Friday, April 17, 2009
Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.�� —Ronald Reagan
Surprise, surprise! Barney Frank wants to take over another portion of the private sector economy at the taxpayers peril!
The Chairman of the House Financial Services Chairman, Barney Frank, who with the help of Senator Dodd forced mortgage lenders to make loans to people who had neither the means nor the inclination to pay the loan payments, is at it again.
Mr. Frank said for years that Fannie Mae and Freddie Mack posed no threat to the tax payers despite his forced regulations that doomed the home mortgage private sector. Now he wants to take over the insuring of Municipal Bonds. This business is used to insure the bonds that State and local governments use to build infrastructure such as new City Halls or Court Houses. The municipalities “float” bonds that people buy with the intention of making money on the interest payed to the bond holders.
But in bad economic times like this, many municipalities do not have the money to pay the bond holders. This presents a situation that most prudent self serving politicians do not want to find them selves in. They have to choose to raise taxes or default on the the bonds. Unfortunately many choose to default rather than raise taxes and face an angry electorate at the polls in the next election.
Here is where large insurance companies like Warren Buffett’s Berkshire Hathaway come in. His company insures the municipal bonds against default.
Presently there are approximately $1.7 trillion outstanding municipal bonds held by the American public.
Now the man who caused the housing crisis, and told Americans that there was no chance the taxpayers would be at risk for his regulations on Fannie and Freddie, wants to meddle in the municipal bond insurance business!
He says there will be no risk to the taxpayers when the Congress passes the Bill he is proposing that will establish a fund to insure municipal bonds.
Although, once again Frank says there is no (zero) risk of a cost to the taxpayers. A man who despite the fact that his company charges high rates for insuring municipal bonds. Says “it is a dangerous business”!
Mr. Frank would like to create what he calls an FDIC-like federal insurance program for municipal bonds. Jurisdictions issuing debt would pay premiums into the insurance fund, and in return the federal government would guarantee the debt against default. “Private companies already insure municipal bonds — companies such as MBIA, Ambac and Berkshire Hathaway. And you may recall that last year the big bond insurers caused considerable angst when their exposure to mortgage-related debt called into question their ability to meet their muni-bond obligations. MBIA, in response, recently fenced off its muni-bond business from its other obligations”.Source:Wall street Journal
Wake up Americans!!! This is another taxpayer disaster that “statists” like Frank and the majority of the Congress want to force down our collective throats! Write, call, email your Congress and Senate representatives to defeat this absurd idea! They probably will ignore you as they have in the past, but it is ammunition for the next time they run for their princely office!