that debt-to-income ratio to 31 percent, the government said.

The modifications would allow a lender to drop the interest rate to as little as 2 percent to achieve the ratio, and if necessary, extend the term or amortization of the loan to as long as 40 years. If more effort is needed, lenders can forbear the principal and in some cases forgive, or reduce, portions of the principal altogether, the documents show.

Sounds like an excellent incentive to work as little as possible.

The proposal, Garrett said, may violate requirements that homeowners put up at least 20 percent of the appraised value of a home or carry mortgage insurance.

“Due to falling home values, many of the potential applicants for Treasury’s foreclosure mitigation refinancing plan will now find themselves” below that level, Garrett said. “There is no specific language under this title that provides the regulator of these two entities any discretion for when or how to apply this requirement.”

The problem with making stuff up as you go is that you often run afoul of the rule of law--not that that matters too much to our current administration. They're acting "for our own good" so there's nothing to worry about. Paging unintended consequences...


At least some vacant houses in Florida are being put to good use:

Kids Party in Foreclosed Homes, Leave Wake of Vandalism

As one astute commenter at the bottom of the article put it, ""These kids DO own these houses and will be paying for them for generations...!"

Geithner to fight himself; Obama channels Jim Cramer

Everytime I see Treasury Sec Geithner's mug on TV, this is how I envision him:


Geithner: Obama to fight international tax dodgers

WASHINGTON (AP) - President Barack Obama's Treasury secretary says the administration will unveil a series of rules and measures in the coming months to limit the ability of international companies to avoid U.S. taxes.

Treasury Secretary Timothy Geithner told the House Ways and Means Committee on Tuesday that Obama will propose legislation to limit U.S. companies' ability to shelter foreign earnings from taxation in the U.S. He also said the administration will try to limit wealthy Americans' ability to use tax havens to avoid taxation.

He did not immediately provide details.

Separately, Obama had this to say about the stock market:

"What you're now seeing is profit and earnings ratios are starting to get to the point where buying stocks is a potentially good deal"

I'm no CFA, but even I know there is no such thing as a profit and earnings ratio, let alone multiple "profit and earnings ratios" . I know that the very useful price to earnings (P/E) ratio exists, but a profit to earnings ratio? No such thing. Perhaps it was just a gaffe, and he really meant P/E ratio. I would give him the benefit of the doubt if I thought that he actually knew anything about finance or wealth creation. But as a self described community organizer and a lawyer to boot, I will assume he is as well-versed in finance as the rest of his cohort. By that I mean he only knows how to take wealth from those who create it and give it to those who do not.

By the way, WTF is the President of the United States of America doing making a market timimg call in the first place?