Los Angeles Personal Injury Lawyer - John McCain

32 Problems with the Wall Street Bailout

Paul Kiesel — Mon, 22 Sep 2008 19:28:01 GMT

Actually, there may be more or less than 32 problems with Bush's Wall Street Bailout proposal, but there is no greater problem than the 32 words present in Section 8 of the Bush Administration's legislation.

Section 8: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Based on the track record of the Bush Administration (9/11, Afghanistan, Iraq, Hurricane Katrina, the events that led up to Wall Street's demise, past proposals to privatize social security, etc., etc.), to not question their authority or provide oversight to how the billions are spent by Treasury Secretary Paulson (or the Economic Czar that Bush proposes; Section 8 also cites "unfettered authority" that would be given to Paulson), or to review the decisions made by the ones in charge of this bailout, would be as irresponsible as the Wall Street CEOs who acted like Tom Cruise's character, Joel Goodsen, from Risky Business when his parents left town, the moment Phil Gramm, John McCain and their buddies provided and voted on the legislation that deregulated the banking and lending industries.

Section 8, as it is currently written (this could be revised after Congress reviews the proposed bill and adds its provisions), is one of the more transformative sentences of economic policy in U.S. history. It transfers a significant amount of power to the Executive Branch, while occluding any possibility for oversight, and offering no guarantees in return. This is amazing considering the fact that Bush was explicit in his speech last Friday morning, when he discussed the need for more transparency and more oversight throughout Wall Street. All Section 8 does, and reaffirms, is that the Bush Administration, in this version of the bailout plan, wants nothing to do with transparency, and wants to have uncontested control of how the $700,000,000,000 bailout funds are dispersed before the administration comes to a wheezing halt on January 20, 2009.

However, over in the Senate, Democratic Connecticut Senator Chris Dodd is coming up with a bailout bill of his own. Dodd's bill does not include anything similar to Section 8.

Originally posted at InjuryBoard by Paul Kiesel

Phil Gramm to Step Down as John McCain's Co-Chair

Paul Kiesel — Fri, 18 Jul 2008 20:32:42 GMT

Phil Gramm, the former "deregulating" senator from Texas, will step down as John McCain's co-chair, CNN reports.

Phil Gramm received very bad press last week when commenting on American's and their views on the U.S. economy:

Former Senator Phil Gramm told the Washington Times that he does not think the economy is doing as poorly as the general media reports. In fact, Gramm suggests that the country is not in a recession, rather, the country is in a "mental recession" and that America is a "nation of whiners."

These non-sensical statements come from a man who not only helped propel the current mortgage meltdown back in 2000 with his Commodity Futures Modernization Act (helping deregulate the lending industry), but from an individual who claims the nation's economic struggles are imaginary. Because gas prices aren't 50% higher than they were seven months ago, right? Foreclosure rates? A weakened dollar? (Paul Kiesel, InjuryBoard.com, 7/10/08)

Overall, Gramm stepping down is very good news. Regardless of who wins the upcoming presidential election, we now know that Phil Gramm will not be the next Treasury Secretary and will no longer be able to influence the economy negatively, at least in such an impacting way as he had in the past, since Gramm is credited with bringing about one of the most detrimental deregulation bills over the last decade -- Commodity Futures Modernization Act of 2000 -- thus, allowing the Enron-debacle and the subprime mess.

Originally posted at InjuryBoard by Paul Kiesel

Phil Gramm's Mortgage Meltdown Denial, McCain Disappointed

Paul Kiesel — Thu, 10 Jul 2008 21:29:05 GMT

Former Senator Phil Gramm told the Washington Times that he does not think the economy is doing as poorly as the general media reports. In fact, Gramm suggests that the country is not in a recession, rather, the country is in a "mental recession" and that America is a "nation of whiners."

These non-sensical statements come from a man who not only helped propel the current mortgage meltdown back in 2000 with his Commodity Futures Modernization Act (helping deregulate the lending industry), but from an individual who claims the nation's economic struggles are imaginary. Because gas prices aren't 50% higher than they were seven months ago, right? Foreclosure rates? A weakened dollar?

And to his assertion that we're a "nation of whiners," maybe Phil Gramm should go on John McCain's "Straight Talk Express" tour and elucidate to all the hard working Americans that have come to hear John McCain speak about how he's going to FIX the economy and explain to them that they're just a bunch of whiners with wild imaginations. He should also inform them of his role at UBS, a big player in the game of Collateralized Debt Obligations (which through the purchasing of CDO's as packaged subprime mortgage securities helped accelerate an eventual subprime fallout), and how he would execute his philosophies and pontifications (as told to the Washington Times) as Treasury Secretary in a McCain administration. (Not to mention the irony of Gramm complaining or "whining" to the Washington Times about other people whining.)

It's nice to see that McCain tried separating himself from Gramm's statements today, but in reality, it would behoove McCain to find another economic adviser that is more compassionate to Americans who were misled into teaser rate mortgages (TILA fraud) and, at the same time as trying to keep current with their mortgage, are hoping they won't have to break the bank to buy groceries and gas in the coming months, as both have been escalating in price. I know Gramm is McCain's "guy" because he helped rescue McCain's struggling presidential campaign last summer, but McCain, if he truly wants to fix the economy, needs to begin fixing the economic priorities of his own campaign first, and the people who are non-sensically purveying those priorities, before he's even able to attempt to fix the entire economy.

Originally posted at InjuryBoard by Paul Kiesel

McCain: Mortgage Flip-Flopping

Paul Kiesel — Thu, 10 Jul 2008 17:41:14 GMT

To have a change of mind or heart is not a bad thing. People change their minds all the time. So when most people accuse politicians of flip flopping, they're really accusing them of changing their opinion on a particular issue, which is technically a natural thing to do and perfectly acceptable.

However, when a politician is unequivocal in his/her view and appears to be inexorable, and then he or she changes positions on that issue in a short amount of time (within months and with no new information available), that is more or less a "flip flop" maneuver; it also proves the politician was unaware of some cracks or flaws in their former stance and has likely changed perspectives for political reasons.

Senator John McCain has done this today in regards to the mortgage crisis. With news of Fannie Mae and Freddie Mac having liquidity problems (which federal regulators are denying) and possibly needing a government bailout soon, McCain said, "Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes, and they will not fail, we will not allow them to fail [. . .] They are vital to Americans' ability to own their own homes. And we will do what's necessary to make sure that they continue to function," (The New York Times, 7/10/08).

However, just three months ago, McCain suggested that it's the borrowers' fault for why we're in this mortgage mess and that he couldn't understand how such a small percentage of foreclosures and/or troubled mortgages are causing this much financial turmoil, "[Americans] bought homes they couldn't afford [. . .] Only 55 million [homeowners] have a mortgage at all and 51 million are doing what is necessary [. . .] to make their payments on time. That leaves us with a puzzling situation: How could 4 million mortgages cause this much trouble for us all?" (New York Times, 3/25/08). He also said in March that government intervention is unnecessary and he wouldn't support it, but clearly his statements today contradict his former ones.

McCain changed his mind not because of a change of perspective (the writing was on the wall back in March and April, as I wrote about a potential bailout that Fannie and Freddie might need later this summer), but, rather, because he would be politically killing himself to stick to his stance that terrorism is the most pressing matter for Americans, as McCain commented that, "Even if the economy is the, quote, No. 1 issue, the real issue will remain America's security [. . .]" But this is clearly not the case as polls show that most Americans are in fact more concerned with the economy and other domestic issues. Now McCain is presumably more concerned with the economy.

Therefore, McCain had to switch his stance -- he had to flip flop, but it wasn't necessarily due to a genuine change of economic perspective; because banks and homeowners were struggling just as much in March as they are now. So does McCain really care about economic pains that Americans have been facing for months now or is he more in line philosophically with his top economic adviser former Senator Phil Gramm? -- who today said that America was in a "mental recession" and was a "nation of whiners." The New York Times reported on this just hours after McCain claimed to be concerned with the health of Fannie and Freddie and each institution's ability to loan mortgages to Americans and not become insolvent.

Originally posted at InjuryBoard by Paul Kiesel

UBS Misled Customers

Paul Kiesel — Thu, 26 Jun 2008 16:32:54 GMT

Two subsidiaries of the Swiss bank UBS, earlier today, were accused of misleading investors about how safe auction rate securities were. The complaint was filed by William Galvin, Massachusetts' top securities regulator, and he accuses UBS Securities and UBS Financials Service of aggressively selling the instruments to customers at a time when large money managers were losing faith in them and a top UBS executive was dumping them from his personal holdings.

There are many similarities in UBS's business practices as there were at Countrywide, as both companies pushed the sales of "products" without telling their customers of their vulnerabilities or the amount or risk attributed to each product (i.e. Countrywide in proliferating subprime mortgages; UBS in pushing "cash alternatives" when employees were dumping them).

According to the New York Times, Mr. Galvin, "is seeking to get the UBS units to return investors' money and reimburse who had to sell at a loss."

Also, former senator Phil Gramm, who was a key player in the surge of subprime mortgages and CDOs, and who also worked as lobbyist for UBS, has yet to speak on either Countrywide's pending legal matters, it acquisition by Bank of America, or the trouble UBS faces (financial and legal) in the coming months. Mainly, Mr. Gramm has remained quiet in reagrds to the foreclosure/credit crisis, as he continues to advise Senator McCain on his presidential campaign's economic policies/initiatives.

Originally posted at InjuryBoard by Paul Kiesel

The Subprime Mess and Phil Gramm: An Experiment in Deregulation

Paul Kiesel — Tue, 24 Jun 2008 16:12:58 GMT

In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) -- giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses -- most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

Some justice was served, however, this spring, as UBS became one of the subprime debacle's biggest losers, having to write down $37 billion -- the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

Now, Gramm has a second chance of extending his out-of-touch and ill-performing policies, as Senator John McCain appointed Gramm to be his "economic expert" and cochair of his presidential campaign, last year. Also, it is likely that if Senator McCain were to win in November, Gramm would be our next Treasury Secretary, which means more of the same deregulatory mess and the continuation of failed and insidious economic policies.

Originally posted at InjuryBoard by Paul Kiesel

Obama and McCain: The Presidential Candidates on the Mortgage Crisis

Paul Kiesel — Tue, 17 Jun 2008 13:50:12 GMT

Here are Barack Obama's and John McCain's plans for dealing with the mortgage crisis (according to each candidate's respective website):

Barack Obama wants to create a fund to help people refinance their mortgages and provide comprehensive support to innocent homeowners. The fund will be partially paid for by Sen. Obama's increased penalties on lenders who act irresponsibly and commit fraud.

On top of this, Sen. Obama will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief. This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.

After seeing what took place in the subprime mortgage industry, Sen. Obama introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices. Sen. Obama's STOP FRAUD Act provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.

Sen. Obama will also create a Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metric (similar to APR) for home mortgages. The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.

John McCain, after saying for months that he didn't want the government to intervene in the housing crisis, has recently come up with a housing relief plan called HOME Plan. Under his HOME Plan, every deserving American family or homeowner will be afforded the opportunity to trade a burdensome mortgage for a manageable loan that reflects their home's market value.

In order to be eligible, holders of a non-conventional mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of the original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstrate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30-year fixed-rate mortgage on the existing home.

John McCain has also recently called for the formation of a task force within the Justice Department to combat mortgage fraud, but this has already been in the works for sometime. Sen. McCain's proposal suggests that the task force's primary duty will be to aggressively investigate potential criminal wrongdoing in the mortgage industry and bring to justice any who violated the law. The DOJ Task Force will offer assistance to State Attorneys General who are investigating abusive lending practices. (The FBI has also increased their efforts two, if not, three fold over the last 90 days.)

Originally posted at InjuryBoard by Paul Kiesel

McCain Will Not Fix Foreclosure Crisis

Paul Kiesel — Tue, 27 May 2008 19:14:46 GMT

Senators Barack Obama and Hillary Clinton have been outspoken critics of John McCain's foreclosure remedies on their respective campaign trails, saying that Sen. McCain would be lackadaisical in his approach to correct the market, regulate banks, and help troubled borrowers. This afternoon, those sentiments continued to be heard from the Obama camp as Sen. Obama told a crowd of over a hundred homeowners his plans to help fight the foreclosure crisis.

His opinions ranged from support of both Barney Frank's and Chris Dodd's housing bills, to pleading to lenders and asking them to make a better effort in negotiating new loans with borrowers. Here are excerpts of Obama's speech from earlier today in Nevada (The Washington Post, 5/27/08):

"Nevada is being hit just about harder than any place in the country when it comes to people being able to stay in their homes," Obama said. According to figures compiled by the campaign, the Silver State's foreclosure rate is three-and-a-half times the national average, and one in 44 households in Las Vegas is facing foreclosure."

"Today, John McCain is having a different kind of meeting," Obama said during a town meeting at the College of Southern Nevada. "He's holding a fundraiser with George Bush behind closed doors in Arizona. No cameras. No reporters. And we all know why. Senator McCain doesn't want to be seen, hat-in-hand, with the President whose failed policies he promises to continue for another four years."

ON JOHN MCCAIN AND GEORGE W. BUSH:

"We've got a vicious circle," Obama said, pitching a package of measures aimed at stabilizing the housing market, so that banks and lenders feel they can loosen credit. Obama supports the measure co-sponsored by Sen. Chris Dodd and Rep. Barney Frank that would permit some homeowners to negotiate with lenders to convert existing mortgages to new, fixed-rate loans that will allow them to avoid foreclosure. He also suggested a new fund for low income housing, and changes in bankruptcy laws that now favor those wealthy enough to have second homes."

"If the government can bail out investment banks on Wall Street," he said, in another swipe at Bush, it should help working people who signed mortgages promoted by lenders "out to make a quick buck."

In other words, as McCain goes behind closed-doors with President Bush, who currently stands as having the highest disapproval rating in the history of the United States, and tries to garner more campaign money from dubious sources, Sens. Obama and Clinton are continuing to try and find common ground in order to help the people who have been affected most by the mortgage crisis: middle- and working-class Americans, who will make their opinions loud and clear when they vote this coming November.

Originally posted at InjuryBoard by Paul Kiesel