Posts Tagged ‘S&P’

Obama Regime Illegitimately Pressuring Private Rating Agencies To Endorse Reid Plan

July 30, 2011

First there was the fact that Harry Reid, the Democrat Party and then the mainstream media falsely concocted a bogus “fact” that Standard & Poors favored Harry Reid’s so-called “plan.”  It was not true.  Which is to say it was a lie:

Now we find out that Obama is pressuring the rating agencies to say they prefer the Reid plan whether they actually do or not:

White House Prodding Rating Agencies to Endorse Reid Plan: Report
By editor Jul 27, 2011, 1:12 PM Author’s Website 

FOX Business Network’s Charlie Gasparino reports that “the White House is trying to prod the rating agencies to accept the Reid plan, which gives them political cover,” while saying “Boehner’s plan creates political uncertainty.” Excerpts from the report are below, courtesy of Fox Business Network.
 
On rating agencies being pressured by the White House to endorse a budget plan:
 “Sources close to the rating agencies are saying that the White House is trying to get the rating agencies to endorse a certain plan. The White House is trying to prod the agencies to accept the Reid plan, which gives them political cover.  They’re trying to say Boehner’s plan creates political uncertainty in the market because it’s two increases.”

These people do not want what is best for America.  They don’t care about the rules, or about what’s right and what’s wrong.  Obama and his White House and his Democrat Party are dishonest to the cores of their cockroach souls and they will do ANYTHING to get what they want.

And, as we see above, that includes both lying and cheating.

See more on the video report on the Obama regime illegitimately pressuring rating agencies here.

Democrats/Mainstream Media On Debt Ceiling Negotiations: ‘Why Don’t We Just Start Telling Lies?’

July 27, 2011

Senate Majority Leader Harry Reid lied about his “plan” versus House Speaker John Boehner’s plan, saying that Standard & Poors had said that his plan would keep our AAA credit rating, but Boehner’s would not.

The DNC immediately packaged the lie for the press and sent it out to the world:

To: NATIONAL AND POLITICAL EDITORS

Contact: DNC Press, +1-202-863-8148, dncpress@dnc.org

WASHINGTON, July 26, 2011 /PRNewswire-USNewswire/ — Today on CNN, Erin Burnett reported that she spoke with an investor who talked directly with the credit ratings agency Standard & Poor’s. According to the Standard & Poor’s source, John Boehner’s debt plan would probably still lead to a downgrade of U.S. debt by the ratings agencies, raising interest rates for all Americans. Harry Reid’s plan, however, would preserve America’s AAA credit rating.

http://thinkprogress.org/politics/2011/07/25/278929/ratings-agency-source-boehner-plan-TTwould-lead-to-downgrade/

Watch it: http://www.youtube.com/watch?v=2RXNrtUU-TQ&feature=player_embedded

SOURCE  Democratic National Committee

And then of course the mainstream media jumped in and immediately backed Harry Reid’s and the DNC’s lie.

I don’t know what the record is for a brand new CNN anchor to report lies as fact, but given that it’s CNN, it’s probably a matter of minutes.  New CNN anchor Erin Burnett reported:

Facts should never get in the way of a story that makes Democrats look good and Republicans look bad, so I almost hesitate to mention this, but … it wasn’t true:

And so legitimate media (i.e., sorry CNN and MSNBC, but you aint) began to correct the lie that Harry Reid, the DNC and the mainstream media had invented:

JULY 26, 2011, 4:07 P.M. ET.UPDATE: S&P: Reports That It Endorses One Debt Plan “Not Accurate”
By Stephen L. Bernard
Off DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Standard & Poor’s said Tuesday that reports that it would endorse one of two competing Congressional frameworks to secure an increase the U.S. debt ceiling are “inaccurate.”

“Standard & Poor’s has chosen not to comment on the many and varying proposals that have arisen in the current debate,” the ratings agency said in an official announcement. The official statement echoes comments a spokesman gave to Dow Jones earlier in the day.

Ratings agencies have repeatedly said throughout the ongoing debt debate that they do not endorse any specific deals to cut long-term U.S. deficits.

Reports early Tuesday indicated that S&P was said to prefer Sen. Harry Reid’s (D-Nev.) plan over the one being pitched by House of Representatives Speak John Boehner (R-Ohio).

Congress is facing an Aug. 2 deadline to hammer out a deal to raise the debt ceiling or else the U.S. could default on its debt. Politicians have tried to tie the increase in the debt ceiling to cutting long-term deficits.

Reid’s plan calls for a $2.7 trillion increase to the debt ceiling, while cutting spending by a similar amount. Critically, that would increase the debt ceiling by a high enough figure that it would give the government space to spend through 2012 and the next presidential election.

Boehner’s plan, by contrast, calls for a two-step process. The first would cut spending and raise the debt ceiling by $1 trillion to get through 2011. Then another increase of up to $1.5 trillion would be sought via a bipartisan commission’s recommendations and would have to be approved in 2012 with an equal amount of spending cuts.

Democrats have argued that Boehner’s plan would introduce uncertainty to markets and drive up U.S. borrowing costs.

S&P has previously said that even if the debt ceiling is raised, it could still cut the U.S. government’s perfect “AAA” rating if a long-term deficit-reduction plan is not enacted.

Fox News also reported the facts and further corrected the record of Harry Reid’s unprofessional and disgraceful lie:

After Reid claimed Tuesday morning that the rating agencies had endorsed his plan – which cuts $2.7 trillion at most — S&P reiterated through a spokesman that it has not endorsed “any particular plan.”

There is so much dishonesty and so many lies coming from Democrats and their mainstream media propagandists that it is positively unreal.

Here’s more on the actual story without the Harry Reid/DNC/mainstream media spin:

Deal or no deal? US downgrade looking likely
By MATTHEW CRAFT – AP Business Writer | AP – 8 hrs ago

NEW YORK (AP) — Could the U.S. lose its top credit rating even if a deal is reached to raise the debt limit?

Market analysts and investors increasingly say yes. The outcome won’t be quite as scary as a default, but financial markets would still take a blow. Mortgage rates could rise. States and cities, already strapped, could find it more difficult to borrow. Stocks could lose their gains for the year.

“At this point, we’re more concerned about the risk of a downgrade than a default,” said Terry Belton, global head of fixed income strategy at JPMorgan Chase. In a conference call with reporters Tuesday, Belton said the loss of the country’s AAA rating may rattle markets, but it’s “better than missing an interest payment.”

Even with a deadline to raise the U.S. debt limit less than a week away, many investors still believe Washington will pull off a last-minute deal to avoid a catastrophic default. Washington has until Aug. 2 to raise the country’s $14.3 trillion borrowing limit or risk missing a payment on its debt. President Barack Obama and Congressional Republicans have failed to reach an agreement to raise the debt ceiling and pass a larger budget-cutting package. Politicians have tied raising the debt limit and spending cuts together.

But at least one credit rating agency has already made it clear that unless that agreement includes at least $4 trillion in budget cuts over the next decade, the country’s AAA rating could be lost. Right now, the proposals under discussion cut around $2 trillion or less.

Standard & Poor’s warned earlier this month that there was a 50-50 chance of a downgrade, if Congress and President Obama failed to find a “credible solution to the rising U.S. government debt burden.” S&P said it may cut the U.S. rating to AA within 90 days. Passing a $4 trillion agreement could prevent a downgrade, S&P said.

And why will our credit rating get cut?  Because Obama and his depraved administration have been lying and fearmongering the crisis:

While officials from the Obama Administration raised their rhetoric over the weekend about the possibility of a debt default if the debt ceiling isn’t raised, they privately have been telling top executives at major U.S. banks that such an event won’t happen, FOX Business has learned.

In a series of phone calls, administration officials have told bankers that the administration will not allow a default to happen even if the debt cap isn’t raised by the August 2 date Treasury Secretary Tim Geithner says the government will run out of money to pay all its bills, including obligations to bond holders. Geithner made the rounds on the Sunday talk shows saying a default is imminent if the debt ceiling isn’t raised, and President Obama issued a similar warning during a Friday press conference after budget negotiations with House Republicans broke down. […]

A senior banking official told FOX Business that administration officials have provided guidance to them that even though a default is off the table, a downgrade “is a real possibility for no other reason than S&P and Moody’s have to cover (themselves) since they’ve been speaking out on the debt cap so much.”

Thanks, Barry Hussein and Turbo Tax Tim!

That’s right.  We’re going to get our credit rating downgraded – which will have disastrous long-term consequences – because of Barack Obama’s fearmongering lies.  Harry Reid reports something that isn’t even remotely true, and the DNC and the mainstream media pick it up like a symphony.

Mark Twain once said that a lie could get halfway around the world before the truth could even get its boots on.  But I think even that famous cynic would be amazed and apalled by the liberal media complex.

More Proof Democrats Destroyed The Economy In 2008: The Ongoing Fannie Mae/Freddie Mac Disaster

November 8, 2010

Who destroyed the economy in 2008?  Democrats say it was Bush.  Why?  Well, because he was president, that’s why.

Why – when applying the same logic – Barack Obama STILL isn’t responsible for any of his economic mess fully two years after George W. Bush left office is anybody’s guess.

But stop and think.  The primary cause for the 2008 economic meltdown was a downturn in the housing market and the underlying mortgage market.

At the core of that meltdown was GSEs (that’s “Government Sponsored Enterprises” to you) Fannie Mae and Freddie Mac.

The problem with Fannie Mae and Freddie Mac has always been that it was – and remains – a social welfare institution masquerading as a financial institution.  And they have made beyond-godawful “financial” decisions because their true loyalty has always been with socialist policies rather than financial ones.

Let’s look at Fannie and Freddie’s current picture:

Fannie, Freddie’s $685B fix
Bloomberg
Last Updated: 11:54 PM, November 4, 2010
Posted: 11:54 PM, November 4, 2010

Fannie Mae and Freddie Mac, the mortgage firms operating under federal conservatorship, may cost taxpayers as much as $685 billion as the US covers losses and overhauls the housing-finance system, Standard & Poor’s said.

Costs for resolving the two government-sponsored entities could reach $280 billion, including $148 billion already delivered under a US Treasury Department promise of unlimited support, New York-based S&P said yesterday in a research report. The government may spend an additional $405 billion to capitalize a replacement for the two companies, which own or insure more than half the US mortgage market.

“It appears unlikely in our view that housing and mortgage markets will be able to operate normally without continuing and substantial government involvement,” S&P said, citing the GSEs’ growing portfolio of unsold homes, a sluggish economy, high unemployment, the prospect of rising foreclosures and billions in legacy losses.

Treasury Secretary Timothy F. Geithner, who has said there is a strong case to be made for continued US involvement, has promised to deliver the Obama administration’s plan to overhaul the housing-finance system by the end of January. Republican lawmakers, who will take control of the House of Representatives in January, have called for the government to end its support for Washington-based Fannie Mae and Freddie Mac, of McLean, Va.

“Although federal authorities have taken no concrete public steps toward sponsoring a GSE alternative, Standard & Poor’s believes that it’s a useful exercise to consider how much such a recapitalization might cost taxpayers,” the report said.

$685 BILLION.  That’s quite a mess.

Did it just happen?  Hardly.  This was going on for years.  This was what caused the subprime crisis that destroyed our economy in 2008.

Let’s survey the record.  According to record provided by The New York Times, Fannie and Freddie were in huge trouble PRIOR TO the economic collapse.  And their holdings were so massive that there is simply no reasonable way that one can maintain that their crisis didn’t directly contribute to the greater crisis to be revealed.  Read the article dated July 11, 2008:

Fannie Mae and Freddie Mac are so big — they own or guarantee roughly half of the nation’s $12 trillion mortgage market — that the thought that they might falter once seemed unimaginable. But now a trickle of worries about the companies, which has been slowly building for years, has suddenly become a torrent.

A timeline of the subprime loan crisis of 2008 clearly reveals that it was Fannie Mae’s collapse that started the entire mess rolling downhill.  From Wikipedia:

September 2008

    • September 7: Federal takeover of Fannie Mae and Freddie Mac, which at that point owned or guaranteed about half of the U.S.’s $12 trillion mortgage market, effectively nationalizing them. This causes panic because almost every home mortgage lender and Wall Street bank relied on them to facilitate the mortgage market and investors worldwide owned $5.2 trillion of debt securities backed by them.[151][152]
    • September 14: Merrill Lynch is sold to Bank of America amidst fears of a liquidity crisis and Lehman Brothers collapse[153]
    • September 15: Lehman Brothers files for bankruptcy protection[154]
    • September 16: Moody’s and Standard and Poor’s downgrade ratings on AIG‘s credit on concerns over continuing losses to mortgage-backed securities, sending the company into fears of insolvency.[155][156] In addition, the Reserve Primary Fund “breaks the buck” leading to a run on the money market funds. Over $140 billion is withdrawn vs. $7 billion the week prior. This leads to problems for the commercial paper market, a key source of funding for corporations, which suddenly could not get funds or had to pay much higher interest rates.[157]
    • September 17: The US Federal Reserve lends $85 billion to American International Group (AIG) to avoid bankruptcy.
    • September 18: Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke meet with key legislators to propose a $700 billion emergency bailout through the purchase of toxic assets. Bernanke tells them: “If we don’t do this, we may not have an economy on Monday.”[158]
    • September 19: Paulson financial rescue plan is unveiled after a volatile week in stock and debt markets.

Democrats who bother to offer any reason at all why “Republicans got us into this mess” claim that the Republicans refused to regulate and reform the economic sector.

Well, let’s dig a little further.  Was it George Bush who refused to regulate or reform?

Hardly.

From US News & World Report:

Seventeen. That’s how many times, according to this White House statement (hat tip Gateway Pundit), that the Bush administration has called for tighter regulation of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

That’s right.  George Bush tried SEVENTEEN TIMES to reform and regulate Fannie Mae and Freddie Mac, the agencies at the epicenter of the economic crisis.

When did this thing start?  Under Bush?  Not according to The New York Times, as I have pointed out before in a previous article.

From the New York Times, September 30, 1999:

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

More.  Again from the New York Times, September 30, 1999:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980′s.

From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

What do we have, even in the pages of the New York Times?  A prediction that as soon as the economy cooled off, the mortgage market would explode like a depth charge and the government would have to step in to prevent a catastrophe.  And from a Clinton program, at that.

The same man – Peter Wallison – who had predicted the disaster from 1999 wrote a September 23, 2008 article in the Wall Street Journal entitled “Blame Fannie Mae and Congress For the Credit Mess.”

So this disaster began under Bill Clinton.  Specifically, it began in the very final years of the Clinton administration.  Interestingly, at the same time that the Dot-com bubble was getting ready to explode on Clinton’s watch.  Clinton got all the credit for a great economy, and Bush got to watch 78% of the value of Nasdaq destroyed just as he was taking office.  $7.1 TRILLION in wealth was vaporized (43% of the the Market Capitalization of the Dow Jones Wilshire 5000 Full Cap between 2000 Q1 and Q1 2003).  Bill Clinton handed George Bush a massive economic disaster (made even worse by the shocking 9/11 attacks), and Bush turned economic calamity into the longest consecutive period of job growth (52 straight months) in history.  In diametrical contradiction to all the lies that you have  heard from Democrats and from a mainstream media propaganda machine that often puts Joseph Goebbels to shame

What did George W. Bush do to deal with the necessary regulation and reform of these government-subsidized behemoths Fannie and Freddie?

Read what the New York Times said back in September 11, 2003:

WASHINGTON, Sept. 10— The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

So Bush WANTED to regulate and reform the industry that would destroy the economy five years later, again, in contradiction to a blatantly dishonest and ideologically liberal and biased media.  Bush didn’t “refuse to regulate.”  Bush TRIED to provide the necessary regulatory steps that could have averted disaster.

And who blocked those regulations and reforms that Bush tried to provide?  None other than Barney Frank and his Democrat buddies:

These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

Democrats blocked reform and regulation of Fannie and Freddie.  They threatened to filibuster any attempt at regulation and reform.  Meanwhile John McCain wrote a letter in 2006 urging reform and regulation of the GSEs.  He said:

Congress chartered Fannie and Freddie to provide access to home financing by maintaining liquidity in the secondary mortgage market. Today, almost half of all mortgages in the U.S. are owned or guaranteed by these GSEs. They are mammoth financial institutions with almost $1.5 Trillion of debt outstanding between them. With the fiscal challenges facing us today (deficits, entitlements, pensions and flood insurance), Congress must ask itself who would actually pay this debt if Fannie or Freddie could not?

And it came to pass exactly as John McCain warned.

Because of Democrats.  Who were virtually entirely to blame for the disaster that ensued as a result of their blocking of reform and regulation.

What did Democrats do with the mainstream media’s culpability?  They falsely dropped the crisis at the feet of “greedy” Wall Street.  But while examples of Wall Street greed abound, the liberal intelligentsia deliberately overlooked the central and preceding role of Democrat-dominated Fannie Mae and Freddie Mac.

Here’s how the mess actually happened:

The New York Times acknowledged that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac “buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.”

And the Los Angeles Times on May 31, 1999 describes how this process turned into a bubble, as more begat more, and then more and more begat more and more and more:

Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more. . . .

In a nutshell, Fannie and Freddie, in their role as Government Sponsored Enterprises, bought tens of millions of mortgages, and then repackaged them into huge mortgage-backed securities that giant private entities such as Bear Stearns, AIG and Lehman Brothers purchased.  What made these securities particularly attractive to the private banking entities was that these securities were essentially being sold – and had the backing – of the United States government.  Fannie Mae and Freddie Mac, again, are Government Sponsored Enterprises.

Here’s the process:

The Role of the GSEs is to provide liquidity and stability to the U.S. housing and mortgage markets. Step 1 Banks lend money to Households to purchase and refinance home mortgages Step 2 The GSEs purchase these mortgage from the banks Step 3 GSEs bundle the mortgages into mortgage-backed securities Step 4 GSEs sell mortgage-backed and debt securities to domestic and international capital investors Step 5 Investors pay GSEs for purchase of debt and securities Step 6 GSEs return funds to banks to lend out again for the issuance of new mortgage loans.

Now, any intelligent observer should note a primary conflict that amounts to a fundamental hypocritical contradiction: the GSE’s role was to “provide stability,” and yet at the same time they were taking on “significantly more risk” in the final year of the Clinton presidency.  What’s wrong with this picture?

The GSEs Fannie Mae and Freddie Mac were designed to bundle up the mortgages into mortgage backed securities and then sell them to the private market.

Fannie Mae is exempt from SEC [Securities and Exchange Commission] regulation. Which screams why Bush wanted to regulate them.  This allowed Fannie Mae to bundle up mortgages, which were then rated AAA with no requirement to make clear what is in the bundle.  Which screams why Bush wanted to regulate them.

This is what allowed the toxic instruments that have been sold across the world to proliferate.  And then to explode.  It also created a situation where money institutions did not know and could not find out whether potential inter-bank business partners were holding these “boiled babies on their books, complete with a golden stamp on the wrapping,” rather than safe instruments.  This then inclined banks to a natural caution, to be wary of lending good money to other banks against these ‘assets’.  And thus banks refused to lend to one another.

And it was Democrats, not Bush, and not Republicans, who were all over this disaster that destroyed our economy in 2008.

We were led by a pathologically dishonest media to believe that Republicans had created this mess, when it fact it had been Democrats.  And so we gave the very fools who destroyed our economy total power.

And what have they done in the two years since?

They made bad far, far worse.