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Fannie, Freddie, and Dems

Sandhusker

Well-known member
In what some observers are calling a reshaping of Wall Street, two of the world’s largest investment banks, Merrill Lynch and Lehman Brothers, are set to disappear. Lehman has announced it will file for Chapter 11 bankruptcy protection, and Merrill Lynch was bought by Bank of America. For all the complicated financial instruments and relationships involved in the current financial turmoil, the underlying cause is still relatively simple: the bursting of the housing bubble.

One market strategist told The New York Times: “We are in the grip of a vicious circle and the only thing that to me will break that is for home prices to stop going down.” The most dangerous thing we can do right now is to assume that massive government intervention is needed to shore up home prices. After all, massive government intervention is what caused the housing bubble in the first place.

Fannie Mae and Freddie Mac were created by Presidents Franklin D. Roosevelt and Lyndon B. Johnson to make homes more affordable for Americans. They accomplish this by buying, repackaging and then selling home loans that other institutions make, thus freeing institutions to offer more loans. Contrary to what some defenders of big government assert, Fannie and Freddie were also key players in the subprime mortgage market. In 2004 alone, they bought 44% of all subprime securities. Every dollar that Fannie and Freddie gave to companies like Countrywide Financial for bundled subprime mortgages was another dollar Countrywide gave out in new subprime mortgages.

When President Bill Clinton took office, Fannie and Freddie were viewed as “key” to Clinton’s plans to expand home ownership. The Washington Post reports: “The result was a period of unrestrained growth for the companies. … The companies increasingly were seen as the engine of the housing boom.” As the companies grew, conservatives repeatedly warned that their size posed a systemic risk to the financial system. As Sarah Palin put it, thanks to the implicit federal guarantee of their debt, Fannie and Freddie had become too big and too expensive to the taxpayers.

But Fannie and Freddie pushed back hard, turning to friends on the left for protection. Former Walter Mondale and Barack Obama campaign adviser James Johnson led a fierce lobbying campaign to fight reform of Freddie and Fannie. Clinton administration OMB director Franklin Raines told investors when he was Fannie Mae CEO in 1999: “We manage our political risk with the same intensity that we manage our credit and interest rate risks.” Fannie and Freddie’s lobbying power over the left continues to be strong to this day. According to the Center for Responsive Politics, the top three recipients of campaign donations from Freddie and Fannie’s PACs and employees are all Democrats. From 1989 through today, Sen. Chris Dodd received $165,400, Barack Obama $126,349, and John Kerry $111,000. The Washington Post concludes: “Blessed with the advantages of a government agency and a private company at the same time, Fannie Mae and Freddie Mac used their windfall profits to co-opt the politicians who were supposed to control them.”

Nobody wants to see anybody lose their home. The current Wall Street turbulence will not settle until home prices do. But before we move to some new massive government spending effort to prop up home prices at some artificial level, we should also remember what the historical record teaches us about the unintended consequences of well-meaning market interventions.
 

SR

Well-known member
From: www.thenextright.com

Strangle the Democrats with Fannie, Freddie, and the Housing crisis
View What links here by Soren Dayton | September 13, 2008 at 11:34 AM
in Corruption Democrats ethics Fannie mae Freddie Mac Housing lobbying
The meltdown of Fannie and Freddie should be a transformative moment in American politics. It should discredit the whole Democratic economic agenda. It is too bad that it happened in the middle of the most interesting Presidential election in a generation because there are lessons to learn from it. Several points.

Let's start with some numbers. Contributions since 1989(!) to ALL members of Congress. Note that this is an aggregate over time. Note how a guy who has been in Congress for 3 years manages to come in 3rd on the list.

Name
Office
Party/State
Total

1. Dodd, Christopher J
S
D-CT
$133,900

2. Kerry, John
S
D-MA
$111,000

3. Obama, Barack
S
D-IL
$105,849

4. Clinton, Hillary
S
D-NY
$75,550

5. Kanjorski, Paul E
H
D-PA
$65,500


First, this is a Democratic scandal. In yesterday's WaPo Al Hubbard and Noam Neusner ask "Where was Senator Dodd?" The answer is clear. On the take. Open Secrets notes who gets money from these guys:

Fifteen of the 25 lawmakers who have received the most from the two companies combined since the 1990 election sit on either the House Financial Services Committee; the Senate Banking, Housing & Urban Affairs Committee; or the Senate Finance Committee. The others have seats on the powerful Appropriations or Ways & Means committees, are members of the congressional leadership or have run for president. Sen. Chris Dodd (D-Conn.), chairman of the Senate banking committee, has received the most from Fannie and Freddie's PACs and employees ($133,900 since 1989). Rep. Paul Kanjorski (D-Pa.) has received $65,500. Kanjorski chairs the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, and Freddie Mac and Fannie Mae are government-sponsored enterprises, or GSEs.


But they miss the important point. The GSEs give to Democrats primarily.

And this is the second point. These are partisan instituttions. Republicans tried to reform it, but got out lobbied every time. Hubbard and Neusner described how this works:

The administration did not accept half-measures. In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill (H.R. 1461), and Fannie and Freddie's lobbyists set out to weaken it. The bill was rendered so toothless that Card called Oxley the night before markup and promised to oppose it. Oxley pulled the bill instead.

When there was a Republican Congress, Congressional leadership tried to do the right thing, but Fannie and Freddie's lobbyists picked off some weak Republicans. With a Democratic Congress, Fannie and Freddie just feed at the trough.

Third, these guys are some of the most powerful figures in the Democratic lobbyist-operative firmament. Obama was forced to fire James Johnson, his first VP Vetter. Johnson had been CEO of Fannie Mae. But it doesn't stop there. Johnson, while a consultant for Fannie and Countrywide, was passing out below market loans to Senator Dodd, among others.

The recent CEO of Fannie was Franklin Delano Raines. (what do you bet his parents politics were?) Raines was a Clinton OMB Director and worked in the Carter White House. Raines was replaced with an actual business guy.

Fourth, it doesn't stop there. Not only that, but the affordable housing racket is also used as a way to launder government money into corrupt Democratic voter registration practices. One of the organizations pushing subprime loans and other "affordable housing" financial vehicles... ACORN, which got a sweet deal in the Housing Bill.

What is the upshot of all of this? The housing meltdown has both causes and effects that are ideologically aligned with Democratic objectives. While gutting the regulatory apparatus for a huge segment of our economy, leading Democrats were receiving contributions and below market loans from the very people whose regulations their were gutting. It was used to move money into Democratic grassroots campaign vehicles. And it moved substantial parts of the economy into government control. According to financial analyst Barry Richoltz, "socialism for the rich."

This should be a long-term stain on the credibility of Democratic Party's economic management. Too bad no one has the attention span to notice
 

hopalong

Well-known member
SR said:
From: www.thenextright.com

Strangle the Democrats with Fannie, Freddie, and the Housing crisis
View What links here by Soren Dayton | September 13, 2008 at 11:34 AM
in Corruption Democrats ethics Fannie mae Freddie Mac Housing lobbying
The meltdown of Fannie and Freddie should be a transformative moment in American politics. It should discredit the whole Democratic economic agenda. It is too bad that it happened in the middle of the most interesting Presidential election in a generation because there are lessons to learn from it. Several points.

Let's start with some numbers. Contributions since 1989(!) to ALL members of Congress. Note that this is an aggregate over time. Note how a guy who has been in Congress for 3 years manages to come in 3rd on the list.

Name
Office
Party/State
Total

1. Dodd, Christopher J
S
D-CT
$133,900

2. Kerry, John
S
D-MA
$111,000

3. Obama, Barack
S
D-IL
$105,849

4. Clinton, Hillary
S
D-NY
$75,550

5. Kanjorski, Paul E
H
D-PA
$65,500


First, this is a Democratic scandal. In yesterday's WaPo Al Hubbard and Noam Neusner ask "Where was Senator Dodd?" The answer is clear. On the take. Open Secrets notes who gets money from these guys:

Fifteen of the 25 lawmakers who have received the most from the two companies combined since the 1990 election sit on either the House Financial Services Committee; the Senate Banking, Housing & Urban Affairs Committee; or the Senate Finance Committee. The others have seats on the powerful Appropriations or Ways & Means committees, are members of the congressional leadership or have run for president. Sen. Chris Dodd (D-Conn.), chairman of the Senate banking committee, has received the most from Fannie and Freddie's PACs and employees ($133,900 since 1989). Rep. Paul Kanjorski (D-Pa.) has received $65,500. Kanjorski chairs the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, and Freddie Mac and Fannie Mae are government-sponsored enterprises, or GSEs.


But they miss the important point. The GSEs give to Democrats primarily.

And this is the second point. These are partisan instituttions. Republicans tried to reform it, but got out lobbied every time. Hubbard and Neusner described how this works:

The administration did not accept half-measures. In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill (H.R. 1461), and Fannie and Freddie's lobbyists set out to weaken it. The bill was rendered so toothless that Card called Oxley the night before markup and promised to oppose it. Oxley pulled the bill instead.

When there was a Republican Congress, Congressional leadership tried to do the right thing, but Fannie and Freddie's lobbyists picked off some weak Republicans. With a Democratic Congress, Fannie and Freddie just feed at the trough.

Third, these guys are some of the most powerful figures in the Democratic lobbyist-operative firmament. Obama was forced to fire James Johnson, his first VP Vetter. Johnson had been CEO of Fannie Mae. But it doesn't stop there. Johnson, while a consultant for Fannie and Countrywide, was passing out below market loans to Senator Dodd, among others.

The recent CEO of Fannie was Franklin Delano Raines. (what do you bet his parents politics were?) Raines was a Clinton OMB Director and worked in the Carter White House. Raines was replaced with an actual business guy.

Fourth, it doesn't stop there. Not only that, but the affordable housing racket is also used as a way to launder government money into corrupt Democratic voter registration practices. One of the organizations pushing subprime loans and other "affordable housing" financial vehicles... ACORN, which got a sweet deal in the Housing Bill.

What is the upshot of all of this? The housing meltdown has both causes and effects that are ideologically aligned with Democratic objectives. While gutting the regulatory apparatus for a huge segment of our economy, leading Democrats were receiving contributions and below market loans from the very people whose regulations their were gutting. It was used to move money into Democratic grassroots campaign vehicles. And it moved substantial parts of the economy into government control. According to financial analyst Barry Richoltz, "socialism for the rich."

This should be a long-term stain on the credibility of Democratic Party's economic management. Too bad no one has the attention span to notice

The dems will just try and rearrenge the wording on some of the report and try to blame BUSH. That is what they are good at!
 

nonothing

Well-known member
Ya cause it sure was not GW's fault,he was to busy looking after Iraq's infrastructure .How could you blame him on the dollar no longer being the worlds currency...Or the failing economy inside his own country..As again he was busy helping build a better Iraq...
 

hopalong

Well-known member
nonothing said:
Ya cause it sure was not GW's fault,he was to busy looking after Iraq's infrastructure .How could you blame him on the dollar no longer being the worlds currency...Or the failing economy inside his own country..As again he was busy helping build a better Iraq...

Shows just how ignorant you really are about our politcal structure.
 

TSR

Well-known member
nonothing said:
Ya cause it sure was not GW's fault,he was to busy looking after Iraq's infrastructure .How could you blame him on the dollar no longer being the worlds currency...Or the failing economy inside his own country..As again he was busy helping build a better Iraq...

I liked the phrase in the original post ....... and they picked off some weak Republicans. lol
 

TexasBred

Well-known member
nonothing said:
Ya cause it sure was not GW's fault,he was to busy looking after Iraq's infrastructure .How could you blame him on the dollar no longer being the worlds currency...Or the failing economy inside his own country..As again he was busy helping build a better Iraq...

Maybe Bush is just trying to leave the country like he found it...recession, weak dollar, unrespected by foreign govt's.
 

aplusmnt

Well-known member
TexasBred said:
nonothing said:
Ya cause it sure was not GW's fault,he was to busy looking after Iraq's infrastructure .How could you blame him on the dollar no longer being the worlds currency...Or the failing economy inside his own country..As again he was busy helping build a better Iraq...

Maybe Bush is just trying to leave the country like he found it...recession, weak dollar, unrespected by foreign govt's.

Don't forget gas prices rising so much that Gore, was calling for the selling of the strategic reserves as he campaigned.

Shame that those relaxed lending practices that Clinton promoted led to so many people buying homes they could not afford.
 

TexasBred

Well-known member
The Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) in the United States and included banking reforms, some of which were designed to control speculation.Some provisions such as Regulation Q that allowed the Federal Reserve to regulate interest rates in savings accounts were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Other provisions which prohibit a bank holding company from owning other financial companies were repealed in 1999 by the Gramm-Leach-Bliley Act.[1]

Contents
1 Background
2 First Glass-Steagall Act
3 Second Glass-Steagall Act
3.1 Impact on other countries
4 Repeal of the Act
5 References
6 External links




Senator Glass, co-sponsor of the bill that became the Glass-Steagall Act, and Senator Robinson:

Mr. Glass: Here [section 21] we prohibit the large private banks whose chief business is investment business, from receiving deposits. We separate them from the deposit banking business.

Mr. Robinson of Arkansas: That means if they wish to receive deposits they must have separate institutions for that purpose?

Mr. Glass: Yes.

The Court also rejected the argument that a bank and its holding company should be treated as a single entity for the purposes of sections 16 and 21, stating that the structure of the Glass-Steagall Act itself indicates the contrary. Id. at n. 24.

“ Although the Supreme Court in Board of Governors v. ICI did not consider section 21 in the context of a bank and its subsidiary, we are of the opinion that the Court's conclusion regarding section 21 and holding company affiliates is equally applicable in this instance. Thus, the FDIC does not believe that it would be warranted in extending the reach of the prohibitions of section 21 of the Glass-Steagall Act to bona fide subsidiaries of insured nonmember banks. The FDIC intends, however, to continue to monitor closely developments related to the securities activities of bank subsidiaries. ”

[2]

Two separate United States laws are known as the Glass-Steagall Act. The Acts (Glass & Steagall) were both reactions of the U.S. government to cope with the collapse of a large portion of the American commercial banking system in early 1933. While many economic histories attribute the collapse to the economic problems which followed the Stock Market Crash of 1929 it is clear that the U.S. banking collapse of 1933, which came three and a half years later, could only have been partially the result of the stock market collapse in October 1929.

The Republican Hoover administration had lost the November 1932 election to Franklin Delano Roosevelt, but his administration did not take office until March 1933. The lame duck Hoover Administration and the incoming Roosevelt Administration could not, or would not, coordinate actions to stop the run on banks affiliated with the Henry Ford family that began in Detroit Michigan in January 1933. The Federal Reserve under its chairman Eugene Meyer, who would buy the Washington Post out of bankruptcy in May 1933 as he left his post as Chairman of the Federal Reserve, was equally ineffectual.

Both bills were sponsored by Democratic Senator Carter Glass of Lynchburg, Virginia, a former Secretary of the Treasury, and Democratic Congressman Henry B. Steagall of Alabama, Chairman of the House Committee on Banking and Currency.

Congressional Research Service Summary:

In the nineteenth and early twentieth centuries, bankers and brokers were sometimes indistinguishable. Then, in the Great Depression after 1929, Congress examined the mixing of the “commercial” and “investment” banking industries that occurred in the 1920s. Hearings revealed conflicts of interest and fraud in some banking institutions’ securities activities. A formidable barrier to the mixing of these activities was then set up by the Glass Steagall Act.[3]


First Glass-Steagall Act
The first Glass-Steagall Act was the first time currency (non-specie, paper currency etc.) was permitted to be allocated for the federal reserve. In addition, the G.S.A. separated investment banking from commercial banking, in effect curbing speculation. The resulting FDIC (Federal Deposit Insurance Corporation) insured all bank deposits up to $5000.

The Glass Steagall Act, as well as FDIC, CCC (Civilian Conservation Corps), Emergency Banking Act, and the TVA (Tennessee Valley Authority) were all products of Roosevelts 'Hundred Days', Roosevelt's first one hundred in office.[4]


Second Glass-Steagall Act
The second Glass-Steagall Act, passed on 16 June 1933, and officially named the Banking Act of 1935, introduced the separation of bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Company for insuring bank deposits.[citation needed]

Literature in economics usually refers to this simply as the Glass-Steagall Act, since it had a stronger impact on US banking regulation.[citation needed]


Impact on other countries
The Glass-Steagall Act has had influence on the financial systems of other areas such as mainland China which maintains a separation between commercial banking and the securities industries.[5][6]

On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One of the effects of the repeal was to allow commercial and investment banks to consolidate. Some economists have criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis.[7][8]The repeal enabled commercial lenders such as Citigroup, the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities. Citigroup played a major part in the repeal. Then called Citicorp, the company merged with Travelers Insurance company the year before using loopholes in Glass-Steagall that allowed for temporary exemptions. With lobbying led by Roger Levy, the "finance, insurance and real estate industries together are regularly the largest campaign contributors and biggest spenders on lobbying of all business sectors [in 1999]. They laid out more than $200 million for lobbying in 1998, according to the Center for Responsive Politics..." These industries succeeded in their two decades long effort to repeal the act.[9]

The banking industry had been seeking the repeal of Glass-Steagall since at least the 1980's. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.

The argument for preserving Glass-Steagall (as written in 1987):

1. Conflicts of interest characterize the granting of credit – lending – and the use of credit – investing – by the same entity, which led to abuses that originally produced the Act

2. Depository institutions possess enormous financial power, by virtue of their control of other people’s money; its extent must be limited to ensure soundness and competition in the market for funds, whether loans or investments.

3. Securities activities can be risky, leading to enormous losses. Such losses could threaten the integrity of deposits. In turn, the Government insures deposits and could be required to pay large sums if depository institutions were to collapse as the result of securities losses.

4. Depository institutions are supposed to be managed to limit risk. Their managers thus may not be conditioned to operate prudently in more speculative securities businesses. An example is the crash of real estate investment trusts sponsored by bank holding companies (in the 1970s and 1980s).

The argument against preserving the Act (as written in 1987):

1. Depository institutions now operate in “deregulated” financial markets in which distinctions between loans, securities, and deposits are not well drawn. They are losing market shares to securities firms that are not so strictly regulated, and to foreign financial institutions operating without much restriction from the Act.

2. Conflicts of interest can be prevented by enforcing legislation against them, and by separating the lending and credit functions through forming distinctly separate subsidiaries of financial firms.

3. The securities activities that depository institutions are seeking are both low-risk by their very nature, and would reduce the total risk of organizations offering them – by diversification.

4. In much of the rest of the world, depository institutions operate simultaneously and successfully in both banking and securities markets. Lessons learned from their experience can be applied to our national financial structure and regulation.[10
 

cutterone

Well-known member
I'm not sure I buy all this crap that the housing & mortgage crisis is to blame on "people who could not afford a home" thing. IMO the real crisis started with the same institutions pushing credit cards and spend, spend, spend down everyone's throat. If anything they gave credit card usage to folks who should not have had one. Then when they put increased rates and fees on them and they could not make the payments the answer was take out an equity loan. And wouldn't ya know it the very next week they were running up those card again! All we are doing is bailing out the aholes who started this thing and made billions of dollars. The best thing we could do is blow Wall St off the map.
 

Cal

Well-known member
Very good article Sandhusker. If you have a link maybe I know a junior high kid that would use it as a Current Event. :wink:

I don't have a link, but heard that an alarming number of the housing foreclosures were loans made to illegal immigrants, especially in California, as well as loans that never touched the principle....which is really a no brainer.
 
A

Anonymous

Guest
An interesting article in todays Billings Gazette-- about how this Bush policy and according to Senator Dodd "an 8 year coffee break" in any oversight, management, and regulation by the Administration has affected so many peoples retirement chances and or quality of retirement....And how this is going to effect the middle aged and older part of the population worse.....

Longtime Billings insurance agent Tom Crawford had only to turn on his computer Monday to feel the pain of Wall Street's latest meltdown.

Crawford, 63, is counting on his three stock portfolios and a savings account to fund his retirement.

Crawford's losing portfolio makes up to 20 percent of his retirement plan. He did diversify his investment risks, so the loss won't wipe him out. Yet after selling insurance for Farmers Insurance Co. for 34 years, Crawford said people like him, between the ages of 55 and 65, face a classic dilemma.

"We don't have enough time in our lives to recover. Twenty- to 25-year-olds have the rest of their lives to watch their investments grow," Crawford said. "Yet I can't afford to pull out of my investments."

http://www.billingsgazette.net/articles/2008/09/16/news/local/18-agent.txt

Today many of the TV shows are saying how "lucky" we are that Congress wouldn't allow Bush's "privatization" of Social Security to go forward- as it could have/would have been wiped out with the current markets status....
 

TexasBred

Well-known member
Cal said:
Very good article Sandhusker. If you have a link maybe I know a junior high kid that would use it as a Current Event. :wink:

I don't have a link, but heard that an alarming number of the housing foreclosures were loans made to illegal immigrants, especially in California, as well as loans that never touched the principle....which is really a no brainer.

Cal you could be right...but the fact is banks and other institutions were basically threatened if they did not make loans to anybody that applied or face govt fines and sanctions.....some of the houses were never lived in. They were bought and financed with dirt cheap money made available and when the rates went up they baled just like the illegals and other no good sob's.
 

TexasBred

Well-known member
Oldtimer said:
An interesting article in todays Billings Gazette-- about how this Bush policy and according to Senator Dodd "an 8 year coffee break" in any oversight, management, and regulation by the Administration has affected so many peoples retirement chances and or quality of retirement....And how this is going to effect the middle aged and older part of the population worse.....

Longtime Billings insurance agent Tom Crawford had only to turn on his computer Monday to feel the pain of Wall Street's latest meltdown.

Crawford, 63, is counting on his three stock portfolios and a savings account to fund his retirement.

Crawford's losing portfolio makes up to 20 percent of his retirement plan. He did diversify his investment risks, so the loss won't wipe him out. Yet after selling insurance for Farmers Insurance Co. for 34 years, Crawford said people like him, between the ages of 55 and 65, face a classic dilemma.

"We don't have enough time in our lives to recover. Twenty- to 25-year-olds have the rest of their lives to watch their investments grow," Crawford said. "Yet I can't afford to pull out of my investments."

http://www.billingsgazette.net/articles/2008/09/16/news/local/18-agent.txt

Today many of the TV shows are saying how "lucky" we are that Congress wouldn't allow Bush's "privatization" of Social Security to go forward- as it could have/would have been wiped out with the current markets status....

Oldtimer...enlighten us...where is SS money now invested?????
 

Steve

Well-known member
Oldtimer said:
An interesting article in todays Billings Gazette-- about how this Bush policy and according to Senator Dodd "an 8 year coffee break" in any oversight, management, and regulation by the Administration has affected so many peoples retirement chances and or quality of retirement....And how this is going to effect the middle aged and older part of the population worse.....

Longtime Billings insurance agent Tom Crawford had only to turn on his computer Monday to feel the pain of Wall Street's latest meltdown.

Crawford, 63, is counting on his three stock portfolios and a savings account to fund his retirement.

Crawford's losing portfolio makes up to 20 percent of his retirement plan. He did diversify his investment risks, so the loss won't wipe him out. Yet after selling insurance for Farmers Insurance Co. for 34 years, Crawford said people like him, between the ages of 55 and 65, face a classic dilemma.

"We don't have enough time in our lives to recover. Twenty- to 25-year-olds have the rest of their lives to watch their investments grow," Crawford said. "Yet I can't afford to pull out of my investments."

http://www.billingsgazette.net/articles/2008/09/16/news/local/18-agent.txt

Today many of the TV shows are saying how "lucky" we are that Congress wouldn't allow Bush's "privatization" of Social Security to go forward- as it could have/would have been wiped out with the current markets status....

Why not allow the same retirement investment privilege the congress and senate has?

Had the small percentage investment (less then 10%) of SS funds been allowed in government securities and bonds.. their investment might be small compared to the stock market gains of the past, but it would be larger then the current SS return and still a safe investment...


Federal Employees Retirement System (FERS)

Overview

FERS is a retirement plan that provides benefits from three different sources: a Basic Benefit Plan, Social Security, and the Thrift Savings Plan. Two of the three parts of FERS (Social Security and the Thrift Savings Plan) are portable should you leave the Federal Government before retirement. FERS gives you more control over the retirement benefits you receive.

The Basic Benefit and Social Security parts of FERS require you to make contributions each pay period. The cost of the Basic Benefit and Social Security are withheld from your pay as payroll deductions. The Government makes contributions too. Then, after you retire, you receive benefit checks each month for the rest of your life. This is what is called an annuity. The Thrift Savings Plan part of FERS is an account that is automatically set up for you. Each pay period your employing agency deposits into your account an amount equal to 1% of the basic pay you earn for the pay period. You can also make your own contributions to your TSP account and your agency will contribute even more.
http://www.opm.gov/fers_election/fersh/h_fers3.htm

Even at a modest annual rate of return of 6.0%, income from the TSP can replace about 44% of final pay for a worker who contributes 10% of pay over 30 years.
 

Sandhusker

Well-known member
Oldtimer said:
An interesting article in todays Billings Gazette-- about how this Bush policy and according to Senator Dodd "an 8 year coffee break" in any oversight, management, and regulation by the Administration has affected so many peoples retirement chances and or quality of retirement....And how this is going to effect the middle aged and older part of the population worse.....

Longtime Billings insurance agent Tom Crawford had only to turn on his computer Monday to feel the pain of Wall Street's latest meltdown.

Crawford, 63, is counting on his three stock portfolios and a savings account to fund his retirement.

Crawford's losing portfolio makes up to 20 percent of his retirement plan. He did diversify his investment risks, so the loss won't wipe him out. Yet after selling insurance for Farmers Insurance Co. for 34 years, Crawford said people like him, between the ages of 55 and 65, face a classic dilemma.

"We don't have enough time in our lives to recover. Twenty- to 25-year-olds have the rest of their lives to watch their investments grow," Crawford said. "Yet I can't afford to pull out of my investments."

http://www.billingsgazette.net/articles/2008/09/16/news/local/18-agent.txt

Today many of the TV shows are saying how "lucky" we are that Congress wouldn't allow Bush's "privatization" of Social Security to go forward- as it could have/would have been wiped out with the current markets status....

Actually, if history is any guide, Mr. Crawford will have plenty of time to recover. I forget the actual numbers, but it seems to me that since the great depression, stock have lost 20% or more of their value 19 times, and they have then come back and then gone higher - you guessed it - 19 times. I think it took something like an average of 16 months. What we're seeing now is really no big deal, it's happened many times already and will happen many times again. If you can't stand the inevitable bear markets, you have no business being in stocks to begin with.

Still using history as a guide, Mr. Crawford should now be moving money away from his safer and fixed investments into stocks, as buying more when they are "on sale" will greatly shorten his recovery period. He was wise to diversify, but now its time to rebalance.
 
A

Anonymous

Guest
Sandhusker said:
Oldtimer said:
An interesting article in todays Billings Gazette-- about how this Bush policy and according to Senator Dodd "an 8 year coffee break" in any oversight, management, and regulation by the Administration has affected so many peoples retirement chances and or quality of retirement....And how this is going to effect the middle aged and older part of the population worse.....

Longtime Billings insurance agent Tom Crawford had only to turn on his computer Monday to feel the pain of Wall Street's latest meltdown.

Crawford, 63, is counting on his three stock portfolios and a savings account to fund his retirement.

Crawford's losing portfolio makes up to 20 percent of his retirement plan. He did diversify his investment risks, so the loss won't wipe him out. Yet after selling insurance for Farmers Insurance Co. for 34 years, Crawford said people like him, between the ages of 55 and 65, face a classic dilemma.

"We don't have enough time in our lives to recover. Twenty- to 25-year-olds have the rest of their lives to watch their investments grow," Crawford said. "Yet I can't afford to pull out of my investments."

http://www.billingsgazette.net/articles/2008/09/16/news/local/18-agent.txt

Today many of the TV shows are saying how "lucky" we are that Congress wouldn't allow Bush's "privatization" of Social Security to go forward- as it could have/would have been wiped out with the current markets status....

Actually, if history is any guide, Mr. Crawford will have plenty of time to recover. I forget the actual numbers, but it seems to me that since the great depression, stock have lost 20% or more of their value 19 times, and they have then come back and then gone higher - you guessed it - 19 times. I think it took something like an average of 16 months. What we're seeing now is really no big deal, it's happened many times already and will happen many times again. If you can't stand the inevitable bear markets, you have no business being in stocks to begin with.

Still using history as a guide, Mr. Crawford should now be moving money away from his safer and fixed investments into stocks, as buying more when they are "on sale" will greatly shorten his recovery period. He was wise to diversify, but now its time to rebalance.

I disagree- I don't think the bottom has been hit yet...We're just starting into the domino theory of layoffs...Like one of the economists I heard on Bloomberg yesterday saying- with the fall of all these banks, lending institutions, brokerage firms and closure of many- 100,000's of thousands of white collar jobs around the country (world) are being lost-- but even worse- each one of these means many many more times that in blue collar jobs- from janitors to policemen, to the copy machine serviceman, etc. are losing their jobs too--and its just started to steamroll now.....

But I heard the Lehman CEO will get over $30 million bonus/severance no matter what happens :roll: :???: :mad: :mad:

Its gonna get a lot worse before it gets better- and if we get McSame promoting more Bush/Foreclosure Phil policy- I don't know if its fixable....
 

Sandhusker

Well-known member
I'm not saying we're at the bottom yet. I'm saying that this has happened many times before and will happen many times again. It's simply the nature of the beast.

If hitting the bottom is your goal, elect Obama and his tax increases will get us there fast.
 

hopalong

Well-known member
Sandhusker said:
I'm not saying we're at the bottom yet. I'm saying that this has happened many times before and will happen many times again. It's simply the nature of the beast.

If hitting the bottom is your goal, elect Obama and his tax increases will get us there fast.

:agree:
but oldtimer (notice I quit capitalizing his name for lack of respect) cannot see the forest for all the trees, he can only act on his cut and paste jokes that others have made for him.
Maybe it is all the dirty diapers he has been changing as of late mostly his own!
 

TexasBred

Well-known member
hopalong said:
Sandhusker said:
I'm not saying we're at the bottom yet. I'm saying that this has happened many times before and will happen many times again. It's simply the nature of the beast.

If hitting the bottom is your goal, elect Obama and his tax increases will get us there fast.

:agree:
but oldtimer (notice I quit capitalizing his name for lack of respect) cannot see the forest for all the trees, he can only act on his cut and paste jokes that others have made for him.
Maybe it is all the dirty diapers he has been changing as of late mostly his own!

OT could make it easier on himself if he'd buy some "pull-ups".
 
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