Federal Reservations

Just over a week ago in an article I published here in Big Government: “New California Budget Crisis May Torpedo November Tax Increase Initiative.” The article illuminated how State Controller John Chaing had shocked California’s spendthrift politicians by announcing the State would be out of cash beginning March 8th and would miss up to $5.4 billion in vendor payments through May 1st. The timing of the Chaing announcement was disastrous for state politicians; because it destroyed any hope that Governor Jerry Brown’s $6 billion tax increase initiative on the ballot in November would pass.

Now it appears that Brown successfully lobbied for California to get $6 billion in cash and siphon off a total of $18 billion from the $25 billion mortgage settlement with the five largest U.S. banks, who were accused of fraud in the handling of foreclosures and loan modifications. But as Franklin Center Fellow, Steven Greenhut asks in a deliciously sarcastic article: “Why should a taxpayer in Houston or Wichita bail out irresponsible California homeowners, banks and the state’s public employees’ retirement fund?” Greenhut highlights that the mortgage settlement money is really just another accounting entry, because the real source of cash to fund the “Left Coast” is “implicitly via Federal Reserve/Government coffers.”

Most Americans still snarl about crony capitalism when they think of multinational banks taking $1 trillion slurp of taxpayer’s hard earned cash and then paying themselves record bonuses, while hiking fees and cutting off borrowers. But with the United States President and Congress solemnly telling Americans healthy banks were key to our future, most Americans gritted their teeth and came together to bail-out of banks, insurance companies, and other financial firms.

When the good people of the other 49 states learn the terms of this bail-out, I believe they also come together. But this time they will be showing their fangs and carrying pitch forks! With only 13% of the GDP of the United States, California gets 72% of the settlement proceeds. Undoubtedly, the five national banks will pass 100% of the cost of this settlement on to all their customers nationally. Consequently, 87% of the increased bank fees will be paid by other states increases to bail-out California’s insolvent budget.

Kamala Harris, California’s Attorney General, claimed the settlement may help roughly 250,000 California borrowers by requiring the banks to cut mortgage debt amounts and extend $2,000 payments to homeowners who already suffered foreclosure. But Greenhut points out that powerful interest groups, like the California Public Employees’ Retirement System, which had nothing to do with individual mortgage holders being unfairly foreclosed upon, carved off a piece of the settlement money to bail-out some of their investment losses on real estate speculation that resulted from bad advice.

According to the L.A., a 17-month investigation recently found that some of that bad advice came from Federico Buenrostro Jr., the former chief executive of the $250 billion California public employee pension fund. It seems that he and , and a couple of his pension Board buddies were recently accused of pressuring subordinates to invest billions of dollars of pension money with politically connected firms and strong-armed a for a $4 million in fee to be paid to consultant Alfred J.R. Villalobos, who later hired Buenrostro.

Most Californians refer to Jerry Brown as left wing, but I think he just proved he is more left brained. Left brain thinkers excel in math, language studies and logic problems. Since the banks that settled only control or own only 7.3% of all outstanding single-family mortgages, every time Brown wants to increase spending, he just needs to do another “settlement.” After all, California bank customers only pay 13% of the settlement costs, while the State gets 72% of the proceeds. Either Brown is a very smart or the other 49 governors and their Legislatures are really stupid.
Feel free to forward this Op Ed and or follow our Blog at www.chrissstreetandcompany.com

To invite Chriss Street to speak to your group, e-mail: chriss@chrissstreetandcompany.com

Thank you also for the success of Chriss Street’s latest book: “The Third Way”
Available in hard copy or for Kindle at: www.amazon.com

Originally from Big Government

Just hours after winning the Florida primary, Mitt Romney let loose a potential gaffe that turned what should have been a rallying moment for Republican supporters into an uncomfortable position of having to defend the man that is likely to face Obama in the general election.

If taken out of context, which the media is very adept to doing, Romney’s comment, “I’m not concerned about the very poor” sounds heartless and indefensible. In fact, that is exactly how many conservative commentators reacted.

From a purely political position, the criticism is reasonable. Romney effectively handed Democrats a shiny set of brass-knuckles to use against, not only him, but the Republican Party in general as being out of touch with every day Americans. As NRO’s David Kahane put it, “In the Fight of the Century between the Apologetic Oligarch and the Tribune of the Folks, who do you think the fans will be rooting for?” In other words, Romney unwillingly played into the class-warfare meme that Obama has wrapped himself in.

Jonah Goldberg says there are risks with Romney because he has yet to show he has mastered the art of the “stump” even after close to decade of practice.

These are examples of criticism on the face of the issue. Other conservative commentators chose to hammer Romney on his acceptance of the welfare state, and no doubt relished at the opportunity to attack him before having to reluctantly support him in the general election. To this group, not only did Rommey make the mistake of choosing his words poorly, he also spoke of the welfare state as status-quo. Erick Erickson at Red State, and Mark Levin, are charging Romney of the same class-warfare tactics Obama and the Democrats use. Furthermore, from his choice of words Romney effectively endorsed poverty as a thing to be accepted instead of engineering ways for them to lift themselves up out of poverty. Alas, a New England, Rockefeller, Republican.

… Mitt Romney said he wasn’t concerned about the poor. The poor, after all, have food stamps and Medicaid. But don’t worry. If the safety net is broken, Patrician Mitt Romney will fix it so the poor can stay comfortably poor (E. Erickson).

In an environment such as politics, perception is key. After all, there is a saying that is usually applied to politicians “Once you learn to fake sincerity, the rest is easy.” So maybe Romney does have a sincerity problem. But if sincerity is faked, which it usually is, why bother to do it? After all we have a president totally comfortable faking sincerity, and one who took Rousseau’s thought “the more obscure and uncertain the cause, the greater the effect: the greater the number of idlers one could count in a family, the more illustrious it was held to be” and won the presidency with it.

Romney’s full comment was a little deeper than some of the reactions suggested.

I’m not concerned about the very poor. We have a safety net there. If it needs repair, I’ll fix it. I’m not concerned about the very rich. They’re doing just fine. I’m concerned about the very heart of America, the 90-95 percent of Americans who right now are struggling.

It isn’t my job or even my concern to defend Romney by putting a positive spin on his comments. However, his remark did not cause this conservative to react negatively. I heard what he was saying loud and clear. It isn’t the duty of a president, Congress, or state governments to pull people up out of poverty. In fact, one could argue convincingly when those things are tried, poverty increases and wealth declines. So what we do have in place is a safety net for those who are down. It isn’t a permanent residence, it’s an interim position. The focus should always be growth and capital. When the economy is well, so is America’s labor force.

The economy is the engine that drives mobility because as long as our economic system rewards success and punishes failure (such as life) no station in life is monolithic. There is nothing destined in America.

Mobility is not limited to the top-earning households. A study by economists at the Federal Reserve Bank of Minneapolis found that nearly half of the families in the lowest fifth of income earners in 2001 had moved up within six years. Over the same period, more than a third of those in the highest fifth of income-earners had moved down. Certainly, there are people such as Warren Buffett and Bill Gates who are ensconced in the top tier, but far more common are people who are rich for short periods.

Very well then, Romney’s concern shouldn’t be with the poor. His concern should be with those who help drive the economy. Those who buy and produce, start businesses, buy homes and cars and hire employees. With a growing economy comes a rising tide of activity. And it’s from this activity that allows the poor opportunities to pull themselves up out of poverty. For lack of better words, the horse really does come before the cart. Or better, a physician is only concerned with a patient insofar as he can help cure the aliment. That is Romney’s position. Conservatives would do well if they thought more and reacted less.

We can belly-ache and lash our faces from grief and despair over the plight of the poor, or we can actually do something about the conditions for which there are so many poor among us.

Originally from Big Government

Federal Reserve Board Chairman Ben Bernanke calls U.S. vulnerable to sudden fiscal crisis if Washington doesn’t come to grips with deficit, backs Rep. Mike Simpson’s call for an “armistice” between Republicans and Democrats

Originally from MarketWatch

Download Podcast | iTunes | Podcast Feed

On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the Fed’s interest rate announcement, the divided cultural experiences of America’s upper and lower class, and whether or not “the American way of life” still exists.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

U.S. Stocks Cheer Fed’s Rate Pledge
The New American Divide
Quiz: How Thick Is Your Bubble?

Follow Brad on Twitter
Follow Ben on Twitter
Follow Francis on Twitter

Subscribe to The Transom

The hosts and guests of Coffee and Markets speak only for ourselves, not any clients or employers.

Originally from Big Government

As I wrote in a post for Big Government this past Sunday, January 22, the Arizona’s legislature has decided once more to do the job the feds won’t do, and has launched its own investigation into Fast and Furious. And during an appearance on FOX NEWS this morning, Arizona House Speaker Andy Tobin explained why they’ve taken this step. He said that constituents were flooding their offices with questions about the gun-running operation, and he said one recurring question was, “You’re not waiting for the feds [to do something] are you?” He then said the answer to that question was “No.”

Said Tobin:

This is an incident that occurred on Arizona soil, with Arizona business owners, [where we lost] an Arizona agent (Border Patrol Agent Brian Terry), and quite frankly we felt it needed a lot more attention. We felt our citizens needed a place to go to share their stories. Maybe there’s more there. This was a failed program right from the start and I think the idea is to put more light on it.

Tobin explained that as he’s watched this story unfold, and learned about the tactics used in Fast and Furious, it just hasn’t made sense: “I’m from the family of a law enforcement officer and I don’t think that the process by which they were going was the direction in which we fight back on border security and drug infiltration.”

He went on to explain that the Arizona House has been disappointed in the way Eric Holder has handled things up till now, and added:

It doesn’t appear he had a grasp on it right from the beginning when the inquiries started coming in. And forgive me for being concerned when I hear that the federal government’s here and they’re here to help. [We’re] the state that had to pass S.B. 1070 so we could help secure our borders, and the fed sued us…we’ve lost millions of acres of forest land [to fires] because the feds won’t let us clean them, we’ve got a Navajo power plant that the EPA may close…I meant the list goes on and on.

Without ambiguity Tobin added:

The public deserves some answers and we can’t wait for the fed to give us some of those answers. So let’s put some light on it, let’s have some transparency in government. Let’s go ahead and bring some Arizona citizens in to testify and see where this leads us.

I’m all for what Tobin and the rest of his colleagues in the Arizona legislature are doing. It’s time to put some heat on the feds and see if Holder changes his story (again).

Originally from Big Government

Judicial Watch, the public interest group that investigates and prosecutes government corruption, today released its 2011 list of Washington’s “Ten Most Wanted Corrupt Politicians.” The members of the House of Representatives on the list, in alphabetical order, include:

• Rep. Spencer Bachus (R-AL)
• Rep. Alcee Hastings (D-FL)
• Rep. Jesse Jackson, Jr. (D-IL)
• Rep. Laura Richardson (D-CA)
• Rep. David Rivera (R-FL)
• Rep. Maxine Waters (D-CA)
• Rep. Don Young (R-AK)

Dishonorable Mentions for 2011 include:

• Rep. Barney Frank (D-MA)
• Former House Speaker Newt Gingrich (R-GA)
• Rep. Nancy Pelosi (D-CA)
• Rep. Charles Rangel (D-NY)
• Rep. Hal Rogers (R-KY)

Spencer Bachus (R-AL): He has become the face of a congressional “insider trading” scandal that has rocked the Washington establishment as 2011 draws to a close. Rep. Spencer Bachus, Chairman of the House Financial Services Committee, was one of the principal targets of a 60 Minutes investigative report on the scandal, which aired on CBS in September 2011.

The report was based, at least in part, on the book Throw Them All Out by author Peter Schweizer, which outed a slew of members of Congress who allegedly profited in the financial markets by trading on insider information. Bachus was not the only congressman cited by 60 Minutes, others included Speaker of the House John Boehner and House Minority Leader Nancy Pelosi, but the Alabama Republican stood out for his remarkable “good fortune” in shorting the stock market.

According to the allegations made by Schweizer and 60 Minutes, Congressman Bachus, at the time the ranking Republican on the Financial Services Committee, traded short-term stock options in 2008 after receiving a private briefing for congressional leaders by Secretary of the Treasury Hank Paulson and Federal Reserve Chairman Ben Bernanke. The subject of the briefing: the pending meltdown in the global economy. Those privileged to attend the meeting reportedly sat around a table in Pelosi’s office, having left their cell phones outside the room to avoid leaks.

Congressman Bachus’s aggressive trading practices, in which he was able to benefit by betting on falling stock prices, reportedly earned him substantial profits from some of the 40 trades placed during the months of July through November 2008, many of the trades occurring after the September meeting.

In the wake of the congressional insider trading scandal, legislation banning insider trading is under consideration in Congress. The Senate Homeland Security and Government Affairs Committee advanced a bill banning insider trading on December 14, 2011. Similar legislation (pushed by Rep. Bachus himself, obviously to deflect criticism) has stalled in the House. Critics have suggested, and so has the House Ethics Committee, that the law already prohibits insider trading by members of Congress.

Back to Top

Rep. Alcee Hastings (D-FL): In a year full of shocking congressional sex scandals, perhaps none is more serious than that involving Florida Rep. Alcee Hastings, who allegedly sexually harassed a female government employee and then engaged in a cruel campaign of retaliation when she rebuffed his advances. On March 7, 2011, Judicial Watch filed a lawsuit against Hastings on behalf of the victim, Ms. Winsome Packer.

The alleged harassment and retaliation began in 2008 when Hastings (formerly an impeached federal judge) served as Chairman of the United States Commission on Security and Cooperation in Europe. Ms. Packer served as his employee. According to Judicial Watch’s complaint, “Mr. Hastings’ intention was crystal clear: he was sexually attracted to Ms. Packer, wanted a sexual relationship with her, and would help progress her career if she acquiesced to his sexual advances.”

These advances included: making multiple demands that Ms. Packer allow Rep. Hastings to stay in her apartment while she served as the Commission’s lead staff representative overseas; subjecting Ms. Packer to unwanted physical contact, including hugging her with both arms while pressing his body against her body and his face against her face; inviting her on multiple occasions to accompany him alone to his hotel room; making sexual comments and references to Ms. Packer; and asking Ms. Packer humiliating and inappropriate questions in public, such as “What kind of underwear are you wearing?”

In addition, Hastings seems to have abused his office by using government travel as a cover for sightseeing and by soliciting gifts and campaign contributions from congressional staff.

On November 28, 2011, The House Ethics Committee announced that it will take an additional 45 days to determine whether to launch a full investigation into the allegations against Hastings.

Back to Top

Rep. Jesse Jackson, Jr. (D-IL) and the Blagojevich Co-Conspirators: It took more than two years and two trials, but disgraced former Illinois Governor Rod “Blago” Blagojevich was finally brought to justice on June 27, 2011, for a number of crimes, including his efforts to “sell” President Obama’s vacant Senate seat to the highest bidder. He became the state’s fourth governor, and one of at least 79 Illinois public officials, to be found guilty of a crime since 1972, proving that Illinois has certainly lived up to its reputation as a cesspool of corruption.

As the trial unfolded, it became clear that many hands were dirty in the Blago scandal (See Chicago Mayor and former Obama Chief of Staff Rahm “Rahmbo” Emanuel, who was finally forced to testify during this second Blago trial – for a whopping five minutes – and President Obama himself, who was interviewed by the FBI in the scandal even before he took office).

But all of the focus now seems to center on Rep. Jesse Jackson, Jr.

The House Ethics Committee announced on December 2, 2011, that it will continue its investigation into allegations that “Rep. Jesse Jackson Jr. or someone acting on his behalf offered to raise campaign cash for then-Gov. Rod Blagojevich in exchange for a Senate appointment in 2008.” The committee also released an initial report from the Office of Congressional Ethics that said there was “probable cause” to believe that Jackson either directed a third party or had knowledge of a third party’s effort to convince the since-convicted Blagojevich to appoint Jackson Jr. in exchange for campaign cash.

The evidence suggests Jackson, Jr. attempted to bribe his way into the U.S. Senate. And it will take a monumental lack of attention on the part of the House Ethics Committee to overlook the Illinois Congressman’s role in this serious scandal.

Back to Top

Rep. Laura Richardson (D-CA): A first-timer on Judicial Watch’s “Ten Most Wanted” list, Rep. Laura Richardson is in hot water for reportedly misusing her congressional staff for personal and political gain. Rep. Richardson is now under investigation by the House Ethics Committee regarding allegations by former staff member Maria Angel Macias. Macias alleges that she was required by Richardson to order other staffers to run personal errands for the Democrat congresswoman, such as picking up her dry cleaning and working on her reelection campaign at taxpayer expense.

Richardson’s alleged behavior would violate federal law, which protects federal employees from “being forced by job-related threats or reprisals to donate to political candidates or causes.” House ethics rules also specify that “in no event may a member or office compel a House employee to do campaign work.”

Macias indicated to the Committee that Richardson regularly directed her to call staff members outside of office hours to “make them work at campaign events.” According to former employees, they were required to work the extended hours “under threat of dismissal,” and, reportedly, were even required to act as servers at such events. Shirley Cooks, chief of staff for Representative Richardson, was also directed to ensure that staff members “volunteered” for off-hour campaign projects.

Rep. Richardson has responded by denying that she has ever forced employees to volunteer on campaigns, then played the “race card,” claiming she is being targeted because she is black and because she is a woman. Richardson has further indicated that she would explore whether the Ethics Committee “has engaged in discriminatory conduct”… which is a blatant attempt to intimidate committee members and undermine the investigation.

Richardson is not new to controversy and investigations of ethics violations. Complaints against her include commandeering emergency helicopters in her California district for use as sightseeing vehicles for her staff and of her receiving special treatment when a bank rescinded the sale of a foreclosed home Rep. Richardson owned in Sacramento and then restructured her mortgage. This was the third home on which Rep. Richardson had missed payments.

The House Ethics Committee failed to punish her over the foreclosure deal (no surprises there), and approximately one year later Richardson again defaulted on her payments. True to form, however, Richardson failed to take responsibility for her actions, claiming the default was due to a “clerical error.”

Back to Top

Rep. David Rivera (R-FL): Rep. David Rivera, U.S. Representative for Florida’s 25^th congressional district, is mired in numerous ethics controversies stemming from charges of money laundering and tax evasion schemes initiated when Rivera served in the Florida House of Representatives. The Republican congressman, serving his first term, is currently under investigation by the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS), the Florida Department of Law Enforcement, the Miami-Dade Police public corruption unit, and the Miami-Dade State Attorney’s office.

Of particular interest is the investigation by the FBI and the IRS regarding Rep. Rivera’s dealings with the Flagler Dog Track, now known as the Magic City Casino. The basis for the investigation relates to payments reportedly totaling as much as $1 million made by the casino to Millennium Marketing in the guise of a consulting contract. Most of the money is said to have been paid in 2008.

Millennium Marketing is owned by Rivera’s mother and godmother, and Rivera supposedly benefited from the arrangement and is thus the subject of a tax evasion inquiry. Income from the consulting contract was never reported by Rivera on his tax forms, nor did he mention the Millennium deal in financial disclosure forms filed with the Florida Ethics Commission. Instead, Rivera indicated that he had worked as a consultant for the U.S. Agency for International Development (USAID) in addition to being a member of the Florida House of Representatives. He reported no income for USAID, however, and the agency had no record of his having ever worked there.

For a long time, Rep. Rivera denied ever receiving any income from the dog track, but just before heading to Congress, Rivera admitted receiving $132,000 in “undisclosed loans” from Millennium. He claims he paid the money back.

Participating in the dog track inquiry and at one time having had the lead on the case is the Florida Department of Law Enforcement, assisted by the Miami-Dade Police. Investigators are also taking a close look at Rivera’s campaign spending, including $75,000 he paid in 2010 “to a now-defunct consulting company owned by the daughter of a top aide.”

Back to Top

Rep. Maxine Waters (D-CA): Rep. Maxine Waters is one of the most senior and one of the most outspoken members of Congress. She is also one of the most corrupt.

In August 2010, an investigative subcommittee of the House Ethics Committee charged Rep. Waters with three counts of violating House rules and ethics regulations in connection with her use of power and influence on behalf of OneUnited Bank. She was expected to face an ethics trial in late 2010, but the committee delayed the trial indefinitely on November 29, 2010, citing newly discovered documentary evidence that may impact proceedings.

The delay apparently has less to do with evidence and more to do with infighting on the panel. Ultimately, an outside counsel was retained and a recommendation was expected by January 2, 2012. However, the Committee announced that the Waters probe will be extended until July 31, 2012.

According to The Associated Press, the charges currently under the House Ethics Committee microscope “focus on whether Waters broke the rules in requesting federal help [bailout money] for a bank where her husband owned stock and had served on the board of directors.” At the time she requested the help, Waters neglected to tell Treasury officials about her financial ties to OneUnited Bank.

Without intervention by Waters (and a big assist from her co-conspirator Rep. Barney Frank), OneUnited was an extremely unlikely candidate for Troubled Asset Relief Program (TARP) funding. The Treasury Department indicated that it would only provide bailout funds to healthy banks to jump-start lending. However, Judicial Watch uncovered documents detailing the deplorable financial condition of OneUnited at the time of the cash infusion. In fact, just prior to the bailout, OneUnited received a “less than satisfactory rating.”

Aside from OneUnited, there was yet another scandal with Waters’ fingerprints all over it.

According to The Washington Times: “A lobbyist known as one of California’s most successful power brokers while serving as a legislative leader in that state paid Rep. Maxine Waters’ husband $15,000 in consulting fees at a time she was co-sponsoring legislation that would help save the real-estate finance business of one of the lobbyist’s best-paying clients…”

“Real-estate finance businesses,” such as the one helped by Waters’ influence, were labeled a “scam” by the IRS in a 2006 report.

Despite all of her ethical woes, Maxine Waters seeks to take over the retiring Barney Frank’s position as the ranking Democrat on the House Financial Services Committee. It is quite obvious that Rep. Waters has neither the integrity nor the ethics necessary to hold such a position of public trust.

Back to Top

Rep. Don Young (R-AK): Rep. Don Young may have achieved a new level of corruption in 2011. The House Ethics Committee announced just before Christmas that the Alaska Republican Congressman was cleared of allegations by the House Ethics Committee that he exceeded the limit on campaign donations to his legal defense fund – which was set up to defend Young against an entirely different set of corruption charges! There was good reason the House Ethics Committee released this decision after most of official Washington left for the Christmas holiday, because the Committee’s “exoneration” is a joke.

House ethics rules prohibit contributions from any single source that exceed $5,000. Young received $63,000 from “twelve companies that… were in fact owned by Gary Chouest, his wife, and his five children, or some combination of those seven individuals.” Despite an independent analysis by the Office of Congressional Ethics (OCE) that the shell-game was a rather transparent violation of the contribution limit, the House Ethics Committee gave Young a free pass because the 12 companies controlled by essentially one individual were “separate legal entities”!

On July 24, 2007, the Wall Street Journal reported that Young was under federal investigation for taking bribes, illegal gratuities, and unreported gifts from VECO Corporation, an Anchorage, Alaska-based company. Two executives in the company, including former company CEO Bill Allen, had already pled guilty to bribing members of the Alaska legislature. Reportedly, Young received $157,000 from VECO.

Rep. Young has developed a legendary reputation for steering federal dollars to Alaska. As The New Republic put it, Rep. Young is “well known for his sharp elbows and generous appetite for legislative pork,” including the $223 million he secured to build the so-called “Bridge to Nowhere.” Eventually, lawmakers responded to the mounting criticism, and the bridge was defunded.

Over the years, Rep. Young has been linked to lobbyist Jack Abramoff’s illegal efforts to lease government property, and he has been criticized for adding a $10 million earmark to a transportation bill for a short piece of road in Florida near Fort Myers, called Coconut Road. The local real estate developer who owned 4,000 acres along the road helped raise $40,000 for Young’s campaign, which might go a long way toward explaining why the Alaska congressman aggressively pushed to build a road in Florida.

Back to Top

DISHONORABLE MENTIONS:

Rep. Barney Frank (D-MA): Another perennial member of JW’s list of Washington’s “Ten Most Wanted Corrupt Politicians” will soon be saying goodbye to Congress.

Rep. Barney Frank blamed redistricting for his decision to leave office, but the congressional ethics investigation of the OneUnited Bank scandal also implicating California Rep. Maxine Waters must have helped make it easier for him to flee the capital. Both Frank and Waters improperly intervened to secure taxpayer TARP bailout money for the corruptly-run Massachusetts bank, earning them placements on the 2010 “Most Wanted” list.

When asked about the scandal, Frank admitted that he spoke to a “federal regulator,” but according to The Wall Street Journal, “he didn’t remember which federal regulator he spoke with.” That seemed a lie at the time, so Judicial Watch investigated. Sure enough, according to explosive Treasury Department emails uncovered by Judicial Watch in 2010, it appears this nameless bureaucrat was none other than then-Treasury Secretary Henry “Hank” Paulson!

Frank will forever be tied to the implosion at Fannie Mae and Freddie Mac – and the resulting collapse of the housing market. Frank, a key member of Congress on the “take” from Fannie and Freddie, resisted any effort to subject the two Government Sponsored Enterprises to any effective oversight.

For example, during a hearing on September 10, 2003, before the House Committee on Financial Services considering a Bush administration proposal to further regulate Fannie and Freddie, Rep. Frank stated: “I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two Government Sponsored Enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis… I do not think at this point there is a problem with a threat to the Treasury.” Frank received $42,350 in campaign contributions from Fannie Mae and Freddie Mac between 1989 and 2008.

Frank’s corrupt behavior earned the attention of his congressional colleagues in 1990, when the House voted 408-18 to reprimand him for abusing his office to “fix” 33 parking tickets for Stephen Gobie, an acknowledged prostitute and former boyfriend of Barney Frank who had accumulated the tickets while driving Frank’s car. Frank wrote a memo intended to shorten probation for Gobie, who had been convicted of the sex and drug crimes of operating a gay prostitution ring out of the apartment he shared with Frank.

Frank also admitted in the book Reckless Endangerment that he helped yet another boyfriend gain a lucrative position with Fannie and Freddie, which is yet another abuse of office. When confronted on the controversy, Frank said, “If it is a [conflict of interest] then much of Washington is involved in [conflicts].”

That might be the most factual statement Barney Frank has ever made.

Back to Top

Former House Speaker and Current Presidential Candidate Newt Gingrich: Former House Speaker Newt Gingrich has a career plagued by scandal and corruption.

Perhaps most notably, on January 22, 1997, by a vote of 395 to 28, the House of Representatives voted to reprimand Speaker Gingrich for “intentional… or reckless” disregard for House rules and ordered him to pay an unprecedented penalty of $300,000 for ethical wrongdoing. It was the first time in the 208-year history of the House that such a step against a Speaker had been taken. Gingrich had faced a raft of charges for alleged ethics violations during his tenure in the House.

Following a scathing special counsel report to the House Ethics Committee detailing the charges against Gingrich, the former Speaker admitted to providing “inaccurate, incomplete and unreliable” statements to congressional investigators. In a written statement, Gingrich stated that his actions ”brought down on the people’s house a controversy which could weaken the faith people have in their government.”

During the current presidential campaign, Gingrich has continuously misled the American people about how he, like many retired politicians, participated in DC’s lucrative influence-peddling industry.

Gingrich insinuated during one presidential debate that some members of Congress who took money from Fannie and Freddie should go to jail. And yet, over a span of eight years, according to Bloomberg News, The Gingrich Group was paid between $1.6 and $1.8 million by the home mortgage company. At the same time, Freddie Mac was engaged in massive fraud. Gingrich suggested he was a “historian” for Freddie Mac. But the evidence clearly shows he was “throwing his weight” behind the two Government Sponsored Enterprises to prop them up, saying in one interview that Fannie and Freddie provided a more “liquid and stable housing finance system than we would have” without them. Ironically, President Obama, the man who Gingrich is seeking to oust from office, is keeping secret each and every Freddie Mac (and Fannie Mae) document, including those that could shed light on Gingrich’s relationship with Freddie.

Gingrich also has claimed, “I have never done lobbying of any kind.” However, as documented by the Washington Examiner’s Timothy Carney, Gingrich was a hired gun for the drug lobby who “worked hard to persuade Republican congressmen to vote for the Medicare drug subsidy that the industry favored.” Carney reports that the Pharmaceutical Research and Manufacturers of America confirmed that they paid Gingrich. Bloomberg News “cited sources from leading drug companies AstraZeneca and Pfizer saying that those companies had also hired Gingrich.”

Gingrich has also sustained heavy criticism for his troubled personal life, including the admission by Gingrich that he cheated on his second wife while serving as Speaker of the House with then-House employee and current wife, Callista Bisek.

Back to Top

Rep. Nancy Pelosi (D-CA): Despite the media firestorm over her military travel abuses ignited by a Judicial Watch investigation, Nancy Pelosi continued to use the United States Air Force as her own personal travel agency right up until her final days as House Speaker, according to documents Judicial Watch uncovered from the Air Force in 2011.

Pelosi used Air Force aircraft for 43 flights from January 1 to October 1, 2010. By comparison, Nancy Pelosi logged 47 flights in the previous nine-month period–April 1, 2009, to January 1, 2010–according to previous documents uncovered by Judicial Watch. In other words, she did not back off at all from her pattern of abuse.

In fact, these documents show Pelosi not only receiving special treatment on military flights (chocolate covered strawberries for her birthday, for example) but also ferrying her family back and forth on military aircraft, including her husband, daughter, granddaughters and son-in-law. The following is a link to records detailing one such flight with her daughter Christina.

Pelosi was also caught up in the insider trading scandal that exploded into the news in November 2011 courtesy of author Peter Schweizer and his book, Throw Them All Out.

As detailed by Bloomberg, “Pelosi and her husband, Paul, with a net worth estimated at $40 million, bought shares in the initial public offering of credit-card company Visa Inc. in 2008, when Pelosi was speaker of the House… They bought the shares just before legislation died that would have limited the fees credit-card issuers could charge retailers. The shares more than doubled in the next two months.”

Pelosi has also invited San Francisco investment banker William Hambrecht to serve as an expert at economic forums on Capitol Hill on multiple occasions, even speaking to reporters by his side at the U.S. Capitol, without disclosing the fact that Hambrecht is her son’s boss and her husband Paul’s business partner. One of the business deals struck by Paul Pelosi and Hambrecht yielded more than $100,000 in income for the Pelosi family in 2010.

While serving as Speaker of the House, Pelosi repeatedly overlooked corruption by her fellow partisans. The evidence suggests this “ethics blind spot” extends too frequently to her own activities. Pelosi’s penchant for abusing the perks of her office is reprehensible.

Back to Top

Rep. Charles Rangel (D-NY): One year after the House of Representatives voted 333-79 to “censure” Rep. Charles Rangel for serious incidents of corruption, Rangel remains in Congress. And, in fact, the very colleagues who shamed him in the well of Congress for his ethics violations, including Rep. Nancy Pelosi, now stand by his side.

What does this prove? That Rangel did not receive proper punishment for the 13 violations articulated in the House Ethics Committee report, including the following allegations:

• Forgetting to pay taxes on $75,000 in rental income he earned from his offshore rental property (Rangel was formerly in charge of the committee responsible for writing tax policy)

• Misusing his congressional office, staff and resources to raise money for his private Rangel Center for Public Service, to be housed at the City College of New York (he also put the squeeze on donors who had business before his House Ways and Means Committee, and used the congressional “free mail” privilege to solicit funds)

• Misusing his residentially-zoned Harlem apartment as a campaign headquarters

• Failing to report $600,000 in income on his official congressional financial disclosure reports, which contained “numerous errors and omissions”

And these are just the ethics violations under the Ethics Committee’s microscope. The Committee did not even consider other serious corruption charges against Rangel. For example, it has been alleged that Rangel preserved a tax loophole for an oil company in exchange for a Rangel Center donation and used improper influence to maintain ownership of his highly coveted rent-controlled apartment — the same apartment he improperly used for campaign activities.

Rangel should have been expelled from the House of Representatives a year ago. Instead he remains in power and on Judicial Watch’s “Most Wanted” list as a “Dishonorable Mention.”

Back to Top

Originally from Big Government

U.S. Representative Spencer Bachus (R-AL) had access to highly sensitive financial information during the 2008 bailout debates that may have helped him earn tens of thousands of dollars by trading stock options, even as most Americans’ portfolios took a beating.

On Sunday, Rep. Bachus’s trading behavior came under fire in a 60 Minutes report based on Throw Them All Out, the book by investigative journalist and Breitbart editor that has triggered a political earthquake in Washington. Schweizer, who is also a Breitbart editor, devotes a significant portion of the book to exposing possible congressional insider trading.

Bachus’s trades during debate over the Troubled Asset Relief Program (TARP) raise serious questions about whether he invested based on information he acquired as a result of his political power.

“Here’s the rub: all too often his trades coincided with his congressional work,” says Schweizer. “Bachus was neck-deep in crucial financial decision-making at the highest levels.”

BigGovernment.com has obtained and reviewed Rep. Bachus’s Fidelity stock options trading records. The dates of the congressman’s trading patterns paint a troubling picture.

In the summer and fall of 2008, Rep. Bachus–who is the current chairman of the House Financial Services Committee–was then the ranking Republican on the committee. That gave him access to high-level private meetings and phone conversations with then-Treasury Secretary Henry Paulson, among other senior financial officials.

From July to November 2008, by executing well-timed, highly risky options trades throughout the turbulent period, Congressman Bachus made at least 40 options trades that netted him as much as $50,000 in capital gains.The timeline of Rep. Bachus’s trades is unsettling:

• July 14th: Bachus bets $4,500 that the financial sector will fall, and sells short. Bachus comes up a winner and cashes out the next day for $1,500 in profit.
• August 15th and 22nd: the Alabama congressman buys over $11,000 of SPDR sector option contracts, and sells them a few days later for $5,000.
• September 8th: Paulson gets a troubling call from General Electric CEO Jeffrey Immelt, saying GE is having trouble moving its bonds. Two days later, Bachus shorts GE options four times in a single day, more than doubling his money.
• September 10th and 15th: Bachus shorts GE a total of 12 times and comes up a winner 9 times—an impressive average for the high-risk options game.
• September 18th: Bachus and congressional leaders receive a private briefing from Paulson and Federal Reserve chairman Ben Bernanke inside then-Speaker Nancy Pelosi’s office. Bernanke warns of a total financial meltdown in a matter of days. The very next day, September 19th, Bachus shorts the market by buying contract options on Proshares Ultra-Short QQQ, an index fund that strives for results 200% of the inverse of the Nasdaq 100. He nearly doubles his money when he sells his shares four days later for over $13,000.
• October 21st: the Federal Reserve announces it will spend $540 billion to buy debt from money market mutual funds. The next day Bachus buys over $5,000 of options in Market Vectors TRN, and more than doubles his money.

How Rep. Bachus had the time to juggle his frenetic stock-picking with his actual job as a legislator remains unclear. But Schweizer says Spencer Bachus’s lucrative investment habit predates the 2008 financial crisis, stretching all the way back to 1997. In fact, in 2007, Bachus made enough supplemental income from buying stocks that he almost doubled his total $165,200 congressional salary with $160,000 in profits from his put and call options on stocks.

In Throw Them All Out, Schweizer catalogs several other incidents in Bachus’s unusually good stock track record, dating back nearly fifteen years, and concludes that “in over two dozen cases, representing more than two-thirds of all the trades he made, he guessed correctly.”

Jeff Emerson, a spokesman for Bachus, told Schweizer there’s nothing wrong with the congressman’s actions. “There is no conflict of interest,” says Emerson. “He asked the [U.S. House of Representatives] Ethics Committee if he could do this, and they said there’s no problem.”

Indeed, therein lies the real scandal; congressional insider trading is totally legal, no matter how egregious.

Schweizer is careful to point out that it is impossible to know with 100 percent certainty whether Rep. Bachus had perfect and prior insider knowledge that led to each of his scores of option trades. Furthermore, Schweizer notes that the Alabama congressman was hardly the only member of Congress engaged in aggressive and heavy trading throughout the financial crisis.

Still, says Schweizer, the opportunities for misconduct and undue influence are too glaring to ignore.

“If you bet on a particular sector of the economy to fall over the course of a few days or weeks,” writes Schweizer, “how can you be sure that your subsequent decisions are not influenced by that bet?”

Originally from Big Government

The #OccupyWallStreet movement has an agenda and has made it available for all to see.  Among their demands is that government eviscerate existing contracts by “eliminating all debt, everywhere.”  Imagine there was a government agency with the power to make decisions like that.  With a sleight of hand, one person could vitiate contracts and overturn years of business decisions, destroying marketplaces through government intervention.  You don’t have to imagine very long.  If President Obama and his progressive supporters get their way, the Director of the newly created regulatory agency called the Consumer Financial Protection Bureau (CFPB) will have similar powers.

Created by the flawed Dodd-Frank financial reform legislation, the CFPB Director will be the most powerful regulator in government with little checks and balances from Congress.  President Obama said last week that if confirmed, the Director of the Bureau would be able to overturn any private market action it deems abusive.  Obama specifically cited the increase in debit card fees as an example of an area where the CFPB could take action to overturn the fee.

Let that sink in for a moment. A legitimate, legal business in America raises its prices by $5 and some bureaucrat would veto it, or worse, punish the business for raising its prices – in order to “make less profit,” as the president said.  This is the world Obama and the Democrats seek, a world in which an elite few are empowered to override the marketplace based on their own whims or, in this case, to mollify their voters.

No one likes bank fees, but in a market economy, you could take your money from one bank and move it to another. Avoiding this and keeping you happy is what keeps your bank in line. That’s how the market works, but that’s not good enough in Obama-world. On this fantasy island, the government singlehandedly keeps the electoral mobs happy through the utilization of a financial death squad. It’s government by organized mob.

This case becomes even more ridiculous when you consider the fact that the reason the banks are adding new fees is to cover the cost of a new federal price fixing law that took billions from banks and allocated it to giant retailers like Wal-Mart. And even more absurdly, the pricing fixing law that caused the fee increase is the very same law that created the agency that Obama wants to use to overturn the fee increase.

The near dictatorial power of the CFPB is a result of the combination of a broad mandate and no oversight.

Writing in the American Thinker, George Mason University law professor Michael Krauss noted the CFPB “is insulated from all the traditional checks and balances of government agencies. Its budget, for example, is not dependent on appropriations — it determines how much it needs, and it gets the money directly from the Federal Reserve. The CFPB has no dedicated Inspector General. It has no Commission or Board, and its Chairman is not subject to dismissal at will by the President.”  In short, it’s government by dictate.

The potential harms of such an unaccountable agency can easily be understood when you look at the person to whom Obama would like to hand all this power.

Richard Cordray has a history of abusing power.  As Attorney General of the state of Ohio, Cordray allowed a series of lawsuits to move forward – some of which were dismissed – that allowed the state Democrat Party to profit.  The Wall Street Journal observed that,  “Out-of-state plaintiffs’ law firms gave little cash directly to Mr. Cordray’s campaign, but in 2007 and 2008 they contributed $830,000 to the Ohio Democratic Party candidates’ fund, which passed about $2 million to support Mr. Cordray. Mr. Cordray then launched what he called an “aggressive” litigation strategy.  Six law firms so far have been retained to represent Ohio pension funds in new lawsuits; five of the firms donated a total of $300,000 to the state Democratic Party candidates’ fund in 2008.” [Wall Street Journal, 2/3/2010, "Trial Lawyers Contribute, Shareholder Suits Follow" By Mark Maremont, Tom McGinty and Nathan Koppel]

It doesn’t take much imagination to see that giving Cordray unchecked power at the CFPB would be a boon for trial lawyers, Occupy Wall Street types and the DNC coffers but be a catastrophe for the economy and average Americans.  To think otherwise requires a forced blindness to both Cordray’s past and centuries of evidence against unchecked power.

Senator Richard Shelby has organized a majority of Republicans to join him and block Cordray—or any nominee—from confirmation until structural reforms are made to the CFPB.  But even if they succeed in forcing accountability into this agency, “Pay to Play Cordray” should never be confirmed as it Director.

Originally from Big Government

In his interview Tuesday evening with ABC’s Jake Tapper, President Obama was asked to reflect on the economy and his overall performance as president. Asked by Mr. Tapper how he would grade himself thus far, the president declined to give himself a grade, preferring, instead, to redirect viewers to all the work that still needs to be done, presumably by him. That is why Americans should re-elect him in 2012, in order to allow him to complete his work.

In his now classically narcissistic style, Mr. Obama refuses any self-criticism during the interview. He appears to expect that his authoritative statements about the issues that face our nation are sufficient for mere mortal Americans. When Mr. Tapper nudges the president to determine, we can only assume, whether Mr. Obama’s concept of his disastrous poll ratings is based in reality, the president responds, “I believe all the choices we’ve made have been the right ones.”

Many of us would have all to do to keep our mouths from dropping open as we sat, incredulous, at this response, but perhaps Jake Tapper’s professional journalistic training was seeing him through.

We are now at a point, with this president, when every speech, every interview, every press conference, every bus tour, is nothing but a series of distorted statements, meant to pull unthinking Americans into a shared delusion. The president is part illusionist, part hypnotist, hoping to lure the most ignorant Americans among us into his realm of unreality. He feels empowered to do this because, as he so often reminds us, “I’m the president!”

Let’s break down some of these distortions from the interview:

The jobs plan that I put forward, we know that it will grow the economy by as much as 2 percent. We know that it could add as many as 1.9 million jobs.

And that plan will cost about $1.6 million per job “kept or added” in Democrat-speak. A real bargain!

I am concerned that right now, things in Washington are broken.

I believe, sir, that you were supposed to fix that when you were elected. Hope and change, remember?

It seems as if too many folks are willing to put politics ahead of what is required and making the tough choices whether that’s reducing deficit, whether it’s putting people back to work, whether it’s making investments that are necessary for us to become competitive, you don’t get a sense of people all pulling together in the same direction.

Of course, sir, you would not be putting politics ahead of what is required, as you ride on your bus tour, campaigning rather than fixing the problems, would you? As for reducing the deficit, reducing is when you lower the deficit. You have done the opposite, sir. Putting people back to work? Well, unemployment has risen to 9.1% under your administration. And making investments for us to become competitive? No, sir, you’re using that Keynesian economics again. Government spending doesn’t increase our competitiveness. It simply puts us deeper into debt. We become competitive by getting government out of our way.

What I say to the American people is that we are moving in the right direction, it is going to take time to heal all the problems that exist out there, the health care bill that we passed is absolutely the right thing to do but it’s going to take awhile before it’s even fully implemented, much less taken full effect, and you start seeing health care inflation stabilize.

There’s that narcissism again, sir. You are still going to “heal all the problems that exist?” We won’t hold our breath. And the health care bill is “absolutely the right thing to do,” even though, sir, your own administration said that the CLASS long-term care portion of the bill is unsustainable, most Americans want Obamacare repealed, and the Supreme Court will be taking up the question of whether the law is even constitutional? We know, just a few glitches, sir…

That’s why the jobs bill is so important because even as we’re doing these structural reforms that put us in a stronger position in the long terms, we still have to help people now and the most important thing we can do right now is to make sure we’re putting people back to work.

Perhaps you are forgetting, sir, that you said the economy and putting people back to work were your priorities when you were elected. But maybe you were distracted by the stimulus bill, the healthcare bill, the financial reform bill, your golf games, etc. We know there’s so much going on- it’s hard to stay focused.

Well what we’ve gotten done I’m enormously proud of and it’s making a difference, and in some cases we’ve had a chance to actually work with the Republicans.

Yes, you certainly have a lot to be proud of, sir, though we don’t hear you speak much about your accomplishments during your campaign tours. To be sure, it’s hard to find time to work with Republicans when you have to spend hours blaming them for the fact that the Democrat-controlled Senate couldn’t pass your jobs bill.

And yet, even though we’ve gotten a majority of senators in the Senate willing to move forward on this, because of the filibuster, because of the rules that are set up in the Senate, those things are blocked.

Now, sir, Harry Reid can’t change all the rules in the Senate. Darn that Constitution!

One of the things I’m most surprised about is hearing both from Republican members of Congress and Republican candidates, the notion that we should return to the rules that existed on Wall Street before the financial crisis. They want to roll back all the Wall Street reforms we put into place as if they’ve got amnesia about how we got into this problem in the first place.

There you go again, sir, trying to get unthinking Americans to believe that Wall Street caused the country’s financial mess. It’s kind of you to cover for Barney Frank, Chris Dodd, Fannie and Freddie, and the Federal Reserve. No fraternizing with greedy Wall Street people for you, sir! Unless, of course, they can come in through the back door for a quick campaign contribution.

On a whole range of these issues, there’s going to be a clear choice for the American people to make.

Crystal clear, sir.

Originally from Big Government

Here’s one of the protesters Reason.tv spoke to at Occupy Wall Street in Los Angeles on October 12, 2011. She identifies herself as Patricia McAllister and as an employee of Los Angeles Unified School District.

“I think that the Zionist Jews, who are running these big banks and our Federal Reserve, which is not run by the federal government… they need to be run out of this country,” she said.

The full coverage of this protest can be seen here.

Originally from Big Government