What is happening at the Westminster Shopping Center?

What is happening at the Westminster Shopping Center?

July 11, 2008

Update: photo – October 28, 2008

Many folks have asked what is happening with the portion of the Westminster Shopping Center at the corner of Englar Road and Rte 140.

Sometime ago, the two back-to-back gas stations, that were located there, were torn down.

Then the area was fenced off and nothing has happened since.

Now anyone who knows anything about shopping centers knows that things often happen at break-neck glacier speed; so many of us thought nothing of it for a while.

I asked around and no one seemed to know anything. I thought of calling the owners, the Washington Real Estate Investment Trust (WRIT) – and well - I lost track of it. There are only so many hours in the day.

My experience with the WRIT is that they are usually very accessible – I just never got around to calling them.

And then the other night I was rummaging around the Maryland Department of the Environment (MDE) website researching another matter and there it was: “Facts about Westminster Citgo and Shopping Center Voluntary Cleanup Program.”

Apparently they are cleaning-up the site before they move forward… Which is a good thing.

I’ll paste the information from the MDE website below, but first some very brief reference material on the shopping center: “StoreTrax” deck sheet on the Westminster Shopping Center (retrieved July 10th, 2008):

Westminster Shopping Center, Route 140 & Englar Road, Westminster, MD
Details: County: Carroll, Type: Community, Built: 1958, Renovated: 2000: Westminster Shopping Center went through a complete redevelopment in 2000. Medium Boxes and Small Sites available for National Tenants. Total Square Feet: 176,692

Washington Real Estate Investment Trust 6110 Executive Blvd. Suite 800 Rockville, MD 20852

Leasing Agent(s) Steve Krupinski, 301-255-0846 phone, 301-984-9612 faxskrupinski@writ.com

http://www.storetrax.com/stx/showNAProperty.do?centerId=811&type=1&st_inc=no

MDE Facts about Westminster Citgo and Shopping Center Voluntary Cleanup Program

October 30, 2007

Page 1
Maryland Department of the Enviroment
1800 Washington Boulevard Baltimore, MD 21230-1718 www.mde.state.md.us
410-537-3000 800-633-6101 TTY Users: 800-735-2258

Facts About…

Department of the Environment
WESTMINSTER CITGO AND SHOPPING CENTER
(VOLUNTARY CLEANUP PROGRAM)

Site Location

The Westminster Citgo and Shopping Center property consists of two parcels totaling 10.84-acres located at the southeast corner of Route 140 and Englar Road in Westminster, Carroll County, Maryland. The property is a strip mall shopping center with several stand-alone buildings and paved parking areas. Overland flow from the property discharges to the southeast. The Town of Westminster supplies water and sanitary sewer services to the property and the vicinity. The Town of Westminster derives the majority of their potable water from groundwater and the Westminster Citgo property is located in the wellhead protection area. The property is zoned business. Other commercial properties surround the property.

Site History

Prior to 1958, the property was used for agricultural purposes, and in 1958, the property was developed into a shopping center. A dual operator service station was located on the property as early as 1959 and the associated building was demolished in 2006.

The current owner, Washington Real Estate Investment Trust, purchased the property from Westminster Shopping Center, Inc. in 1972.

In 1957, Westminster Shopping Center, Inc. purchased the property from Scott and Anita Bair who purchased it in 1955. Prior to 1955, the Albaugh and Babylon Grocery Company owned the property.

Environmental Investigations and Actions

Two service stations operated at the property from 1959 until 2006. Numerous underground storage tanks have historically been associated with the service stations. These tanks have all been removed from the property with the exception of one 8,000-gallon tank that was abandoned in place in 1989. During tank removal in 2006, petroleum contamination was noted in the soil and groundwater. Contaminated soils, totaling 322 tons, were also removed during the tank excavations. A Phase II investigation was conducted subsequently and revealed additional petroleum soil impacts and contamination of groundwater at the property.

An Oil Control Program (OCP) case was opened for the property (#2005-0945-CL). In November 2006, the OCP approved a work plan for the property that required additional sampling. In April 2007, the OCP requested an interim corrective action plan be developed to address the petroleum contamination at the property. The request also includes quarterly sampling of the groundwater from the existing monitoring wells.
Page 2

1800 Washington Boulevard Baltimore, MD 21230-1718 www.mde.state.md.us
410-537-3000 800-633-6101 TTY Users: 800-735-2258

Current Status

On August 20, 2007, Washington Real Estate Investment Trust submitted two Voluntary Cleanup Program applications for the property seeking a restricted no further requirements determination for the shopping center and certificate of completion for the service station for commercial future uses of the property.
Planned or Potential Future Action

The proposed future use of the property will be commercial.

Contact

Jim Carroll
Maryland Department of the Environment
(410) 537-3437
Land Restoration Program
Last Update: October 30, 2007

http://www.mde.state.md.us/assets/document/Westminster%20Citgo%20and%20Shopping%20Cntr.pdf.

20080711 What is happening at the Westminster Shopping Center?

Kevin Dayhoff www.kevindayhoff.net http://kevindayhoff.blogspot.com/

Kevin Dayhoff Art: www.kevindayhoff.com (http://kevindayhoffart.blogspot.com/)

Would the Last Honest Reporter Please Turn On the Lights? By Orson Scott Card

Would the Last Honest Reporter Please Turn On the Lights? By Orson Scott Card

When I wrote Journalistic Bubble Wrap in The Tentacle on October 15, 2008 -

One of the hottest subplots to the 2008 presidential campaign is how would the contest, the polls and the final outcome have looked if the “old – elite” media had not been so biased towards the Democratic Party in general and specifically the Democrat nominee, Illinois Sen. Barack Obama.

I wish I had written it as well as when Orson Scott Card wrote Would the Last Honest Reporter Please Turn On the Lights?

Would the Last Honest Reporter Please Turn On the Lights?

October 5, 2008 - Featured on Rush Limbaugh 10/22/08

http://www.ornery.org/essays/warwatch/2008-10-05-1.html

Editor's note: Orson Scott Card is a Democrat and a newspaper columnist, and in this opinion piece he takes on both while lamenting the current state of journalism.

An open letter to the local daily paper — almost every local daily paper in America:

I remember reading All the President's Men and thinking: That's journalism. You do what it takes to get the truth and you lay it before the public, because the public has a right to know.

This housing crisis didn't come out of nowhere. It was not a vague emanation of the evil Bush administration.

It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.

What is a risky loan? It's a loan that the recipient is likely not to be able to repay.

The goal of this rule change was to help the poor — which especially would help members of minority groups. But how does it help these people to give them a loan that they can't repay? They get into a house, yes, but when they can't make the payments, they lose the house — along with their credit rating.

They end up worse off than before.

This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.

Furthermore, Freddie Mac and Fannie Mae were making political contributions to the very members of Congress who were allowing them to make irresponsible loans. (Though why quasi-federal agencies were allowed to do so baffles me. It's as if the Pentagon were allowed to contribute to the political campaigns of Congressmen who support increasing their budget.)

Isn't there a story here? Doesn't journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep confidence in our economy was a $700 billion bailout? Aren't you supposed to follow the money and see which politicians were benefiting personally from the deregulation of mortgage lending?

I have no doubt that if these facts had pointed to the Republican Party or to John McCain as the guilty parties, you would be treating it as a vast scandal. "Housing-gate," no doubt. Or "Fannie-gate."

Instead, it was Senator Christopher Dodd and Congressman Barney Frank, both Democrats, who denied that there were any problems, who refused Bush administration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting sub-prime mortgage loans almost up to the minute they failed.

As Thomas Sowell points out in a TownHall.com essay entitled "Do Facts Matter?" ( http://snipurl.com/457townhall_com] ): "Alan Greenspan warned them four years ago. So did the Chairman of the Council of Economic Advisers to the President. So did Bush's Secretary of the Treasury."

These are facts. This financial crisis was completely preventable. The party that blocked any attempt to prevent it was ... the Democratic Party. The party that tried to prevent it was ... the Republican Party.

Yet when Nancy Pelosi accused the Bush administration and Republican deregulation of causing the crisis, you in the press did not hold her to account for her lie. Instead, you criticized Republicans who took offense at this lie and refused to vote for the bailout!

Read the rest here: Would the Last Honest Reporter Please Turn On the Lights?

20081005 Would the Last Honest Reporter Please Turn On the Lights? By Orson Scott Card

My three part series on the current economic mess in The Tentacle

My three part series on the current economic mess in The Tentacle

Folks have been asking where they can find my three-part series on the current economic mess in The Tentacle from October 1, 2 and 3, 2008.

They may be found here:

October 3, 2008
Congress and The Rattlesnake – Part 3
Kevin E. Dayhoff
On May 13, 2008, Democratic presidential nominee Barack Obama compared the current housing crisis in the U.S. to the Great Depression in a campaign stop in Missouri.


October 2, 2008
Congress and The Rattlesnake – Part 2
Kevin E. Dayhoff
For several weeks the nation and the world have been watching the financial news emanating from Washington and Wall Street with that “deer in headlights” look as everyone holds their breath in disbelief and worries another shoe will drop.


October 1, 2008
Congress and the Rattlesnake – Part 1
Kevin E. Dayhoff
In response to the increasing wrath of the American voter, the U.S. House of Representatives came to its senses on Monday and voted 288 to 205 to kill the rash and ill-conceived proposed $700 billion bailout of Wall Street.

20081003 My three part series on the current economic mess in The Tentacle

Among my most prized possessions are words that I have never spoken

Among my most prized possessions are words that I have never spoken

October 23, 2008
I’m not sure when Orson Scott Card said this; however the following quote ought to be an everyday mantra for anyone in the public spotlight.

It is certainly a thought that many in the blogosphere ought to take to heart…

It reminds me of the great admonition that I often repeated to myself when I was an elected official – although critics will suggest that I, all too often did not follow my own advice enough: “Never miss an opportunity to sit down and shut up.”

"Among my most prized possessions are words that I have never spoken." Attributed to Orson Scott Card

20081023 Among my most prized possessions are words that I have never spoken

http://www.ornery.org/

New York Times Op-Ed Contributor: “Buy American. I Am.” by Warren E. Buffett

“Buy American. I Am.” by Warren E. Buffett

New York Times Op-Ed Contributor October 17, 2008 Omaha

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks…

[…]

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful…

[…]

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

[…]

Read Mr. Buffet’s entire Op-Ed here: “Buy American. I Am.” by Warren E. Buffett

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

20081017 New York Times Op-Ed Contributor: “Buy American. I Am.” by Warren E. Buffett

We had joy, we had fun, we had sidewalks in the sun

We had joy, we had fun, we had sidewalks in the sun

EAGLE ARCHIVE By Kevin Dayhoff Posted on http://www.explorecarroll.com/ 10/17/08

I'm writing this week's column within feet of the Atlantic Ocean in Nags Head, N.C.

And I mean, literally, "feet from the ocean." Our unit is one of the older ones built here and was, in hindsight, probably too close to the water. Yet it has managed to not yet be washed into the sea.

If you listen carefully while reading this, that is the sound of the ocean in the background.

Life is so hard ...

Many folks from Carroll County vacation on the Outer Banks in places such as Duck, Kill Devil Hills, Ocracoke, Kitty Hawk, Corolla and Manteo. Of course, most people come down here in the summer. (Which is why I like the Outer Banks in the off-season. It is way less crowded.)

Of course, I can't get away from history -- the Outer Banks is rich in history, lighthouses, scenery and miles of pristine beaches.

The Banks was the site of the first attempt at an English settlement on Roanoke Island in 1585.

Nags Head was first established in the 1830s, by a planter by the name of Francis Nixon. Hotels sprang up on the Outer Banks as early as the 1838. The first oceanfront cottages were built around 1855, by an investor named Dr. W. G. Pool, who bought 50 acres of oceanfront property for $30.

During the Civil War, on Dec. 30, 1862, a gale off Cape Hatteras sank the Union ironclad USS Monitor.

The Outer Banks is also where Orville and Wilbur Wright became the first to pilot a mechanically driven, heavier than air, machine about 120 feet, for 12 seconds, on Dec. 17, 1903.

OK, that's enough out-of-Carroll history. Many readers might be surprised to learn that Westminster was promoted 120 years ago as a summer vacation destination.

A promotional piece published by Vanderford Bros. on Jan. 1, 1887, and called to my attention by historian Jay Graybeal, included a section entitled, "(Westminster) as a Summer Resort"

Those who have been following recent discussions in Westminster Common Council meetings about efforts to maintain our streets would be fascinated to learn that the current struggle is not new. The 1887 promotion read, in part:

"The streets are lighted by gas, and are wide and straight. They have recently been graded and the sidewalks been relaid to conform to a uniform grade.

"On several of the outlying streets, much new paving has been done, and the work will begin anew in the spring. A proposition for paving the beds of the streets has been considered for some time, and the Mayor and Common Council, by a vote of the people, are authorized to have the work done when a suitable plan is decided upon ..."

"In short, Westminster is a live town, filled with an active, industrious, and thrifty population, that is unsurpassed for intelligence, skill and business energy.

"Altogether there is no more desirable place for business, for a comfortable, healthful and convenient permanent residence, or for the summer's sojourn, than Westminster."

All we need is a lighthouse.

Read the entire column here: We had joy, we had fun, we had sidewalks in the sun

http://explorecarroll.com/community/1289/we-had-joy-we-had-fun-we-had-sidewalks-sun/
20081019 SCE Westminster as a summer resort
20081019 SCE We had joy we had fun we had com/ sidewalks in the sun sceked

Kevin Dayhoff www.kevindayhoff.net http://kevindayhoff.blogspot.

Kevin Dayhoff Art http://kevindayhoffart.blogspot.com/

War driving in Nags Head NC – The Scream

Monday, October 20, 2008

War driving in Nags Head NC – The Scream

War driving in Nags Head NC – The Scream
October 10 – 19, 2008
http://www.kevindayhoff.net/

I spent the week of October 10-19, 2008 in Nags Head on the Outer Banks of North Carolina in a unit that did not have internet access. To find wireless service, we had to go war driving. It was maddening.

I’m back home now – and I’m fine. Really I am. I’m told the twitching will stop soon…

20081019 War driving in Nags Head NC The Scream

Sphere: Related Content

Posted by Kevin Dayhoff at 10/20/2008 01:26:00 AM

Kevin Dayhoff Art http://kevindayhoffart.blogspot.com/

Washington Times Editorial: What is ACORN?

Washington Times Editorial: What is ACORN?

Friday, October 10, 2008

The Association of Community Organizations for Reform Now, better known as ACORN, is under investigation by state and federal authorities for its voter registration drives. Allegations are that ACORN's get-out-the-vote efforts have produced thousands of fraudulent registrations. The probes are encouraging; America wouldn't be in position to criticize other nations of ballot-stuffing if it permits the same at home. What's most encouraging, though, is that House Minority Leader John Boehner of Ohio is calling for ACORN to be defunded. "The latest allegations of voter registration fraud by ACORN are further evidence that this group cannot be trusted with another dollar of the taxpayers' money," he said.

ACORN helped make the term "affordable housing" a Washington staple. So as the roots of the financial crisis are laid bare, take a hard look at ACORN.

ACORN has its roots in the community-organization teachings of Saul Alinsky, who mobilized Chicago's stockyard workers in the 1930s. The organization was founded as the Arkansas Community Organizations for Reform Now by Wade Rathke, a protege of George Wiley, the civil-rights activist who later engineered the Poor People's Campaign with his founding of the National Welfare Reform Organization. After fighting for "motor-voter" registration in the 1990s, which allowed people to register to vote at departments of motor vehicles, ACORN began expanding its voter registration activities. Since 2004 it has come under scrutiny for producing thousands of fraudulent registrations, and 15 employees intent on exploiting their pay-per-registration policy to make money have been indicted or convicted of voter registration fraud. But it didn't start out that way.

If the political left is an abstract concept for social justice and socialist sentiments, then ACORN is its avatar.

[…]

Read the entire editorial here: Washington Times Editorial: What is ACORN?

http://www.washingtontimes.com/news/2008/oct/10/what-is-acorn/

20081010 Washington Times Editorial What is ACORN?

This week in The Tentacle

This week in The Tentacle

Friday, October 10, 2008

Taliban, Welcome
Roy Meachum
The Bush Administration has not posted signs, not yet, welcoming the Taliban back to Afghanistan. But all the signs and indices are there.

The Future of Maryland Medevac
Kevin E. Dayhoff
The recent tragic crash of the Maryland State Police aviation command Medevac helicopter has unfortunately developed a subplot for those who wish to further a debate about the future of the vital air rescue service.

Thursday, October 9, 2008

Slots and The Second Debate
Richard B. Weldon Jr.
Lots of debate, discussion, and focus on politics in the last few weeks is responsible for a swirling mix of thoughts.

Wasting Taxpayers Time
Joan McIntyre
Anyone looking in on Frederick from the outside on Tuesday would have thought “what a bunch of idiots.” Taking a moment in time to look at us would not bode well. But follow the path backwards for a bit and you will find the same common denominator at the beginning of just about every drama that has gone on in our county over the past two years. One person.

March to The Battleground
Chris Cavey
Saturday was a typical clear early autumn day; cool, crisp and damp as the early morning saw a dedicated group of Maryland for McCain campaign workers heading south to Fairfax, Virginia, to help the cause in that highly targeted state.

Wednesday, October 8, 2008

TFC Mickey Lippy – Hero
Kevin E. Dayhoff
At 11 P.M., September 27, Maryland State Police Medevac helicopter Trooper 2 left its hangar at the Andrews Air Force Base to preserve the “Golden Hour” for two traffic crash victims in Waldorf.

Colorado: Land of Paradox
Tom McLaughlin
The election seems to hinge on battleground states and I visited one of them recently. A trip to Colorado Springs, called “The Springs” by locals, proved to be an enlightening experience.

Tuesday, October 7, 2008

The Republic In Danger
Roy Meachum
With the core of the nation's financial structure in shambles, at stake these next four weeks is the very governmental system itself. Never have these United States needed strong leadership more.


Monday, October 6, 2008
The People’s Will Not Done
Steven R. Berryman
The People to the government: “A lack of planning on your part does not constitute an emergency on my part!” Or does it?

From the Desk of The Publisher:
John W. Ashbury
Over the weekend Frederick City Alderman C. Paul Smith submitted an emailed letter to the chairman of the Republican State Central Committee regarding the decision by Delegate Rick Weldon to change his voting registration from Republican to “Unaffiliated.” Alderman Smith suggests that the Central Committee take a strong stand to have Delegate Weldon removed as chairman of the Frederick County Delegation to the General Assembly. We reprint Alderman Smith’s letter in its entirety.


Friday, October 3, 2008

It’s All Male Bovine Dung
John W. Ashbury
This political season has given new meaning to the term used in the headline above. Both presidential camps have stooped to new lows with their ads, intentionally misrepresenting their opponent’s positions. Unfortunately, all too many American swallow the messages and believe one or the other.

Independent Rick Weldon
Roy Meachum
The only times fellow TheTentacle.com columnist Rick Weldon and I disagreed were when he stepped in the mud pie of partisan politics. Didn't happen often. He was not the sort of human being to give up reason for the sake of one party or the other. Especially in Maryland.


Congress and The Rattlesnake – Part 3
Kevin E. Dayhoff
On May 13, 2008, Democratic presidential nominee Barack Obama compared the current housing crisis in the U.S. to the Great Depression in a campaign stop in Missouri.


Thursday, October 2, 2008
Unfettered Capitalism = Disaster
Tony Soltero
One of the mantras of the right is that free markets only function properly in the complete absence of government intervention. Deregulate everything, get out of the way, and let the market work its magic. It's as essential to conservative dogma as war fever and religious fundamentalism.


Pork and Power
Patricia A. Kelly
I was listening to Senator Orrin Hatch the other day on television, when, referring to the financial bailout vote, he said, “We’re just going to have to sweeten it, and then they’ll vote for it.”

Legally Blonde – The Musical
Roy Meachum
Tuesday's opening at the Hippodrome Theatre brings to Baltimore a show that's still running, if not so strong on Broadway. A cast member's father confided the two-week closing notice has gone up on the New York hit. Pity! But out in the hinterland we have this wow! touring company with us.

Congress and The Rattlesnake – Part 2
Kevin E. Dayhoff
For several weeks the nation and the world have been watching the financial news emanating from Washington and Wall Street with that “deer in headlights” look as everyone holds their breath in disbelief and worries another shoe will drop.


Wednesday, October 1, 2008

From the Desk of The Publisher
John W. Ashbury
Yesterday Delegate Rick Weldon announced that he has changed his voter registration from "Republican" to "Unaffiliated." The text of his announcement is presented here for your edification.

Congress and the Rattlesnake – Part 1
Kevin E. Dayhoff
In response to the increasing wrath of the American voter, the U.S. House of Representatives came to its senses on Monday and voted 288 to 205 to kill the rash and ill-conceived proposed $700 billion bailout of Wall Street.

Two Faces
Tom McLaughlin
I was really surprised how much Sen. John McCain reminded me of Dad. I watched him in the first debate and his mannerisms, coupled with his speech patterns, had Dad written all over him.

20081010 This week in The Tentacle

Chairman Ben S. Bernanke At the National Association for Business Economics 50th Annual Meeting, Washington, D.C.

Chairman Ben S. Bernanke At the National Association for Business Economics 50th Annual Meeting, Washington, D.C.

Related: Speech - Chairman Ben S. Bernanke At the Federal Reserve Bank of Chicago’s 43rd Annual Conference on Bank Structure and Competition, Chicago, Illinois

October 7, 2008

Current Economic and Financial Conditions

http://www.federalreserve.gov/newsevents/speech/bernanke20081007a.htm

Good afternoon. I am pleased to have once again the opportunity to address the National Association for Business Economics. My remarks today will focus on recent developments in the financial sector and the economy and on the challenges we face.

As you know, financial systems in the United States and in much of the rest of the world are under extraordinary stress, particularly the credit and money markets. The losses suffered by many banks and nonbank financial firms have both constrained their ability to lend and reduced the willingness of other market participants to deal with them. Great uncertainty about the values of financial assets, particularly more complex and opaque assets, has made investors extremely reluctant to bear credit risk, resulting in further declines in asset prices and a drying up of liquidity in a number of funding markets. Even secured funding has become expensive and difficult to obtain, as lenders worry about their ability to sell collateral in illiquid markets in the event of default. In addition, many securitization markets, such as the secondary market for private-label mortgage-backed securities, remain closed or impaired.

Considerable experience in both industrialized and emerging economies has shown that severe financial instability, together with the associated declines in asset prices and disruptions in credit markets, can take a heavy toll on the broader economy if left unchecked. For this reason, the Federal Reserve, the Treasury, and other agencies are committed to restoring market stability and are working assiduously to ensure that the financial system is able to perform its critical economic functions. Recent actions by the Congress have given the Treasury new tools and resources to address the stressed conditions of our financial markets and institutions. The Federal Reserve has also been granted a new authority, the ability to pay interest on bank reserves, which will allow us to expand our lending as needed to support the system while better managing the federal funds rate. These tools will provide important additional support for the government's efforts to strengthen financial markets and the economy.

Let me briefly review recent financial developments. On the heels of nearly a year of stress in credit markets, investors' and creditors' concerns about funding and credit risks at financial firms intensified over the summer as mortgage-related assets deteriorated further, economic growth slowed, and uncertainty about the economic outlook increased. As investors and creditors lost confidence in the ability of certain firms to meet their obligations, their access to capital markets as well as to short-term funding markets became increasingly impaired and their stock prices fell sharply. Among the companies that experienced this dynamic most forcefully were the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac; the investment bank Lehman Brothers; and the insurance company American International Group (AIG).

The Federal Reserve believes that, whenever possible, such difficulties should be addressed through private-sector arrangements--for example, by raising new equity capital, as many firms have done, by negotiations leading to a merger or acquisition, or by an orderly wind-down. Government assistance should be provided with the greatest reluctance and only when the stability of the financial system, and thus the health of the broader economy, is at risk. In those cases when financial stability is threatened, however, intervention to protect the public interest may well be justified.

Fannie Mae and Freddie Mac present cases in point. The Federal Reserve had long warned about the systemic risks posed by these companies' large portfolios of mortgages and mortgage-backed securities, as well as the problems arising from the conflict between shareholders' objectives and the government's goals for the two firms. Given the scale of losses in their portfolios, raising enough new capital from private investors was infeasible. The firms' size and their government-sponsored status precluded a merger with, or acquisition by, another company. To avoid unacceptably large dislocations in the mortgage markets, the financial sector, and the economy as a whole, the Federal Housing Finance Agency (FHFA) put Fannie and Freddie into conservatorship and the Treasury, drawing on authorities recently granted by the Congress, made financial support available. The Federal Reserve, acting in a consultative role, worked closely with FHFA in evaluating the GSE portfolios and capital positions. Based on the joint findings of the agencies, we supported FHFA's decision to place the companies into conservatorship as necessary and appropriate, given their conditions and systemic importance. The government's actions appear to have stabilized the GSEs, although like virtually all other firms they are experiencing effects of the current crisis. Nonetheless, we already have seen benefits of their stabilization in the form of lower mortgage rates, which should help the housing market.

The difficulties at Lehman and AIG raised somewhat different issues. Like the GSEs, both companies were large and complex and deeply embedded in our financial system. In both cases, as the firms approached default, the Treasury and the Federal Reserve sought private-sector solutions, but none was forthcoming. Attempts to organize a consortium of private firms to purchase or recapitalize Lehman were unsuccessful. With respect to public-sector solutions, we determined that either facilitating a sale of Lehman or maintaining the company as a free-standing entity would have required a very sizable injection of public funds--much larger than in the case of Bear Stearns--and would have involved the assumption by taxpayers of billions of dollars of expected losses. Even if assuming these costs could be justified on public policy grounds, neither the Treasury nor the Federal Reserve had the authority to commit public money in that way; in particular, the Federal Reserve's loans must be sufficiently secured to provide reasonable assurance that the loan will be fully repaid. Such collateral was not available in this case. Recognizing that Lehman's potential failure posed risks to market functioning, the Federal Reserve sought to cushion the effects by implementing a number of measures, including substantially broadening the collateral accepted by the Fed's Primary Dealer Credit Facility (PDCF) and Term Securities Lending Facility (TSLF) to ensure that the remaining primary dealers would have uninterrupted access to funding.

In the case of AIG, the Federal Reserve and the Treasury judged that a disorderly failure of AIG would have severely threatened global financial stability and the performance of the U.S. economy. That judgment reflected our assessment of prevailing market conditions, AIG's central role in a number of markets other firms use to manage risks, and the size and composition of AIG's balance sheet. To avoid the default of AIG, the Federal Reserve was able to provide emergency credit that was judged to be adequately secured by the assets of the company. To protect U.S. taxpayers and to mitigate the possibility that lending to AIG would encourage inappropriate risk-taking by financial firms in the future, the Federal Reserve further ensured that the terms of the credit extended to AIG imposed significant costs and constraints on the firm's owners, managers, and creditors.

AIG's difficulties and Lehman's failure, along with growing concerns about the U.S. housing sector and economy, contributed to extraordinarily turbulent conditions in global financial markets in recent weeks. Equity prices have fallen sharply, the cost of short-term credit, where such credit has been available, has spiked, and liquidity has dried up in many markets. One money market fund's losses forced it to "break the buck"--that is, the value of its assets fell below par--an event that triggered extensive withdrawals from a number of money market funds. Those funds responded to the surge in redemptions by attempting to reduce their holdings of commercial paper and large certificates of deposit issued by banks. Some firms that could not roll over maturing commercial paper drew on back-up lines of credit with banks just as the banks were finding it even more difficult to raise cash in the money markets. At the same time, a marked increase in the demand for safe assets--a flight to quality and liquidity--resulted in a further drop in the value of mortgage-related assets and sent the yield on Treasury bills down to a few hundredths of a percent.

Developments during the summer pressured not only nonbank financial firms, but also a number of depository institutions, including Washington Mutual (WaMu) and Wachovia. In recent weeks, these two institutions suffered deposit outflows and reduced access to wholesale funding. The Office of Thrift Supervision, WaMu's regulator, closed that company and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver; the FDIC immediately sold the institution to JPMorgan Chase. In the case of Wachovia, to avoid serious adverse effects on economic conditions and financial stability, the Secretary of the Treasury, in consultation with the President and on the recommendation of the Federal Reserve and FDIC, authorized the FDIC to use its funds to facilitate the sale of that company's banking operations without loss to creditors. Both Citicorp and Wells Fargo have offered to buy the company and negotiations are continuing. Most importantly, however, in either case all depositors and creditors of Wachovia are fully protected, and depositors and other customers will experience no interruption in banking services.

By potentially restricting future flows of credit to households and businesses, the developments in financial markets pose a significant threat to economic growth. The Treasury and the Fed have taken a range of actions to address the very tight funding conditions that now prevail. For example, the Treasury implemented a temporary guarantee program for balances held in money market mutual funds, helping to stem the outflows from these funds and thus reducing their need to sell assets into already distressed markets. The Federal Reserve has taken a number of steps, including putting in place a temporary lending facility that provides financing for banks to purchase high-quality asset-backed commercial paper from money market funds. The Fed has also significantly increased the quantity of funds it auctions to banks and has accommodated heightened demands for funding from banks and primary dealers; as of last Wednesday, our various lending facilities, including our securities lending program, were providing more than $800 billion of liquidity to the financial system. To address dollar funding pressures worldwide, we have significantly expanded reciprocal currency arrangements (so-called swap agreements) with foreign central banks. These agreements enable the foreign central banks to provide dollar funding to financial institutions in their jurisdictions, which helps to improve the functioning of dollar funding markets globally. In addition, this morning the Federal Reserve announced a new facility that will help provide liquidity to term funding markets by purchasing three-month commercial paper and asset-backed commercial paper directly from eligible issuers.

The expansion of Federal Reserve lending is helping financial firms cope with reduced access to their usual sources of funding. Recently, however, our liquidity provision had begun to run ahead of our ability to absorb excess reserves held by the banking system, leading the effective funds rate, on many days, to fall below the target set by the Federal Open Market Committee. This problem has largely been addressed by a provision of the legislation the Congress passed last week, which gives the Federal Reserve the authority to pay interest on balances that depository institutions hold in their accounts at the Federal Reserve Banks. The Federal Reserve announced yesterday that it will pay interest on required reserve balances at 10 basis points below the target federal funds rate, and pay interest on excess reserves, initially at 75 basis points below the target. Paying interest on reserves should allow us to better control the federal funds rate, as banks are unlikely to lend overnight balances at a rate lower than they can receive from the Fed; thus, the payment of interest on reserves should set a floor for the funds rate over the day. With this step, our lending facilities may be more easily expanded as necessary. So long as financial conditions warrant, we will continue to look for ways to reduce funding pressures in key markets.

Economic activity had shown signs of decelerating even before the recent upsurge in financial-market tensions. As has been the case for some time, the housing market continues to be a primary source of weakness in the real economy as well as in the financial markets. However, the slowdown in economic activity has spread outside the housing sector. Private payrolls have continued to contract, and the declines in employment, together with earlier increases in food and energy prices, have eroded the purchasing power of households. This sluggishness of real incomes, together with tighter credit and declining household wealth, is now showing through more clearly to consumer spending. Indeed, since May, real consumer outlays have contracted significantly. Meanwhile, in the business sector, worsening sales prospects and a heightened sense of uncertainty have begun to weigh more heavily on investment spending as well.

The intensification of financial turmoil and the further impairment of the functioning of credit markets seem likely to increase the restraint on economic activity in the period ahead. Even households with good credit histories are now facing difficulties obtaining mortgage loans or home equity lines of credit. Banks are also reducing credit card limits, and denial rates on automobile loan applications reportedly are rising. Businesses, too, are confronting diminished access to credit. For example, disruptions in the commercial paper market and tightening of bank lending standards have made it more difficult for businesses to obtain the working capital they need to meet everyday operating expenses such as payrolls and inventories.

All told, economic activity is likely to be subdued during the remainder of this year and into next year. The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth. To support growth and reduce the downside risks, continued efforts to stabilize the financial markets are essential. The Federal Reserve will continue to use the tools at its disposal to improve market functioning and liquidity.

Inflation has been elevated, reflecting the steep increases in the prices of oil, other commodities, and imports that occurred earlier this year, as well as some pass-through by firms to consumers of their higher costs of production. However, more recently, the prices of oil and other commodities, while remaining quite volatile, have fallen from their peaks, and prices of imports show signs of decelerating. In addition, expected inflation, as measured by consumer surveys and inflation-indexed Treasury securities, has held steady or eased. These recent developments, together with economic activity that is likely to fall short of potential for a time, should lead to rates of inflation more consistent with price stability. Still, the inflation outlook remains highly uncertain, in part because of the extraordinary volatility of commodity prices. We will need to continue to monitor price developments closely.

Overall, the combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased. At the same time, the outlook for inflation has improved somewhat, though it remains uncertain. In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate.

The intensification of the financial crisis in recent weeks made clear that a more powerful and comprehensive approach involving the fiscal authorities was needed to solve these problems. On that basis, the Secretary of the Treasury, with the support of the Federal Reserve, went to the Congress to ask for a substantial program aimed at stabilizing our financial markets. As you know, last week the Congress passed and the President signed the Emergency Economic Stabilization Act. This legislation provides important new tools for addressing the distress in financial markets and thus mitigating the risks to the economy. The act adds broad, flexible authorities to buy troubled assets, to provide guarantees, and to directly strengthen the balance sheets of individual institutions. Notably, the legislation establishes a new Troubled Asset Relief Program, or TARP, under which the Treasury is authorized to purchase as much as $700billion of troubled mortgages, mortgage-related securities, and other financial instruments from financial firms that are regulated under U.S. law and have significant operations in the United States. The act also raises the limit on deposit insurance at banks and credit unions from $100,000 to $250,000 per account, a step that should reinforce depositors' confidence in the security of their funds and thus help to stabilize depository institutions. And, as I mentioned, the act provides the Federal Reserve the authority to pay interest on reserves, which will allow us to better manage the federal funds rate as we provide liquidity to the markets. We will begin exercising that authority this week.

The TARP's purchases of illiquid assets from banks and other financial institutions will create liquidity and promote price discovery in the markets for these assets. This in turn will reduce investor uncertainty about the current value and prospects of financial institutions, enabling banks and other institutions to raise capital and increasing the willingness of counterparties to engage. More generally, increased liquidity and transparency in pricing will help to restore confidence in our financial markets and promote more normal functioning. With time, strengthening our financial institutions and markets will allow credit to begin flowing again, supporting economic growth.

The interests of taxpayers are carefully protected under this program. First, the Congress has required extensive controls and oversight to ensure that the allotted funds are used appropriately and effectively. Second, the $700 billion allocated by the legislation is not an authorization to spend but rather an authorization to purchase financial assets. The Treasury will be a patient investor and will likely hold these assets for an appreciable period of time. Eventually, however, some assets will mature, and the Treasury will choose to sell others to private investors. Financially, in the long run, the taxpayer may come out either ahead or behind in this process; in light of the many uncertainties, no assurances can be given. But the ultimate cost of the program to the taxpayer will certainly be far less than $700 billion. Third, and most important, restoring the normal flow of credit is essential for economic recovery. If the TARP promotes financial stability, leading ultimately to stronger economic growth and job creation, it will have proved a very good investment indeed, to everyone's benefit.

To be sure, there are many challenges associated with the design and implementation of the TARP, including determining which assets will be purchased and how prices will be determined. The Treasury, with the advice and cooperation of the Federal Reserve, is working to address these challenges as quickly as possible. It is unlikely that a single method will be used for acquiring assets; inevitably, some experimentation will be necessary to determine which approaches are most effective. Importantly, the legislation that created the TARP does provide sufficient flexibility to allow for different approaches to solving the problem--subject, of course, to the close oversight that will ensure that the program's funds are used in ways that are in the interest of taxpayers.

These are momentous steps, but they are being taken to address a problem of historic dimensions. In one respect, however, we are fortunate. We have learned from historical experience with severe financial crises that if government intervention comes only at a point at which many or most financial institutions are insolvent or nearly so, the costs of restoring the system are greatly increased. This is not the situation we face today. The Congress and the Administration chose to act at a moment of great stress, but one at which the great majority of financial institutions have sufficient capital and liquidity to return to their critical function of providing new credit for our economy. The steps being taken now to restore confidence in our institutions and markets will go far to resolving the current dislocations in the markets. I believe that the bold actions taken by the Congress, the Treasury, the Federal Reserve, and other agencies, together with the natural recuperative powers of the financial markets, will lay the groundwork for financial and economic recovery.

Subject: Request For Urgent Business Relationship

Subject: Request For Urgent Business Relationship

Hat Tip: Doug Ross at Journal

Friday, October 03, 2008

DEAR AMERICAN:

I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.

I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.

I AM WORKING WITH MR. CHRISTOPHER DODD, MILLIONAIRE SENATOR, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE NINETIES. THIS TRANSACTION IS 100% SAFE.

THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.

PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.

YOURS FAITHFULLY MINISTER OF TREASURY PAULSON

20081003 Request for Urgent Business Relationship

This week in The Tentacle – October 1, 2008

This week in The Tentacle – October 1, 2008

Wednesday, October 1, 2008

From the Desk of The Publisher
John W. Ashbury
Yesterday Delegate Rick Weldon announced that he has changed his voter registration from "Republican" to "Unaffiliated." The text of his announcement is presented here for your edification.

Congress and the Rattlesnake – Part 1
Kevin E. Dayhoff
In response to the increasing wrath of the American voter, the U.S. House of Representatives came to its senses on Monday and voted 288 to 205 to kill the rash and ill-conceived proposed $700 billion bailout of Wall Street.

Two Faces
Tom McLaughlin
I was really surprised how much Sen. John McCain reminded me of Dad. I watched him in the first debate and his mannerisms, coupled with his speech patterns, had Dad written all over him.


Tuesday, September 30, 2008
My Best Friend's Fancy
Roy Meachum
Other people said Pushkin is Downtown Frederick's best known celebrity. He also runs high in the best-loved category. Every time the English pointer hits the sidewalk, his fans appear. They start conversations when their heads reach my knee level.


The Rites of Autumn on Two Wheels
Nick Diaz
Readers of TheTentacle.com may remember one of my earlier columns, written late last Fall, in which I listed the 10 dumb questions people ask of motorcycle riders. Since it’s the last day of September, several days past the equinox, one of the 10 dumb questions deserves reiteration, to wit:


Monday, September 29, 2008
Take a Chance
Richard B. Weldon Jr.
Well, it seems as though every expert, bush league moralist, and elected opinion maker is busy sharing their opinions on the question of slot machines in Maryland. In fact, the rush to find a microphone is so overwhelming that it sounds like a stampede.


Three Blind Mice
Steven R. Berryman
What do the president’s speech to the American people on Thursday, and the performance of both the Democratic and Republican candidate at the first presidential debate in Oxford, Mississippi, have in common? Answer: None of them acted with full candor and in a bipartisan way, as advertised.


Friday, September 26, 2008
GOP Rotten Fish
Roy Meachum
Coming out of the Fredericktown movies Wednesday I was greeted by the voice of the commander-in-chief. George W. Bush informed me and all Americans that his financial rescue proposal would save the lives we cheer. It was a clunker of a speech.


Don’t Panic!
Steven R. Berryman
…With those words, and the threat of bipartisan congressional intervention, you may wish to do exactly that. Any rush to solution is certainly against the best interests of the citizens of the United States of America.


Making A Wise Choice
Derek Shackelford
Okay, it has been weeks since the glitz and glamour, the pomp and circumstances, the cartwheels, boos over the “other” name and cheers for it as well just because someone delivered a good punch line.


Thursday, September 25, 2008
Struggling Citizens = Pay Hike?
Joan McIntyre
In the legislative package that is just now being developed for the upcoming session, Commissioner David Gray put a proposal on the table for not only a raise for the Board of County Commissioners but a raise of huge proportions and with no reasoning other than it makes sense to him. How could you argue with that?


From Whence Cometh This Star Status
Chris Cavey
There is a growing phenomenon that is taking the United States by storm – The Palin Effect. You can recognize this new occurrence by the renewed and intense interest in national politics by the overall female population.


Wednesday, September 24, 2008
Bush’s Crowd to Blame
Tom McLaughlin
For the past year the nation has been embroiled in a roller coaster ride of the economy brought about by President George W. Bush, Vice President Dick Cheney and their cronies.


The Taneytown Business Breakfast
Kevin E. Dayhoff
I recently had a chance to attend the Taneytown business breakfast. I jumped at the opportunity to take a wonderful break from the drama of national politics and the byzantine intrigue over projected shortfalls in the Maryland state budget.


Tuesday, September 23, 2008
Election Year Low-jinks
Roy Meachum
The Harvard of the West is the catch-phrase prized by California's Stanford University. By whatever name, a recent survey designed and supervised in the school's Palo Alto academic laboratories is, by any standard, the dumbest thing I've encountered going back through nearly 60 years in journalism.


Demand Answers, Expect None
Farrell Keough
When Congress, the president, and the Federal Reserve come together to make a huge new plan with very little dissent or public discussion, it is time to worry. That is what occurred last weekend.


Monday, September 22, 2008
You Bet Your Life…
Steven R. Berryman
The market psychology of the financial investment world has now changed forever. What had been betting essentially on the fortunes of businesses will at least – for the short term – be replaced by betting on how we suspect the rules of the game will change.

20081001 This week in The Tentacle – October 1, 2008

The Republican Study Committee Economic Rescue Alternative Plan

The Republican Study Committee Economic Rescue Alternative Plan

Economic Rescue Alternative Plan

(9/29/08)

Today, as the House considers Treasury's financial rescue plan, the RSC has released alternative legislation to provide relief in the financial markets while protecting free-market principles. The bill includes the original Repbulican alternative legislation as well as the provisions the RSC unveiled earlier in the week (capital gains relief, GSE privatization, suspending mark-to-market regulations, etc.). The RSC has distributed this summary of the bill, which provides a detailed outline of the alternative.

RSC Legislative Bulletin: The Emergency Economic Stabilization Act (9/29/08)The RSC has analyzed the text of the Emergency Economic Stabilization Act and distibuted this Legislative Bulletin, containing a summary of the bill's highlights.

Conservatives Question Bailout Plan (9/19/08)

Leading conservatives in the House have publicly questioned the soundness of Treasury Secretary Paulson’s plan for a taxpayer bailout of the financial markets.

Read the letter from 31 House conservatives to Treasury Secretary Paulson and Federal Reserve Chairman Bernanke here.

Read the statement from RSC Chairman Jeb Hensarling (R-TX) here.

Read the statement from former RSC Chairman Mike Pence (R-IN) here.

ECONOMIC RESCUE ALTERNATIVE PLAN

September 29, 2008

We believe that policymakers must act decisively and correctly.

We believe that we can help Wall Street “workout” of this crisis, not force the taxpayers into a “bailout.”

We believe that voluntary private capital, not involuntary taxpayer capital, will help the system recover.

A Work-Out—Not a Bail-Out

Stabilizing Financial Markets: Require the Treasury Department to guarantee losses up to 100%, resulting from the failure of timely payment and interest from mortgage-backed securities (MBS) originated prior to the date of enactment. Such insurance would provide immediate value to the MBS and a foundation for which they could then be sold.

Risk-Based Premiums: Direct the Treasury Department to assess a premium on outstanding MBS to finance this insurance. Participation in the program would be mandatory for all holders of such MBS in order to guard against adverse selection where only the holders of troubled assets participate. A risk-based premium would be assessed on those with troubled MBS. The premium would expire when the Treasury Secretary determines the fund has sufficient resources to meet any projected losses.

Private-Capital Off the Sidelines by Empowering Private Investors

Net Operating Losses: Allow companies to carry-back losses arising in tax years ending in 2007, 2008, or 2009 back 5 years, generating a tax refund and immediate capital. Despite the presence of willing buyers, many firms with MBS are not willing to sell at such a huge loss. Such a carry-back provides a cushion for any such loss, making firms more willing sellers.

Repatriation Infusion: Allow a repatriation window for profits earned by U.S. firms overseas. Such repatriation amounts would be taxed at 0% if invested in distressed debt (as defined by Treasury) for at least one year.

Bank Losses on GSE Stock: Allow banks to treat losses on shares of preferred stock in Fannie Mae and Freddie Mac as ordinary losses, not as capital losses.

Two-Year Suspension of the Capital Gains: Immediately suspend the capital gains rate from 15% for individuals and 35% for corporations. By encouraging corporations to sell unwanted assets, this provision would unleash funds and materials with which to create jobs and grow the economy. After the two-year suspension, capital gains rates would return to present levels but assets would be indexed permanently for any inflationary gains.

Reforming a Failure in Government Institutions

Limit Federal Backing for High Risk Loans: Mandate that GSEs no longer securitize any unsound mortgage that is: (1) not fully documented to meet minimum requirements for work, assets, and income; (2) written to comply with any law or regulation that would otherwise violate a firm’s lending rules.

Schedule the GSEs for Privatization: Transition Fannie and Freddie over a reasonable time period to truly private companies without special government privileges and open them up to real market competition. This reform would 1) establish commonsense limits for their capital requirements and portfolio holdings relative their size, 2) focus their mission on affordable housing only, not profit making, 3) require them to pay an appropriate risk-based amount for the government guarantee they enjoy, 4) subject them to state and local taxes and accurate SEC filings like every other private for-profit corporation, and 5) ultimately provide for the phase out their GSE charters once their conservatorship has ended.

Suspend “Mark to Market” Accounting: Direct the SEC to suspend the mark-to-market regulatory rules until the agency can issue new guidelines that will allow firms to mark these assets to their true economic value. The current rules contribute to a downward spiral as firms have to evaluate their assets not on the basis of their long-term investment but rather on a short-term mania.

Stabilize the Dollar: Repeal the Humphrey-Hawkins Full Employment Act which diverts the Federal Reserve’s attention from long-term price stability to short-term economic growth. In an effort to fuel the economy, this additional mandate has encouraged the Fed to keep rates artificially low, fueling economic boom and busts, and now a strong up-tick in inflation and the decline of the dollar (as investors free dollars for hard assets). This reform would require the Fed to establish a numerical definition for price stability and maintain a policy that promotes it over the long-term.

Oversight and Corporate Accountability

Executive Compensation Limits: Require the Treasury to write rules prohibiting excessive compensation or golden parachutes to executives of failed companies at the expense of taxpayers.

Strict Enforcement of Laws Designed to Protect Investors: Task the SEC with reviewing the annual audit reports of entities the federal government has brought under conservatorship or now owns, and determine if those annual audit reports from years 2005 to present accurately reflected the financial health of those businesses.

Staff Contact: Russ Vought, 202-226-8581, russ.vought@mail.house.gov

Related:

The Pelosi Charm

Transcript of Speaker Pelosi’s Floor Statement on the partisan Financial Rescue Legislation moments before it was voted down

Doug Ross: Any Questions

Doug Ross The Fannie Mae testimony that will make you scream in anger

20080928 The Republican Study Committee Economic Rescue Alternative Plan

http://www.house.gov/hensarling/rsc/

The Pelosi Charm

The Pelosi Charm

Monday, September 29, 2008

Democrat Speaker of the House left no doubt that she skipped the class in charm school that taught that it is to one’s advantage to be nice to folks when you want something from them.

http://www.youtube.com/watch?v=VMLo7i38D58

“Reps. Boehner, Blunt, and Cantor said they had at least a dozen more votes for the bill until Nancy Pelosi came to the floor just after 12:20 eastern time and gave an exceedingly partisan speech that effectively killed the bill.” (GOP: Pelosi Killed Bill With Partisan Speech Posted by TOM BEVAN on the Real Clear Politics blog)

This speech was incomprehensible reprehensible revisionist history in which, what may very well be the most galling moral relativism, she praises Rep. Barney Frank (D-MA) whose fingerprints are over the causes of current financial meltdown.

Representative Frank said in 2003: “I think it is clear that Fannie Mae and Freddie Mac are sufficiently secure so they are in no great danger... I don't think we face a crisis; I don't think that we have an impending disaster. ...Fannie Mae and Freddie Mac do very good work, and they are not endangering the fiscal health of this country.” (Doug Ross The Fannie Mae testimony that will make you scream in anger)

Rep. Maxine Waters (D-CA) said in 2003: “I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke. [sic] ...These GSEs have more than adequate capital for the business they are in: providing affordable housing. As I mentioned, we should not be making radical or fundamental change... If there is anything to fix or improve, it is the [regulators].” (Doug Ross The Fannie Mae testimony that will make you scream in anger)

“Five years ago, Republicans proposed ‘the most significant regulatory overhaul in the housing finance industry [in a decade].’ (Source: New York Times) Democrats on the House Financial Services Committee blocked efforts at fixing Fannie and Freddie. Rep. Barney Frank (D-MA) said, ‘Fannie Mae and Freddie Mac... are not facing any kind of financial crisis,’” (Doug Ross: Any Questions)

Speaker Pelosi says that the current meltdown is all the fault of President George W. Bush and free market capitalism. Yet this is inconsistent with: Wayne Barrett at the Village Voice: “[Clinton appointee] Andrew Cuomo... made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that... helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration...into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.” (Doug Ross The Fannie Mae testimony that will make you scream in anger)

Hat Tip for AP photo: Don Surber – “A confident Democrat Barney Frank promises solvency in our time as he announces the breakthrough bailout. Voting is only a formality…”

Related:

Transcript of Speaker Pelosi’s Floor Statement on the partisan Financial Rescue Legislation moments before it was voted down

Doug Ross: Any Questions

Doug Ross The Fannie Mae testimony that will make you scream in anger

Don Surber

20080928 The Pelosi Charm

Transcript of Speaker Pelosi’s Floor Statement on the partisan Financial Rescue Legislation moments before it was voted down

Transcript of Speaker Pelosi’s Floor Statement on the partisan Financial Rescue Legislation moments before it was voted down

September 29, 2008

Madam speaker, when was the last time anyone ever asked you for $700 billion? It’s a staggering figure. And many questions have arisen from that request. And we have been hearing, I think, a very informed debate on all sides — of — of this issue here today. I’m proud of the debate.

$700 billion. A staggering number. But only a part of the cost of the failed Bush economic policies to our country. Policies that were built on budget recklessness. When President Bush took office, he inherited President Clinton’s surpluses — four years in a row, budget surpluses, on a trajectory of $5.6 trillion in surplus. And with his reckless economic policies, within two years, he had turned that around.

And now eight years later, the foundation of that fiscal irresponsibility, combined with an anything goes economic policy, has taken us to where we are today. They claim to be free market advocates, when it’s really an anything goes mentality. No regulation, no supervision, no discipline. And if you fail, you will have a golden parachute, and the taxpayer will bail you out.

Those days are over. The party is over in that respect. Democrats believe in a free market. We know that it can create jobs, it can create wealth, it can create many good things in our economy. But in this case, in its unbridled form, as encouraged, supported, by the Republicans — some in the Republican Party, not all — it has created not jobs, not capital, it has created chaos.

And it is that chaos that the secretary of the Treasury and the chairman of the Fed came to see us just about a week and a half ago — seems like an eternity, doesn’t it, so much has happened, the news was so bad. They described a very, very dismal situation. A dismal situation describing the state of our economy, the fragility of our financial institutions and the instability of our markets, our equity markets, our credit markets, our bond market.

And here we were listening to people who knew of what they spoke. Secretary of the Treasury brings long credentials and knowledge of the markets. More fearful, though, to me, more scary, was the statement — were the statements of Chairman Bernanke [Ben S. Bernanke, chairman of the Federal Reserve], because Chairman Bernanke is probably one of the foremost authorities in America on the subject of the Great Depression. I don’t know what was so great about the Depression, but that’s the name they give it. And we heard the secretary and the chairman tell us that this was a once in a hundred year phenomenon, this fiscal crisis was so drastic. Certainly once in 50 years, probably once in a hundred years.

And how did it sneak up on us? So silently, almost on little cat feet. That they would come in on that day — and they didn’t actually ask for the money, that much money that night. It took two days until we saw the legislation that they were proposing to help calm the markets. And it was on that day that we learned of a $700 billion request.

But it wasn’t just the money that was alarming. It was the nature of the legislation. It gave the secretary of the Treasury czar-like powers, unlimited powers, latitude to do all kinds of things and specifically prohibited judicial review or review of any other federal administrative agency to review their actions.

Another aspect of it that was alarming is it gave the secretary the power to use any money that came back from these infusions of cash to be used at the discretion of the secretary. Not to reduce the deficit, not to go into the general funds so that we could afford other priorities. To be used at the discretion of the secretary. It was shocking. Working together in a bipartisan way, we were able to make major improvements on that proposal, even though its fundamental basis was almost arrogant and insulting.

The American people responded almost immediately. Overwhelmingly, they said they know that something needs to be done. Say 78 percent of the American people said Congress must act. Fifty-eight-some percent said, but not to accept the Bush proposal. And so here we are today, a week later and a couple of days later, coming to the floor with a product — not a bill that I would have written, one that has major disappointments with me, beginning with the fact that it does not have bankruptcy in this bill — and we will continue to persist and work to achieve that.

It’s interesting, though, to me that when they describe this, the magnitude of the challenge and the precipice that we were on and how we had to act quickly and we had to act boldly and we had to act now, that it never occurred to them that the consequences of this market were being felt well in advance by the American people. And unemployment is up, and therefore we need unemployment insurance. That jobs are lacking, and therefore we need a stimulus package. So how can on the one hand could this be so urgent at the moment, and yet so unnecessary for us to address the effects of this poor economy in the households of America across our country?

We’ll come back to that in a moment. Working together, we put together some standards — and I am really proud of what Barney Frank did in this regard. The first night, that night, that Thursday night, when we got the very, very dismal news, he immediately said, if we’re going to do this — and Spencer Bachus was a part of this as well — in terms of if we’re going to do this, we must have equity for the American people. We’re putting up $700 billion, we want the American people to get some of the upside. So equity, fairness for the American people.

Secondly, if they were describing the root of the problem as the mortgage-backed securities, Barney insisted that we would have forbearance on foreclosure. If we’re now going to own that paper, that we would then have forbearance to help responsible homeowners stay in their home.

In addition to that, we have to have strong, strong oversight. We didn’t even have to see the $700 billion or the full extent of their bill to know that we needed equity and upside for the taxpayer, forbearance for the homeowner, oversight of the government on what they were doing, and something that the American people understand full well, an end to the golden parachutes and the — a — review and reform of the compensation for C.E.O.’s.

Let’s get this straight. We have a situation where on Wall Street people are flying high, they are making unconscionable amounts of money. They make a lot of money, they privatize the gain, the minute things go tough, they nationalize the risk. They get a golden parachute as they drive their firm into the ground, and the American people have to pick up the tab. Something is very, very wrong with this picture.

So just on first blush, that Thursday night, we made it clear, meeting much resistance on the part of the administration, that those four things, equity, forbearance, oversight, and reform of compensation. Overriding all of this is a protection of the taxpayer. We need to stabilize the markets. In doing so, we need to protect the taxpayers.

And that’s why I’m so glad that this bill contains a suggestion made by Mr. Tanner [Representative John Tanner, Democrat of Tennessee] that if at the end of the day, say in five years, when we can take a review of the success or whatever of this initiative, that if there is a shortfall and we don’t get our whole $700 billion back that we have invested, that there will be an initiative to have the financial institutions that benefited from this program to make up that shortfall.

But not one penny of this should be carried by the American people. People asked, and Mr. Spratt [Representative John M. Spratt Jr., Democrat of South Carolina] spoke with great knowledge and eloquence on the budget and aspects of the budget. $700 billion, what is the impact, what is the opportunity cost for our country of the investments that we would want to make?

O.K., now we have it in place where the taxpayer is going to be made whole and that was very important for us. But why on the drop of a hat can they ask us for $700 billion, and we couldn’t get any support from the administration on a stimulus package that would also help grow the economy?

People tell me all over the world that the biggest emerging market, economic market in the world, is rebuilding the infrastructure of America. Roads, bridges, waterways, water systems in addition to waterways. The grid, broadband, schools, housing, certain schools. We are trillions of dollars in deficit there.

We know what we need to do to do it in a fiscally sound way, in a fiscally sound way that creates good-paying jobs in America immediately. Brings money into the treasury by doing so, and again does all of this in an all-American way. Good-paying jobs here in America.

We can’t get the time of day for 25, $35 billion for that, which we know guarantees jobs, et cetera, but $700 billion. So make no mistake, when this Congress adjourns today to observe Rosh Hashanah and have members go home for a bit, we are doing so at the call of the chair. Because this subject is not over, this discussion about how we save our economy.

And we must insulate Main Street from Wall Street. And as Congresswoman Waters [Representative Maxine Waters, Democrat of California] said, Martin Luther King Drive, in my district Martin Luther King Drive, and Cedar Chavez Road and all of the manifestations of community and small businesses in our community. We must insulate them from that. And so we have difficult choices, and so many of the things that were said on both sides of this issue in terms of its criticisms of the bill we have and the bill that we had at first, and the very size of this, I share. You want to go home, so I’m not going to list all of my concerns that I have with it.

But it just comes down to one simple thing. They have described a precipice. We are on the brink of doing something that might pull us back from that precipice. I think we have a responsibility. We have worked in a bipartisan way. I want to acknowledge Mr. Blunt and Mr. Boehner, the work that we have done together, trying to find as much common ground as possible on this.

But we insisted the taxpayer be covered. We all insisted that we have a party-is-over message to Wall Street. And we insisted that, that taxpayers at risk must recover — that any risk must be recovered. I told you that already. So, my colleagues, let’s recognize that this Congressional — this legislation is not the end of the line.

Mr. Waxman [Representative Henry A. Waxman, Democrat of California] will be having vigorous oversight this week, hearings this week on regulatory reform and other aspects of it. I hope you will pursue fraud and mismanagement and the rest. Mr. Frank and his committee will continue to pursue other avenues that we can stabilize the markets and protect the taxpayer. For too long, this government, in eight years, has followed a right-wing ideology of anything goes, no supervision, no discipline, no regulation.

Again, all of us are believers in free markets, but we have to do it right. Now, let me again acknowledge the extraordinary leadership of Mr. Frank. He has been an exceptional leader in the Congress, but never has his knowledge and his experience and his judgment been more needed than now. And I thank you, Mr. Frank, for your exceptional leadership, Mr. Chairman.

I also — so many people worked on this, but I also want to acknowledge the distinguished chair of our caucus, Mr. Emanuel. His knowledge of the markets, the respect he commands on those subjects, and his boundless energy on the subjects served us well in these negotiations. But this, this is a bipartisan initiative that we are bringing to the floor. We have to have a bipartisan vote on this. That is the only message that will send a message of confidence to the markets.

So I hope that — I know that we will be able to live up to our side of the bargain. I hope the Republicans will, too.

But my colleagues, as you go home and see your families and observe the holiday and the rest, don’t get settled in too far, because as long as the American — this challenge is there for the American people, the threat of losing their jobs, the credit, their credit, their jobs, their savings, their retirement, the opportunity for them to send their children to college.

As long as in the households of America, this crisis is being felt very immediately and being addressed at a different level, we must come back, and we will come back as soon and as often as it is necessary to make the change that is necessary. And before long we will have a new Congress, a new president of the United States, and we will be able to take our country in a new direction.

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20080929 Pelosi Fl St on Bipartisan Fin Rescue Leg

20080929 Transcript of Speaker Pelosi’s Floor Statement on the partisan Financial Rescue Legislation moments before it was voted down