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April 21, 2014

Andrew Silow-Carroll: Passoverkill? Suggestions to make next year's seders even more culturally sensitive

Sara Israelsen Hartley: Seeking the Divine: An ancient connection in a new context

Christine M. Flowers: Priest's execution in Syria should be call to action

Courtnie Erickson: How to help kids accept the poor decisions of others

Lizette Borreli: A Glass Of Milk A Day Keeps Knee Arthritis At Bay

Lizette Borreli: 5 Health Conditions Your Breath Knows Before You Do

The Kosher Gourmet by Betty Rosbottom Coconut Walnut Bars' golden brown morsels are a beautifully balanced delectable delight

April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Sept. 10, 2008 / 10 Elul 5768

Paulson didn't bailout Fannie and Freddie --- the power grab was thievery, Mafioso style

By Robert Robb

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http://www.JewishWorldReview.com | Less than two months ago, Treasury Secretary Hank Paulson told Congress and the country that if he were given virtually unlimited power to intervene in the affairs of Fannie Mae and Freddie Mac he wouldn't have to use it.


"If you have a bazooka in your pocket and people know it, you probably won't have to use it," was the inartful way he put it.


Well, Paulson was massively wrong, and remarkably quickly so. Worse, the powers that Paulson successfully sought, rather than calming markets, alarmed them further.


Fannie and Freddie do not originate mortgages. Instead, they buy mortgages, bundle them into securities, guarantee their performance and sell them to investors. This frees up funds from the mortgage originators to continue lending. They also hold some of the mortgages they bundle and buy mortgage-backed securities from others for investment.


Fannie and Freddie have to raise capital to buy mortgages. The threat of federal intervention severely hampered their ability to do so. If there were a federal intervention, no one knew what would happen to existing shareholders and debt holders.


The seizure of the two companies orchestrated by Paulson over the weekend wasn't a bailout. The management of Fannie and Freddie were still trying to make things work despite the added burden of the uncertainty created by the bazooka in Paulson's pocket.


Paulson concluded that they weren't going to make it. He decided that the federal government was going to take them over.


So, the federal government put the companies into conservatorship. It also awarded itself, for both Fannie and Freddie, a billion dollars in equity with a guaranteed rate of return of 10 percent and the right to purchase, at terms it sets, up to about 80 percent of the company.


This wasn't even a takeover. It was thievery, Mafioso style.


In the modern world of global finance, Fannie and Freddie should not exist. They are anachronisms. And they may not have made it.


But they deserved the chance to try, rather than being given a choice they could not refuse by Godfather Paulson: accept conservatorship and preserve some position for your shareholders or be involuntarily taken over with shareholder equity being perhaps totally extinguished.


Paulson has asserted and seized a remarkable degree of authority over private economic activity. He also forced the fire sale of Bear Sterns to J.P. Morgan Chase. He even dictated the price of the transaction.


In the process, he has put taxpayers at risk for hundreds of billions of dollars in mortgage financing. Fed chairman Ben Bernanke has willingly allowed Paulson to use the Federal Reserve as a piggy bank for his power grabs. As a result, half of the Fed's assets now consistent of junk other investors are shunning.


This is all supposedly to prevent systemic financial risk. This is the theory that if one big boy fails, all the big boys will fail.


In Fannie and Freddie's case, the consequences of their failure and their indispensability to mortgage finance are both exaggerated.


The mortgage-backed securities Fannie and Freddie guarantee are mostly held by others. The underwriting on the underlying mortgages was pretty sound.


The delinquency rate on them is just around 2 percent.


So, if the guarantees became doubtful, the market value of the securities would decline, but not by much.


And there are other ways of creating a secondary market in mortgages. In fact, the existence of Fannie and Freddie, with their substantial competitive advantage from a perceived (now explicit) governmental guarantee, hampered the development in this country of the covered bond approach that predominates in Europe.


With covered bonds, the mortgage originator keeps the mortgage. The originator then issues its own bonds backed by its mortgages, replenishing its capital to keep lending. But because the originator is on the hook for any defaults on the underlying mortgages, underwriting tends to be tighter. Paulson, in addition to riding roughshod over the private economy, is really trying to continue pumping money into housing when the market is screaming, about as loudly as it can, that there's been an overinvestment in housing.


President Bush's previous treasury secretaries — Paul O'Neill and John Snow — were thought to be mostly ineffectual. The country didn't know how well it had it when Bush's treasury secretaries were merely ineffectual, rather than perniciously effective.

Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.

JWR contributor Robert Robb is a columnist for The Arizona Republic. Comment by clicking here.

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