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Plug That Hole

“Plug the damn hole!!!”

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Thomas Jefferson

John F. Kennedy held a dinner in the white House for a group of  the brightest minds in the nation at that time. He made this statement:

“This is perhaps the assembly of the most intelligence ever to

gather at one time in the White House with the exception of

when Thomas Jefferson dined alone.”

Especially read the last quote from 1802.

When we get piled upon one another in large cities, as in Europe,

we shall become as corrupt as Europe .

Thomas Jefferson

++++++++++

The democracy will cease to exist when you take away from those

who are willing to work and give to those who would not.

Thomas Jefferson

++++++++++

It is incumbent on every generation to pay its own debts as it goes.

A principle which if acted on would save one-half the wars of the world.

Thomas Jefferson

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I predict future happiness for Americans if they can prevent the government

from wasting the labors of the people under the pretense of taking care of them.

Thomas Jefferson

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My reading of history convinces me that most bad government results from too much

government.

Thomas Jefferson

++++++++++

No free man shall ever be debarred the use of arms.

Thomas Jefferson

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The strongest reason for the people to retain the right to keep and bear arms

is, as a last resort, to protect themselves against tyranny in government.

Thomas Jefferson

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The tree of liberty must be refreshed from time to time with the blood of

patriots and tyrants.

Thomas Jefferson

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To compel a man to subsidize with his taxes the propagation of ideas which he

disbelieves and abhors is sinful and tyrannical.

Thomas Jefferson

++++++++++

Thomas Jefferson said in 1802:

I believe that banking institutions are more dangerous to

our liberties than standing armies. If the American people ever allow

private banks to control the issue of their currency, first by inflation, then by

deflation, the banks and corporations that will grow up around the banks will deprive the people

of all property – until their children wake-up homeless on the continent their fathers conquered.’

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involved with real estate since about 1977. For my purpose here, the

pertinent facts are that I have been in mortgage lending since 1984. I

have worked for mortgage bankers and banks as a mortgage originator.

From my perspective, people who had income, and a respectable credit

history, could borrow money for their house purchase, and the bank –

and ultimately the investor could expect to get paid back on a monthly

basis. The investors – the ones who provided the cash for the purchase

– was mostly FNMA known as Fannie Mae, or FHLMC known as Freddie Mac.

These agencies provided the structures for which lenders could lend

money to borrowers. Various economic times and situations may have

tweaked the rules – better credit or more flexibility on credit

standards were the ones affecting borrowers most directly. Everyone

played by the rules and life was good for the credit-worthy.

Then in the 1990’s, there was a shift of policy, not from

the investors, but from the political administration that home ownership is

not merely a privilege to be earned, but a right of all Americans. A

directive from the administration, to the investors was made to make

homeownership available to more people, to those who were marginally

qualified and expand that to those who would not have qualified for

home ownership, even in the best of times. So, by administrative

edict, the quasi-governmental agencies, FHMA and FHLMC worked to expand

and loosen their guidelines to enhance home ownership to the ‘underserved’ in our society.

Things like ‘stated income’ loan programs – which became the liar’s

loans and the zero down payment loan

programs (not the VA loan program). Yes – I originated some of these

loans. If we as a bank wanted to participate with FNMA and FHLMC, we

had to offer them, and if we as an institution originated mortgage

loans and did not offer these programs, we would then been accused of

discrimination, and that would open up other unwanted doors.

There was an attempt to somewhat control the liars loan

program – we had a site that would give us a range of income for

particular careers or positions, and if the stated income fit into this

range, the loan was granted. The problem was probably not in the loan

product so much as what the borrowers perceived as their income.

If you are self-employed, and you take in $20,000 a month – this is

probably not your net income. Against this income there would be

maybe business expenses and other items – maybe the cost of goods, that

would reduce this $20,000 to a lower figure of actual income (also

called net income). Needless to say, these loans experienced a

foreclosure rate exceeding 25%. These loans were mostly in the

expensive property ranges, as an hourly worker would not have qualified

for these loans from the beginning.

The zero down payment was another lending accident waiting to happen.

There were variations of this loan – 100% loan where all the money was

borrowed in one loan, the 80/20 loans, where there were 2 loans – an

80% first mortgage and a 20% second mortgage, and 80% first mortgages

with the seller carrying the 20%. While the product itself was sound,

it would depend on many external issues to make the program successful.

One of the most dependant issues would be that the value of the house

would either stay the same or increase. We certainly know that that

didn’t happen in many areas of the country. This zero down payment program

was also used to take advantage of the underserved.

For the most part, mortgage brokers –

those who originated and then sold the loans, would make these 80/20

loans to the underserved – and make the loans adjustable rate

mortgages. The payments on these ARMS were lower for the first 3 to 5

years before they would adjust – and up was the only way they would go.

These borrowers could then qualify for a more expensive house than

they normally would and of course, emotion rules when this happens. In

their defense, the program was probably not explained in depth to them.

If they barely could qualify for this lower ‘teaser rate’ payments,

how were they going to make the payments when the rate increased? So

losing a job – or even getting cut back on hours worked would be

devastating, and on top of that, they couldn’t sell their home for what

they paid for it to get out of the loan because of the economic

turndown.

This now is the basic backdrop of my frustration. There were

mortgage brokers who took advantage of the borrowers – for sure, but

this was not the only problem. Once the loans were closed, they were

packaged together into mortgage-backed securities and sold to

investors. Notice the Goldman Sachs fiasco. These high risk mortgages

were sold as investments and while I am not privy to the inside

information, where Goldman Sachs is accused of doing wrong, is betting

that these securities would go bad and not perform as was presented.

Thus the word ‘derivative’ we hear on the news. While derivatives are

not bad in themselves, if Goldman Sachs offered these to the public and

then bet that these would go bad is not good business.

The bottom line is that greed was playing a part in most of

the above items. Mortgage brokers became wealthy making these loans –

often charging outrageous fees to the marginal borrowers. The

investors and on to the brokerage houses who funded the loans and sold

them as securities also made tons of money. It was then left up to the

taxpayer to bail them out.

There is blame to be spread over the whole

industry and people should be punished for crimes they enacted.

This greed also crept into the bank I work for. We are now

under the directives of the Office of Thrift Supervision (OTS). We

have been directed to sell the bank by April 30th, with the deal to

close by May 31st. The mortgage-lending arm is still lending as usual,

for the most part, but our consumer lending is at a standstill. What

happened here?  This is my employer, I have been nothing but honest in

my dealings with the public and their mortgage loans. I offered them

good rates and low costs. What happened?

Prior to 2001, we were a privately held regional bank, with

our home office in Lincoln, Nebraska. In 2001 we became a publicly

traded stock company. Now everyone who owned or bought stock in the

company wanted their stock to rise. So – to facilitate the maximum

income, loan production offices (LPOs) were opened in Florida, South

Carolina, North Carolina, Minneapolis, Colorado, Phoenix, and of course

Las Vegas.

Construction lending went sour in Florida, Las Vegas and

Phoenix and the Carolinas, and 100% home equity loans went sour

everywhere. Lots of money had to be written off as bad debt, which of

course depleted the bank’s cash reserves. We dropped below the federal

requirements for reserves, while at the same time the Feds increased

the reserve requirement they wanted institutions to have. There is no

excuse for the poor judgment and greed that entered into my employer.

Thanks for letting me get this off my mind. There are so

many things that I see going on that are not right – and instead

letting things correct themselves via market conditions, we now have

the government stepping in take over institutions and businesses.

Which brings me to another sore point. What is going on in government

is just atrocious to me. Our duly elected president is truly quite an

effective orator, but what comes out of his mouth is so full of lies

and mistruths that I just cringe when he speaks. The government is not

authorized and is ill advised in running private business. I could go

on on this topic forever and still not have said everything that needs

to be said.

Our own Senator Ben Nelson has made Nebraska notorious

with the ‘Nebraska Option’ deal in the health care bill states in his

public stance that 90% of the people he talked to were for the passing

of the health care bill, when readily available polls showed that

Nebraskans were against the health care bill 2 to 1.

When Obama and Clinton talk about the dangers of the tea

party movement and how these tea partiers can undermine the peaceful

process of the United States – also makes my blood boil. The tea party

gatherings have been peaceful – learning and discussion meetings –

which is what we are supposed to be able to do in this – home of the

free.

There are other items which get under my skin – The Feds cannot

close the borders in Arizona, so the Arizonians decide to address the

issue themselves, and Obama criticizes them for that. Pay attention to

what is going on my friends. We are becoming more of a socialistic

nation the longer we do nothing to protect our rights.

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As Republicans contemplate their response to President Obama‘s coming nomination to the Supreme Court, we should go beyond the traditional scrutiny over social issues and demand that any nominee elaborate his or her views about the constitutionality of the recent legislation passed by this Administration. The hearings on his nominee will be an ideal opportunity to convince the public of the unconstitutionality of his power grabs.

The Obamacare bill, for example, not only strips states of the right to determine who will get Medicaid coverage within their borders, but it forces the states to pick up part of the tab. This is a violation of the very concept of the Tenth Amendment which provides that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

The Medicaid mandate literally takes budgeting and taxing out of the hands of state governments and gives the power to the federal government. About one-third of the difference between the high tax levels in a state like New York (8.5% income tax) and Texas (no income tax) is the difference in their Medicaid eligibility standards. By forcing Texas to come up to New York’s standards — and to pay for part of it — the health care law socks the lawmakers in Austin with a $2.7 billion annual hole in their budget. Effectively, this unfunded mandate takes away from the states the right to determine their own level of taxation for state services.

Obama‘s lawyers justify this outrageous usurpation by claiming that states do not have to participate in the Medicaid program and can opt out entirely. But, the courts have held that when such “voluntary” decisions are so draconian that they are really unrealistic, they amount to coercion. For example, states may not require drug tests for welfare recipients claiming that they do not have to apply for welfare. No state is going to throw all of their elderly nursing home patients out on the street by opting out of Medicaid.

Judge Andrew Napolitano, author of the excellent new book, Lies the Government Told You, warns of the unconstitutionality of the limitation on executive pay contained in the TARP program. He cites the doctrine “against unconstitutional conditions,” arguing that “The government may not condition the acceptance of a governmental benefit on the non-assertion of a constitutional liberty.” Because the freedom of contract is constitutionally protected, the government may not “condition corporate welfare on the prohibition of contracts with employees above an arbitrary salary amount.”

The very foundation of the health care bill — the individual mandate that people have to buy health insurance — is unconstitutional. Clearly, the government would have the authority to tax each person and use the money to provide insurance. But can it make everyone buy a privately provided product from a third party?

The Heritage Foundation thinks not, noting that “an individual mandate to enter into a contract with or buy a particular product from a private party, with tax penalties to enforce it, is unprecedented–not just in scope but in kind–and unconstitutional as a matter of first principles and under any reasonable reading of judicial precedents.”

The Foundation correctly points out that “nowhere in the Constitution is Congress given the power to mandate that an individual enter into a contract with a private party or purchase a good or service and… no decision or present doctrine of the Supreme Court justifies such a claim of power.”

The authors of the Obama Bill say that requiring people to buy health insurance is covered by the constitution’s interstate commerce clause, which allows Congress to regulate a “class of activity.”

But where is the interstate commerce? Congress has refused specifically and repeatedly to allow health insurance companies to compete across state lines. Republicans have been seeking this authority for years as a way to use private competition to hold down costs, but the Democrats have always refused.

And the Heritage Foundation asks a further question: What activity is being regulated? The activity of not buying health insurance? As the foundation notes, “proponents of the individual mandate are contending that, under its power to ‘regulate commerce’ . . . Congress may regulate the doing of nothing at all.” The absurdity of this is clear: “never in this nation’s history has the commerce power been used to require a person who does nothing to engage in economic activity. Therefore, no decision of the Supreme Court has ever upheld such a claim of power.”

Liberals who try to justify the individual mandate to buy health insurance often cite state government requirements that drivers must buy automobile insurance. But this comparison misses two key points: First, that requirement extends only to those who wish to drive, not to every citizen. And, second, states do indeed have broad police powers to act in the interest of the public’s health, safety, and welfare. But Washington doesn’t. Its powers are confined to those enumerated in the Constitution–and, try as they might, it’s hard to find any provision allowing the feds to impose such a requirement on all Americans.

The Republicans on the Senate Judiciary Committee need to ask Obama‘s nominee to defend the constitutionality of his legislation and use the hearings as a forum to demonstrate how these bills violate not just the letter of the Constitution but the very spirit of federalism and individual freedom.

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The White House would disagree, of course, but don’t be fooled. The newspaper The Hill reports that White House budget director Peter Orszag says the CBO numbers actually underestimate the savings from the bill.

Orszag cites two reasons. One is that “on major pieces of legislation,” the CBO historically has been “too conservative rather than too optimistic” in its projections. The other is that the CBO’s scoring “largely does not take into account this evolution toward paying for quality,” which, Orszag thinks, “in this decade will begin to pay off.”

Well, the first reason — that the CBO historically has been “too conservative” — says nothing about the scoring of this particular bill. We know that government estimates involving health care programs have been grossly underestimated in the past, such as the government’s cost projections in 1965 that Medicare Part A would rise to $9 billion by 1990; its actual costs were $67 billion. The government’s 1987 projections for the Medicaid special hospitals subsidy were underestimated by a staggering factor of more than 100; they projected annual costs to be $100 million, and they ended up being $11 billion by 1992. American voters instinctively understand this phenomenon. In a Wall Street Journal op-ed last month, Scott Rasmussen and Doug Schoen argued that the main reason Obama hasn’t been able to move the skeptical public toward supporting Obamacare is that “people simply don’t trust the official projections. … Eighty-one percent of voters say it’s likely the plan will end up costing more than projected.”

Orszag’s second reason appears to be that Obama‘s bureaucrats will start denying payments for treatments and procedures they deem unwarranted. That is, they’ll start dictating care decisions — something they’ve vehemently denied — and they’ll ration and pay only for that which they approve. So even if there are some savings here — which is highly doubtful — they will be achieved at the cost of patient and physician choice and the quality of care.

You would think the administration wouldn’t look a gift horse in the mouth and would leave the CBO’s ultimately favorable scoring alone because further scrutiny might backfire on the White House.

Former CBO Director (2003-05) Douglas Holtz-Eakin maintained on Fox News that CBO’s scoring grossly understates Obamacare‘s costs, which he quickly explained is not CBO’s fault because it has to use the information given to it by Congress.

There are glaring problems with the information Congress provided. First, said Holtz-Eakin, it omitted some inconvenient spending: “We’re going to have to spend $250 (billion) to $300 billion more on Medicare doctors over the next 10 years; they just left that out. It’s going to cost $115 billion to implement this bill; they left that out. So it underestimates the cost dramatically.” Holtz-Eakin didn’t have time to finish expounding on his points, but he provided more detail in a March 20 New York Times op-ed (web site).

In that piece, he noted that the $70 billion in premiums expected to be raised in the first 10 years is counted as deficit reduction, but the benefits they will have to finance are assumed not to materialize in the first 10 years, so they are not figured into the costs. It’s a complete gimmick, which others have also pointed out. Holtz-Eakin cited other gimmicks and inaccuracies, but the “most amazing bit of unrealistic accounting” is that the legislation contemplates shifting $463 billion from Medicare spending to finance insurance subsidies without any reforms to recover those losses from an “already bleeding” Medicare.

The bottom line, said Holtz-Eakin, is that Obamacare “would raise, not lower, federal deficits, by $562 billion. … And the nation would be on the hook for two more entitlement programs rapidly expanding as far as the eye can see.”

This is horrifying stuff, folks, which the public already understands in its gut. We were headed for national bankruptcy before Obamacare, but this will seal the deal, unless repealed.

In addition, Holtz-Eakin, in a paper published on his American Action Forum Web site, shows Obamacare will likely increase taxes for 25 percent of filers making less than $200,000 — and for 52 percent of all taxpayers — the impact of which will pass through to small-business owners when unemployment is already skyrocketing. How’s Obama‘s “no new middle-class taxes” pledge working out for us now?

But costs and taxes aren’t even the main reasons to fear Obamacare. Try the evaporation of our personal liberties.

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Justice Stevens was on the High Court for 35 years– more’s the pity, or the disgrace. Justice Stevens voted to sustain racial quotas, created “rights” out of thin air for terrorists, and took away American citizens’ rights to their own homes in the infamous “Kelo” decision of 2005.

The Constitution of the United States says that the government must pay “just compensation” for seizing a citizen’s private property for “public use.” In other words, if the government has to build a reservoir or bridge, and your property is in the way, they can take that property, provided that they pay you its value.

What has happened over the years, however, is that judges have eroded this protection and expanded the government’s power– as they have in other issues. This trend reached its logical extreme in the Supreme Court case of Kelo v. City of New London. This case involved local government officials seizing homes and businesses– not for “public use” as the Constitution specified, but to turn this private property over to other private parties, to build more upscale facilities that would bring in more tax revenues.

Justice John Paul Stevens wrote the Supreme Court opinion that expanded the Constitution’s authorization of seizing private property for “public use” to seizing private property for a “public purpose.” And who would define what a “public purpose” is? Basically, those who were doing the seizing. As Justice Stevens put it, the government authorities’ assessment of a proper “public purpose” was entitled to “great respect” by the courts.

Let’s go back to square one. Just who was this provision of the Constitution supposed to restrict? Answer: government officials. And to whom would Justice Stevens defer: government officials. Why would those who wrote the Constitution waste good ink putting that protection in there, if not to protect citizens from the very government officials to whom Justice Stevens deferred?

John Paul Stevens is a classic example of what has been wrong with too many Republicans‘ appointments to the Supreme Court. The biggest argument in favor of nominating him was that he could be confirmed by the Senate without a fight.

Democratic presidents appoint judges who will push their political agenda from the federal bench, even if that requires stretching and twisting the Constitution to reach their goals.

Republicans too often appoint judges whose confirmation will not require a big fight with the Democrats. You can always avoid a fight by surrendering, and a whole wing of the Republican party has long ago mastered the art of preemptive surrender.

The net result has been a whole string of Republican Justices of the Supreme Court carrying out the Democrats‘ agenda, in disregard of the Constitution. John Paul Stevens has been just one. There may have been some excuse for President Ford’s picking such a man, in order to avoid a fight, at a time when he was an unelected President who came into office in the wake of Richard Nixon’s resignation in disgrace after Watergate, creating lasting damage to the public’s support of the Republicans.

But there was no such excuse for the elder President Bush to appoint David Souter, much less for President Eisenhower, with back-to-back landslide victories at the polls, to inflict William J. Brennan on the country.

In light of these justices’ records, and in view of how long justices remain on the court, nominating such people was close to criminal negligence.

If and when the Republicans return to power in Washington, we can only hope that they remember what got them suddenly and unceremoniously dumped out of power the last time. Basically, it was running as Republicans and then governing as if they were Democrats, running up big deficits, with lots of earmarks and interfering with the market.

But their most lasting damage to the country has been putting people like John Paul Stevens on the Supreme Court.

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ObamaThinksHe'sChrist

These are possibly the 5 best sentences you’ll ever read:5 Greatest Sentences

You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

What one person receives without working for, another person must work for without receiving.

The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation.

You cannot multiply wealth by dividing it.

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