The DISH
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Vol. 11 Issue 37…Dedicated to the Dialogue on Race…September 14, 2008
Hood Notes
Mr. and Mrs. F: Your Next Door Neighbors!
By John Burl
Smith
Over the last few months Fannie Mae and Freddie Mac -- Mr. and Mrs. F to those who know them well -- have become household names, and because of their money, they live next door to almost everyone. So, who are Fannie Mae and Freddie Mac? Where did they come from?
Fannie Mae - The Federal National Mortgage Association - was founded as a government agency in 1938 as part of the New Deal. Its purpose was to provide liquidity to the mortgage market, and until 1968, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States (US). In 1968, Fannie Mae was converted into a private corporation to remove its activity from the annual balance sheet of the federal budget.
Freddie Mac - The Federal Home
Loan Mortgage Corporation - was created to provide competition for the newly
privatized Fannie Mae. Fannie Mae and Freddie Mac are shareholder-owned
corporations and are called government-sponsored enterprises (GSEs) because
they were a match made in
Initially, Fannie Mae and Freddie Mac were designed to enhance the flow of credit to the housing sector of the economy, to make that segment of the capital market more efficient and transparent, and to reduce the cost of credit to prospective homeowners. While not explicitly backed or funded by the government, it has been assumed that Fannie Mae and Freddie Mac have an implicit government guarantee, and if they were ever to get in trouble, the government would step in to bail them out.
This has been just a theory since
1968; so, having such extravagant next door neighbors as Fannie Mae and Freddie
Mac was no problem. However, last weekend their house of cards came crashing
down, and the cost of cleaning up the mess left by their lavish lifestyle will
fall on the neighborhood as the government turns theory into practice, while
Mr. and Mrs. F do only a little house cleaning.
After Bear Stearns bellied up to the Fed's trough, followed by JP Morgan Chase
in mid-March, the line of gluttonous pigs keeps growing. The collapse of Fannie
and Freddie is an ominous sign given the failure of IndyMac bank. A huge
mortgage lender and very investor friendly, IndyMac, the 3rd largest closure in
Couple that with Bank of America's rescue of Countrywide, which rode the housing bubble saddled with risky lending until it popped, many believe the worst is yet to come because the people responsible are still riding high at taxpayers' expense. Angelo Mozilo, Countrywide's CEO, engaged in one of history's greatest stock dumps, selling more than $480 million worth of shares, according to the tally of insider filings on secform4.com. Where is the incentive for Mr. and Mrs. F to change their lavish diet as long as the taxpayers keep getting stuck with the tab?
A world awash in US dollars,
mortgage-backed securities provided a safe place to earn a good return. Foreign
Banks invested in Fannie and Freddie's debt; Mr. and Mrs. F sold trillions of
dollars in mortgaged-backed securities to central banks all around the world.
For example,
How Did Mr. and Mrs. F Become Such Spendthrifts?
By John Burl Smith
Similar to most Americans addicted to credit, Mr. and Mrs. F lived far beyond their means. Things began to spin out of control when Roger Barnes, a former Fannie Mae accounting manager (12-16- 2004) accused Mrs. F of "cooking" her books, rather than prime ribs. Their neighbors refused to believe his allegations until years later when the Office of Federal Housing Enterprise Oversight (OFHEO), a regulatory agency, concluded that Mrs. F used possibly illegal accounting methods to boost earnings. Fannie is accused of manipulating earnings through "cookie jar" accounting.
Late Wednesday, the Securities and Exchange Commission said Mrs. F had indeed violated accounting rules and must restate earnings. The SEC's chief accountant confirmed the OFHEO's report and said Fannie violated accounting standards, including the one Barnes cited in his testimony. Mrs. F says she will comply with the SEC's request, which is expected to cost Fannie $9 billion. A Justice Department criminal investigation continues.
Under Franklin Raines' management, Fannie Mae morphed from being a sleepy little housewife -- who issued debt to buy mortgages from lenders -- into a far more exotic, risky and exciting player: buying up mortgages and holding them. This allowed Mrs. F to capture the spread between its borrowing costs (which were lower than anyone's other than the federal government) and the interest rate received. The lowest capital/asset ratio required for financial institutions is 3 percent. However, Mr. and Mrs. F benefit from their special regulations that allow them to operate at 1.2 percent, a much lower ratio. This additional leverage provides greater returns during the good times, but dramatically increases the risk of insolvency when the housing bubble popped.
Business was great. All told, Raines pulled in some $90 million between 1998 and 2003, the majority from bonuses. The thing is: Any company can hit an EPS number if it doesn't worry about little things like accounting rules, debt levels, and risk factors. Fannie overstated earnings by a stunning $10.6 billion, all the while paying Raines and his senior management team massive bonuses.
Former Fannie Mae CFO Timothy Howard, like ENRON poster boy CFO Andrew Fastow, signed off on the financials that overstated the company's earnings by $10.6 billion from 1998 to 2004. His reward? A cool $14 million in salary and $16.8 million in bonuses during the period -- bonuses based on the earnings plan that Raines set up.
Mr. and Mrs. F's "cookie
jar" imploded because they were part and parcel of the widespread gross
financial misconduct that has become common place in the
If any one person can be blamed for the present housing/subprime/credit
debacle, it is Alan Greenspan. Helping George W. Bush jawbone down the economy
by convincing Americans a recession was imminent, Greenspan touted lowering
interest rates as a panacea. He told Americans to use the equity in their homes
like ATM machines. His irrational exuberance fueled a credit binge that created
the housing bubble. Greenspan and those of his ilk shouted down the skeptics,
and/or stood by as Fannie and Freddie deviated from their core business in the
name of growth. Not a financial voice of reason, Greenspan would now be
comical, were the situation not so tragic.
He championed adoption and expansion of adjustable-rate mortgage (ARM) products
in early 2004, when short-term rates were at or near historic lows. Today ARMs
are the bane of victims of Greenspan's housing bubble. While many white collar
criminals are doing time in "club fed," Greenspan is applying his
experience and insight as an advisor with Paulson & Company, a hedge fund
which cashed in on billions of dollars by calling the collapse of the subprime
mortgage market that Greenspan helped create. Paulson! Isn't he the US Treasury
Secretary Henry Paulson? (Sources: www.gosanangelo.com,
www.telegraph.co.uk, www.fool.com)
Benito Amilcare
Andrea Mussolini (1883-1945)
"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."
Born into a working class family
on July 29, 1883 in
After a series of incidents, including throwing stones at the congregation after Mass, stabbing a fellow student in the hand and throwing an inkpot at a teacher, Mussolini was expelled from a boarding school run by Salesian monks. Following his enrollment in a new school, Mussolini made good grades and qualified as an elementary schoolmaster in 1901.
The following year, he emigrated
to
Mussolini's defiance of Royal
authority resulted in his deportation. However, he returned to
In August of 1915, he was called for active military duty, which ended in 1917 when he was accidentally wounded by the explosion of a mortar in his trench. After his discharge from the hospital in August 1917, he resumed his editor-in-chief position at Il Popolo d'Italia.
Fascism became an organized political movement in March 1919 when Mussolini founded the Fasci de Combattimento. After failing in the 1919 elections, Mussolini entered parliament in 1921 as a right-wing member. The Fascisti formed armed squads, Blackshirts, which were gangs of thugs that rioted against Communists and other groups while claiming to protect the peace. The government seldom interfered in their acts of terrorism. In return for the support of a group of industrialists and agrarians, Mussolini gave his approval to strikebreaking and abandoned revolutionary agitation.
Mussolini came to power after his
Blackshirts conducted the "March on
In foreign policy, Mussolini shifted from pacifist anti-imperialism to an
extreme form of aggressive nationalism. He attempted to create an Italian
empire, ultimately in alliance with Hitler's
Rescued by the Germans several months later, Mussolini set up a Republican
Fascist state, "
In April 1945, just before the
Allied armies reached
KERWIN
By Maurice Di
While some of them will hunt you down
to kill the rest of you
the others will hold festivals
to have something to do
And even while they make of you the very first to die
because of age-old Dutch racism
we both know it's a lie
And even if it were the truth,
what would it really change?
the jingle of the guilder
is the rattle of the chains
The chains they used to bind the blacks
and certain whites as slaves
strange the ways they have devised
to get folks to behave
Lord knows the list is long
no space is left to fill
the names of those they've wronged
the unknown ones they've killed
A-h-h
around my people's neck
after all you have taken and done
what more do you expect?
Yes!!! They come and why not
to see their diamond stolen sparkle in your sky
for us poor/folk/ of a darker race
it's always been a place to go and die
Kerwin:
The 1st black to set a foot in
was left in trade
from a Dutch man-o-war
Kerwin:
what makes you differ
from the others racism had die
is that your case of death by race
is one they can't deny
A blood-stain on a taxi-seat
meant more than your life
that's why you layed down on the street
when you were wounded by that knife
When they decide that one must die
it's while the blood is wet that we're obliged
to ask ourselves which one of us is next?
Remember the friends close to you
who did not look like you?
who did not treat you as so many of the others do?
Friend is a friend is a friend
is not a color of a skin but a way of being
this! hate cannot relate and this is where racism steps in
Racism is one thing we learn from history
has done more to damage man than any one disease
people live and people die: that is a natural fact
but not so if the reason why is
just because you're black
Kerwin you were not the first but we want you to be the last
we want fascism to stop and we must do it fast
Kerwin
No one believes it - Kerwin did not - had he - alive
he would be - but he didn't believe -
racism - fascism - Adolf Hitlerism
or just plain
No one really believes there is a thing called racism
it's always something else -
it's not because of your color
they say: it's the way you carry yourself -
Who knows what reasons they'll retrieve
racism is something no one believes
even when the black lays dying in the street
no one believes it
Closed eyes don't see it racial abuse / an excuse
no one believes it though it is true -
Kerwin didn't believe / why should you?
Plus how could he? No one believes racism to be -
like they didn't believe the Vietnamese
pleas to live in peace
they didn't believe blacks should be free
after 400 years of misery
KERWIN
They didn't believe / they didn't believe
that we too should have a right to breathe -
no one believes racism to be/
that people are people with a right to be happy and free - happy and free
No one believes that to be the way it should be
no one believes it possible because no one believes
people don't even believe what their eyes can see
the injustice / the waste / the inhumanity
they just don't believe - they just don't believe
The horror is so normal
so, so, so informal
that the normal horror is believed good
even at the cost of blood -
About
Me: In 1985 a statue, Mama Baranka,
was dedicated to Kerwin's memory in the Vondelpark. It was sculpted in bronze
by Antillian artist Nelson Carrilho. The night before the unveiling, a group of
people sat watch around the statue to ensure that it was not vandalized. As
dawn broke, one of this group-- the poet, Maurice Di-- felt he heard the voice
of Kerwin speaking to him and thus the poem was born.
14 Points of Fascism: The Warning Signs
In "Fascism Anyone?",
Laurence Britt identifies 14 characteristics common in fascist regimes. He
compared the fascist regimes of Hitler, Mussolini, Suharto, Pinochet and Franco
to provide these common traits as warnings.
1) Powerful and continuing nationalism. Fascist regimes tend to make use of
patriotic mottos, slogans, symbols, songs, and other paraphernalia. Flags are
seen everywhere as are patriotic symbols on clothing, public displays, and
cars.
2) Disdain for the recognition of human rights. Because of the fear of enemies
and the need for security, the people in fascist regimes are persuaded that
human rights and civil liberties can be ignored in certain cases because of
"need." The people tend to look the other way or even approve of
torture, summary executions, long incarcerations of prisoners without trial,
etc.
3) Identification of enemies/scapegoats as a unifying cause. The people are rallied into a unifying patriotic frenzy over the need to eliminate a perceived common threat or foe: ethnic or religious minorities, liberals, communists, terrorists, etc.
4) Supremacy of the military.
Even when there are widespread domestic problems, the military is given a
disproportionate amount of government funding, and the domestic agenda is
neglected.
5) Rampant sexism. The governments of fascist nations tend to be almost
exclusively male-dominated. Under fascist regimes, traditional gender roles are
made more rigid. Opposition to abortion is high as is homophobia, and anti-gay
legislation as national policy.
6) Controlled mass media. Sometimes the media is directly controlled by the
government, but in other cases, the media is indirectly controlled by
government regulation, or sympathetic media spokespeople and executives.
Censorship, especially in war time, is common.
7) Obsession with national security. Fear is used as a motivational tool over
the masses.
8) Religion and government are intertwined. Governments in fascist regimes tend
to use the most common religion in the nation as a tool to manipulate public opinion.
Religious rhetoric and terminology is common from government leaders, even when
the major tenets of the religion are diametrically opposed to the government's
policies and actions.
9) Corporate power is protected. The industrial and business aristocracy of a
fascist nation often is the ones who put the government leaders into power,
creating a mutually beneficial business/government relationship for the power
elite.
10) Labor power is suppressed. Because the organizing power of labor is the
only real threat to a fascist government. Labor unions are either eliminated
entirely or are severely suppressed.
11) Disdain for intellectuals and the arts. Fascist regimes tend to promote and
tolerate hostility to higher education and academia. It is not uncommon for
professors and other academics to be censored or even arrested. Free expression
in the arts is openly attacked, and governments often refuse to fund the arts.
12) Obsession with crime and punishment. Under fascist regimes, the police are
given almost limitless power to enforce laws. The people are often willing to
overlook police abuses and even forego civil liberties in the name of
patriotism. There is often a national police force with virtually unlimited
power in fascist nations.
13) Rampant cronyism and corruption. Fascist regimes almost always are governed
by groups of friends and associates who appoint each other to government
positions and use governmental power and authority to protect their friends
from accountability. It is not uncommon in fascist regimes for national
resources and even treasures, to be appropriated or stolen by government
leaders.
14) Fraudulent elections. Sometimes elections in fascist regimes are a complete
sham. Other times elections are manipulated by smear campaigns or even
assassination of opposition candidates, use of legislation to control voting
numbers or political district boundaries, and the manipulation of the media.
Fascist nations also tend to use their judiciaries to manipulate or control
elections. (Source: www.oldamericancentury.org)
Disgruntled
wants to know: The
media-driven controversy surrounding Alaska Governor Sarah Palin's family
situation, i.e., a pregnant 17-year-old daughter and the care and feeding of
her Down syndrome infant, would probably not have happened had she been a white
man. A white evangelical, there would be no question that she is
qualified to lead this great nation into Armageddon. However, that phony sexist
controversy aside, there is something amiss in the political discussion of
Palin and her family. I distinctively recall "traditional" family
values were all the rage in GOP circles when George W. Bush was running for
office. Though he never explicitly explained what these values were, every time
he said "traditional family values," Republicans and others erupted
in applause. The DISH examined Bush's speeches and discovered "traditional
family values" is code for the Republican Party's commitment to the 3/5 Compromise
and maintaining the relative value of black to white human capital codified in
that dastardly agreement. True to his words, Bush has made every effort to turn
back the clock on black progress. Could The DISH's exposure of these words as
racist code be the reason traditional family values are no longer uttered by
every GOP talking head ad nauseum?
Disgruntled
says: Like the Hurricane Gustav excuse used by the Republican Party to
downplay the role of George W. Bush at its convention, the brouhaha over
"lipstick on a pig" is just another media diversion. I remember those
great Charles Schwab commercials that began airing around the same time that
stories about the Enron accounting scandal were dominating news coverage. I
believe Schwab, a Bush friend and financial backer, was told to pull those
commercials, because shortly after a Schwab visit to the White House they
ceased to be aired. Since then, the company has done nothing in advertising
nearly as creative. The only thing we should be discussing regarding lipstick and
pigs is the wasted effort by the GOP to put a pretty face on all the terrible
things that have transpired during their watch. This nation is in serious
trouble, literally going down the tubes, and no amount of made up news will
change the subject to stop struggling Americans from singing the blues.
Disgruntled
feels: Militaristic! A characteristic of all fascist regimes is an
aggressive foreign policy. The
Mailbox: E-Mails, Faxes and Phone Calls
Email www.creativeloafing.com News of the Weird By
Chuck Shepherd...Government in Action: Florida's nation-leading epidemic of
mortgage fraud was facilitated by state regulators who permitted 2200 people
with finance-crime records to become professional "loan originators,"
part of the total 10,000 with rap sheets allowed to work in the industry over
an eight-year period, according to a July investigation by the Miami Herald. At
least 20 registered brokers kept their licenses after fraud convictions. A 2006
state law required criminal background checks for broker licensing, but fewer
than half were ever done, reported the Herald. And the crisis continues,
according to a
Email www.msnbc.com
Pope Benedict XVI denounced fundamentalist fanaticism as he addressed cultural
figures, including Muslim leaders, at the start of a four-day visit to
Email www.ajc.com
Graft alleged in Feds' ties with big oil...By Dina Cappiello (AP)...Government officials
handling billions of dollars in oil royalties improperly engaged in sex with
employees of energy companies they were dealing with and received numerous
gifts from them, federal investigators said Wednesday. The alleged
transgressions involve 13 former and current Interior Department employees in
Email im6263@cwnet.com...Gonzales Violated
Security Rules With Spy Docs, Lied To Cover It Up...By Ryan
Singel...Wired...September 02, 2008....Former Attorney General Alberto Gonzales
repeatedly violated federal secrecy rules by mishandling documents containing
"zealously protected" secrets about government's warrantless
wiretapping program, then lied to investigators to cover up his actions,
Justice Department investigators reported Tuesday. Before his ouster in August,
2007, Gonzales was prone to storing an ultra-secret document about the
so-called Terrorist Surveillance Program in his briefcase at his home -- near,
but not inside, a personal safe. And at his office, he stored at least 18 top
secret documents about the N.S.A.'s wiretapping in a safe used by at least five
employees not cleared to know about the program, according to a 29-page report
from the department's Inspector General.
Email www.wsws.org...Record corporate bailout reveals the bankruptcy of American capitalism...By Barry Grey...The US government takeover of the mortgage finance giants Fannie Mae and Freddie Mac has dealt a shattering blow to the ideology of market capitalism, which has been used for decades to justify a relentless assault on the working class and a vast transfer of wealth to the American ruling elite. The endless invocations of the virtues of private enterprise, individual entrepreneurship and self-reliance, used to demonize socialism and defend a system that exploits the vast majority for the benefit of a financial elite, have been exposed as frauds. When it comes to big capital, losses are socialized. Only profits remain private. The same forces who have inveighed against "big government" in order to justify the removal of all legal impediments to the accumulation of corporate profits and private fortunes, and carry out the destruction of social safeguards for the working class, have engineered a massive expansion of government power to safeguard the interests of the financial elite.