Obama Administration

Moratorium Lifted, But Drilling Still Blocked

by Ben Lieberman on October 13, 2010

in Economy, Energy, Environment, Global Warming, Natural Resources

With much fanfare, the Obama administration has lifted its moratorium on deepwater drilling in the Gulf of Mexico. But don’t expect much actual drilling any time soon, thanks to all of the administration’s other red tape strangling domestic oil and natural gas production.

Even before the April 20th Deepwater Horizon spill, the Obama administration had clamped down on new leasing on federally controlled offshore and onshore areas. In fact, 2009 saw less oil and gas leasing than in any year under Bush or Clinton, and 2010 was on track to be no better.

Nonetheless, the Obama administration Department of the Interior used the spill as an excuse to crack down further by imposing a six-month moratorium, until November 30th, on issuing any new deepwater drilling permits in the Gulf of Mexico. For all practical purposes, the administration also put an end to nearly all shallow water drilling in the Gulf, as well as exploration activities off Alaska.

Studies estimating thousands of lost jobs as a consequence of the moratorium — not to mention strong bipartisan opposition from Louisiana’s Congressional delegation — made for bad politics as well as bad policy. Whether or not influenced by the upcoming elections, the Department of the Interior announced that the moratorium is being lifted more than a month ahead of time.

The moratorium is gone, but all the pre-spill hurdles are still in force. In addition, Secretary of the Interior Salazar announced several tough new provisions and stated that only those operators who “clear the higher bar can be allowed to resume.” Interior concedes that these new requirements “may delay development of some OCS oil and gas resources.” Additional delays piled onto a policy that had already ground drilling to a near halt is not good news for American energy production.

Notwithstanding the official end to the moratorium, the real test is whether and to what extent drilling activity resumes. The American people need more energy, not to mention the thousands of high paying jobs an expanded domestic oil and gas sector would bring. If 2010 goes into the books as the second year in a row of sharply curtailed domestic energy production, the new Congress should take a close look at reversing this worrisome trend.

Private Employers Cut 39,000 Jobs in September

by Hans Bader on October 7, 2010

in Deregulate to Stimulate, Economy, Employment, Energy, Environment, Global Warming, Healthcare, Labor, Legal, Regulation, Stimulus to Nowhere

The private sector shed 39,000 jobs in September.  Liberal journalists claim this was “unexpected.”  This reveals their shaky grasp of economics.

If you were an employer, why would you hire somebody in an economy that’s barely growing, when you could be hit by all sorts of employee-related expenses in the future, the way employers have already been hit by increased costs due to Obamacare?  Employers are worried about additional costs that could force them to lay off newly hired workers if Congress passes cap-and-trade global warming legislation (which would impose massive costs on many industries, requiring cutbacks in production).  Recent EPA rules aimed at global warming will wipe out at least 800,000 jobs, with a blizzard of additional new rules expected to follow.  And the stimulus package, despite its $800 billion cost, did little for employers, wiping out export-sector jobs, and funneling green-jobs money to foreign firms.  (The current weak “recovery” actually began in June 2009, before the stimulus package even began being spent.)

Thanks to steadily-expanding government red tape, every time you set a worker’s pay, or have to fire a lazy or incompetent employee, you now face the risk of being sued  (You are less likely to hire someone if you can’t fire them later if they turn out to be lazy or incompetent).  Employees who are fired for even good reasons often turn around and sue the employer for age, race,  sex, or disability discrimination, or for the “hostile work environment” they claim existed during their employment due to things like overheard remarks.  Getting meritless lawsuits tossed out is expensive — years ago, it was typically $25,000 on legal bills if the employer succeeded in getting rid of the lawsuit at the earliest possible stage (on a pre-trial motion to dismiss), $75,000 at the next stage (”summary judgment”), and $250,000 if the employer won at trial.  Under a legal double-standard called the Christiansburg Garment Rule, if the employer wins, the worker seldom has to pay the employer’s legal bills; but if the worker wins, the employer has to pay the worker’s legal bills as a matter of course (or even a multiple of the employee’s legal bills if the lawsuit is brought in some liberal states like New Jersey (see  Rendine v. Panzer (1995)).

You are much less likely to hire someone if you can’t avoid being sued by them later over the pay package you negotiated with them when they were hired.  That’s now a real possibility for employers.  Setting employee pay has gotten harder under the Obama administration due to the 2009 Lilly Ledbetter Fair Pay Act, the first law signed by President Obama, which essentially eliminates the deadline for bringing pay discrimination claims against employers, meaning that employees can wait many years after their pay is set, and sometimes even after they are fired, before bringing a lawsuit against their employer. (Some courts have even allowed employees to use the new law to challenge demotions many years after they occur, under the theory that their demotion indirectly affected their pay.) The Ledbetter Act was named after Lilly Ledbetter, who waited until she was about to retire before suing over alleged pay discrimination, meaning that the supervisor who allegedly discriminated against her was dead and unable to defend himself against discrimination charges by the time the jury decided her case.  (Ledbetter testified in her deposition that she knew of the pay disparity by 1992, but didn’t file a complaint with the EEOC until 1998).  The Ledbetter Act overturned the deadline applied by the Supreme Court in its 5-to-4 ruling against Ledbetter.

The Obama administration wants to make it even easier to sue for discrimination through bills like the Civil Rights Restoration Act and the Paycheck Fairness Act.  The Paycheck Fairness Act would require equal pay for some employees who do unequal work, and allow them to seek unlimited punitive damages against their employers.  Right now, most pay discrimination claims require a showing of unequal treatment (that is, intentional discrimination), although, under Title VII of the Civil Rights Act, big employers can be ordered to pay very limited amounts (back pay, not emotional distress or punitive damages) for certain practices or pay scales that have an unintentional “disparate impact” on women or minorities (like paying people more because they have a high-school diploma, if the job supposedly doesn’t really require a high-school diploma).  The Paycheck Fairness Act would import such standards into the Equal Pay Act, which covers even tiny employers (unlike Title VII), and subject them not merely to back-pay claims, but to uncapped punitive damages and claims for “emotional distress” over pay disparities.

It would require the employer to prove in court things that no tiny employer could ever afford the legal-fees to demonstrate.  Under the Paycheck Fairness Act, an employer would have to show an overriding “business necessity” and lack of any alternative to justify the use of certain factors “other than sex” in setting pay scales.  This is worrisome, because even under existing laws that allow lawsuits over “unintentional” discrimination, employers have been forced to spend hundreds of thousands of dollars on expert witnesses to show that a challenged practice was reasonable, only to have the courts say that that was not enough, that the practice had to be more essential (and more closely-related to technical requirements like “content validity” and “construct validity”).

Distracted Driving Kills, But What About Dysfunctional Policy?

by Marc Scribner on September 21, 2010

in Mobility, Nanny State, Personal Liberty, Politics as Usual, Regulation, Zeitgeist

The Obama administration, having succeeded in bringing about economic recovery and having nation-built a democratic Afghanistan, has set its sights on another pressing issue: driving while distracted. Today in Washington, the Department of Transportation is holding its second annual Distracted Driving Summit. This meeting of the minds brings together finger-waving bureaucrats and activists from across the country to devise strategies on how to make another molehill into a mountain. They even have a website, Distraction.gov, which instructs lowly citizen visitors to “Become a fan of [Transportation] Secretary [Ray] LaHood [on Facebook]” (which, of course, I did).

LaHood is currently waging a war on “texting while driving,” as many cities and states continue to ban holding phones behind the wheel. But why the selective hysteria over texting and hand-held cell phones? Research suggests that drivers using hands-free devices are no safer than those using hand-held devices, yet I have heard no calls to prohibit hands-free devices — not to mention fiddling with the stereo or yelling at your kids in the backseat or listening to NPR’s awful cringe-fest “Wait Wait…Don’t Tell Me!,” which are also potentially deadly distractions.

These laws, which have little effect on actual human behavior (particularly among high-risk demographics) given that they are so difficult to enforce, have little basis in reality. Despite the fact that many drivers ignore these laws, distracted driving deaths fell this past year. LaHood and his cronies have no doubt taken credit, despite there being no evidence to support their shameless high-fiving.

The Independent Institute’s transportation guru Gabriel Roth (editor of the indispensable volume on creative, market-based transportation solutions Street Smart) suggests that focusing on distracted driving is a way for transportation officials to avoid addressing real problems because, well, they are the problem.

CEI has long noted that, as they continue to be ratcheted up, Corporate Average Fuel Economy (CAFE) standards will continue to kill thousands of drivers by putting them into smaller, lighter, less-safe cars. Yet because The Environment is spared a trivial amount of damage, that’s okay. A government monopoly over the roads preempts the market-based solution — insurance testing and certification, just like they often do in the shipping industry — with inefficient, expensive, poorly enforced government mandates. Yet this is okay because it keeps politicians and bureaucrats such as LaHood perpetually employed.

Rather than holding summits and engineering new nanny state policies, regulators and their cheerleaders should focus on rolling back deadly and perverse government mandates.

Record Federal Spending Increase Due to Wasteful Spending Like the Failed Stimulus Package

by Hans Bader on September 1, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, International, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

Federal domestic spending increased by a record 16 percent this year, thanks to wasteful spending by the Obama administration, such as its “huge economic stimulus package.”

The $862 billion stimulus package increased unemployment by wiping out thousands of jobs in America’s export sector, while giving 79 percent of its green-jobs funding to foreign firms.

Obama falsely claimed that the $787 billion stimulus package was needed to prevent “irreversible decline,” but the Congressional Budget Office admitted that it would actually shrink the economy “in the long run.”  As the Washington Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent . . . The reality is that it passed 10.3 percent.”

“Nearly two-thirds of Americans do not believe the $787 billion stimulus package the president passed last year has helped create jobs, according to a new Pew Research Center poll.”As the Washington Examiner notes, “a recent survey of business economists showed they didn’t think the stimulus was creating jobs, either.”  President Obama falsely claimed that virtually all economists supported his stimulus package, but this was patently untrue at the time he made this claim, when at least 200 economists publicly opposed it, and it  is even more untrue now.

Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.   Germany, which avoided adopting a huge American-style stimulus package, has an unemployment rate much lower than ours, and experienced a massive 9 percent growth rate in the second quarter of 2010.

“President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said” earlier.

A Full-Court Press on Trade? Not Likely

by Fran Smith on August 19, 2010

in International, Politics as Usual, Trade

Today’s Washington Times has a lengthy article on the Obama Administration’s trade agenda vis-à-vis the stalled free trade agreements with South Korea, Colombia, and Panama.  The article explores the likelihood of President Obama being able to resolve issues with the South Korea FTA before the November summit in that country – a deadline he had earlier announced.  The South Korea FTA has some tough opposition from some automakers and labor unions — and little support among Congressional Democrats.

While the U.S. dithers on this agreement, the article notes, the European Union, Canada, and Australia are going full-speed ahead to finalize their own trade pacts with South Korea, which will leave the U.S. in a weakened position regarding some important exports to that country.

The two other languishing deals also face some fierce opposition, especially from labor unions.

To get some movement on these trade pacts, the president will have to do more than make a few public pronouncements  expressing his support.  He’s going to have to take on the union opposition, get House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid in line, rally his troops by touting the benefits of these agreements, bring together those spurned business groups, and reach out to some Republican supporters of free trade.  A likely scenario?  Not hardly.

Check out CEI’s publications on the South Korea, and the Colombia and Panama FTAs.

Government Spends Billions Bailing Out Foreign Firms and Countries, and Replacing American Jobs With Foreign Green Jobs

by Hans Bader on August 12, 2010

in Agriculture, Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Global Warming, International, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

Our government spent as much money bailing out foreign firms as some countries spent on stabilizing their entire financial system.  Much of the money in the $140 billion AIG bailout actually went to mismanaged foreign firms that dealt with AIG.  The government also used that bailout to give billions to the Wall Street investment firm Goldman Sachs, an immensely rich and profitable company that didn’t even need the money.  (While harming most banks, and the productive  sectors of the economy, the recent financial reform bill will benefit politically-connected Goldman Sachs, which endorsed it.  Goldman Sachs is one of the biggest donors to liberal politicians.)

Earlier, the Obama administration devoted $6 billion in taxpayer money to bailing out Greece, which ran into trouble because of generous pensions that let many occupations like hairdressers retire at age 50.

American workers are also suffering due to the stimulus package.  It is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. It also destroyed thousands of jobs in America’s export sector.

Even more jobs will end up overseas if the Obama administration’s poorly conceived global warming legislation passes.

Reason magazine has an insightful article called “Five Lies About the American Economy.”

854,000 People Have Top-Secret Security Clearances; Huge, Politically-Correct Security Apparatus Expands

by Hans Bader on July 19, 2010 · 2 comments

in Culture, International, Legal, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Sanctimony, Zeitgeist

The Washington Post reports that 854,000 people have top-secret security clearances. America’s security apparatus is huge and incredibly costly.

Despite all these resources, our government turned a blind eye to the radical anti-American ravings and links of Nidal Hasan, who later murdered 13 people at Fort Hood while shouting “Allahu Akbar.” The Obama Administration did its best to conceal his religious and ideological motivation in the aftermath of the shootings. It commissioned a mendacious report on the cause of the shootings by two staunch advocates of racial preferences and restrictions on politically-incorrect speech. Their whitewash report blamed Hasan’s shootings on inadequate workplace stress programs and the “cumulative psychological effects of persistent conflict,” while deliberately ignoring the role of a “culture of political correctness” in causing the shootings. Although the killer’s actions were based on a radical Islamist ideology, the report did not even contain the words “Islam” or “Muslim,” and referred to the undisputed killer as “the alleged perpetrator.” Politically-correct military officials bent over backwards so far to accommodate Hasan’s ravings and on-the-job religious proselytizing before the shootings that they put up with behavior that would not even have been tolerated in the armies of sensible Muslim counties like Albania and Turkey.

“The top-secret world the government created in response to the terrorist attacks of Sept. 11, 2001, has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work,” reports the Post. The public portion of the security budget alone tops $75 billion.

Readers Contest Factcheck.Org’s “Oil Spill, Foreign Help, and the Jones Act”

by Hans Bader on July 12, 2010 · 1 comment

in Energy, Environment, International, Labor, Legal, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Trade

FactCheck.org argued that the Jones Act, which ordinarily bans both foreign ships and foreign crews from working in U.S. waters, did not interfere with foreign assistance in cleaning up the massive oil spill at BP’s Deepwater Horizon.  Factcheck readers like Jarrett Wampler disagreed, and called FactCheck’s reasoning flawed.  As he notes:

Newspapers like the Wall Street Journal, and even Democrats in Congress, have criticized the Obama Administration for refusing to waive those Jones Act restrictions (as the law lets the President do) to take advantage of foreign aid. Canada’s Financial Post has chronicled how the Administration rejected valuable expertise, and delayed vital assistance in fighting the spill, by many weeks, simply because of its foreign origin (so, too, has a federal news source, Voice of America, which said Dutch help was rejected ‘partly because of the Jones Act, which restricts foreign ships from certain activities in U.S. waters’).

But in a June 23 analysis, ’Oil Spill, Foreign Help, and the Jones Act,’ FactCheck made it sound like only right-wingers like Sarah Palin viewed the Jones Act as an obstacle to cleaning up the Gulf. It also claimed that the Jones Act couldn’t be a barrier to aid, because the federal government hasn’t cited the Jones Act in specifically rejecting many offers of foreign aid. (Although it apparently cited it again more recently in rejecting an offer of foreign assistance).  That claim made little sense, since a ban on a category of foreign assistance can make even offering the assistance pointless, resulting in few if any offers. Why would you even offer someone something they don’t want, or may not even be able to accept — even if you would otherwise be perfectly happy to give it to them?  As I noted in a June 29 letter in response to FactCheck.Org’s claim (“Gulf Spill Cleanup,” in “FactCheck Mailbag, Week of June 22-28):

‘Many respected newspapers, such as the Wall Street Journal and Canada’s Financial Post, as well as Voice of America News, have stated that the U.S. government rejected some offers of foreign assistance in cleaning up the Gulf oil spill. Canadian environmentalist Lawrence Solomon says the U.S. rejected critically-important Dutch expertise. Moreover, the Obama Administration has issued no general waiver of the Jones Act, which bars foreign crews and ships from working in U.S. waters or moving goods between U.S. ports.. . . .’If the Jones Act has not been waived, as FactCheck concedes, one would not expect many offers of assistance to be made in the first place, since accepting such offers would generally be forbidden. Does FactCheck.Org really expect a foreign country to hire an American lobbyist or lawyer for big bucks to try and convince the government to waive the Act to accept its help?’

The Jones Act certainly restricts foreign ships and crews in U.S. waters.  A ban or restriction can be a significant barrier even if it seldom leads to formal rejections, by discouraging offers or applications from being made in the first place, or leading to tentative offers being dropped prior to a formal rejection.  The Supreme Court recognized this principle in Teamsters v. United States, 431 U.S. 324, 365-66 (1977).  In that case, it held that even non-applicants could sue an employer for discrimination, where the policy of discrimination discouraged minorities from even applying.  It approvingly cited a federal appeals court’s observation that “as a practical matter . . . a member of the affected class may well have concluded that an application . . . was not worth the candle.”  The Supreme Court rejected  “the company’s assertion that a person who has not actually applied for a job can never be awarded” relief, noting that “A consistently enforced discriminatory policy can surely deter job applications from those who are aware of it and are unwilling to subject themselves to . . . explicit and certain rejection.  If an employer should announce his policy of discrimination by a sign reading ‘Whites Only’ on the hiring-office door, his victims would not be limited to the few who ignored the sign and subjected themselves to personal rebuffs. The same message can be communicated to potential applicants more subtly but just as clearly by an employer’s actual practices,” such as ”his responses to casual or tentative inquiries, and even by the . . . composition of . . . his work force . . . When a person’s desire for a job is not translated into a formal application solely because of his unwillingness to engage in a futile gesture he is as much a victim of discrimination as is he who goes through the motions of submitting an application.”  A similar principle exists in administrative and constitutional law, where regulations can be challenged even by people who did not apply under them, if an application would have been futile under the regulation. See, e.g., Grid Radio v. FCC, 278 F.3d 1314, 1319 (D.C. Cir. 2002); Pihl v. Massachusetts Dep’t of Educ., 9 F.3d 184, 190 (1st Cir.1993).

On the other hand, the Jones Act was not the only potential obstacle to foreign aid in cleaning up the oil spill, and I may well have inadvertently overstated its significance in making the federal government so slow to accept many forms of foreign assistance.  A French offer of assistance was apparently rejected due to environmental regulations, for example.  Expansive interpretations of environmental regulations also seem to have been involved in the federal government delaying the use of barges to clean up the Gulf of Mexico by sucking thousands of gallons of oil out of Louisiana’s oil-soaked waters.  Such regulations have impeded even domestic clean-up efforts. (A TV station in New Orleans reported that “the federal government is shutting down the dredging that was being done to create protective sand berms in the Gulf of Mexico.”)   The news stories attributing some rejections of foreign assistance to the Jones Act do not say it was the basis for all the rejections (Voice of America News noted that ”The Dutch also offered assistance with building sand berms (barriers) along the coast of Louisiana to protect sensitive marshlands, but that offer was also rejected, even though Louisiana Governor Bobby Jindal had been requesting such protective barriers.”  Moreover, a CNBC commentator says that an example I earlier cited from a Voice of America News report of Dutch help being rejected, which the VOA attributed to the Jones Act, actually involved a rejection by the EPA instead.)

Moreover, the Jones Act is less likely to be an obstacle going forward.  After weeks of delay, the federal government finally accepted various offers of foreign assistance.  And while the administration has failed to provide a general waiver of the Jones Act, it has now belatedly provided for reciprocal approval of skimmers, and set up an expedited process for applicants to seek individualized waivers.

Not-so-Happy Stimulus Anniversary

by Ivan Osorio on February 17, 2010 · 1 comment

in Agenda for Congress, Deregulate to Stimulate, Economy, Employment, Labor, Regulation

The Obama administration and its allies are trying their hardest to put a happy face on the first anniversary of the the gargantuan $787-billion stimulus bill — officially named the American Recovery and Reinvestment Act of 2009. President Obama claims that the Act helped “save” 2 million jobs, while Ross Eisenbrey of the union-backed Economic Policy Institute (EPI) argues that the stimulus has worked because jobs are being lost at a slower rate than before the Act was enacted. (It’s worth noting that EPI has a direct line to the administration: Vice President Joe Biden’s chief economic adviser, Jared Bernstein, was chief economist at EPI before joining the administration.)

If Eisenbrey is trying to lower expectations, he certainly succeeds. However, he doesn’t succeed in proving that the stimulus was a success. First, he provides no hard numbers, only the “[m]onthly change in payroll employment.” Things getting worse at a slower pace doesn’t mean that things are about to get better. Jobs are still being lost. Once you’re a hole, you don’t need to keep digging as fast to go much deeper.

Second, Eisenbrey argues that because the rate of job losses slowed down after the stimulus was enacted, then the to the stimulus should go the credit. Yet coincidence in time doesn’t prove causation. The proposition that the rate slowed down despite the stimulus — and would have turned around even faster without it – is just as valid an assertion.

However, once you get beyond mere assertion, the numbers hardly put the stimulus in a good light. Elizabeth MacDonald, of Fox Business, provides a useful summary of the jobs situation:

* The unemployment rate has increased since the stimulus bill was enacted, by +1.5% to 9.7%, from 8.2% in Feb 2009.

* The number of people who are unemployed increased by 2.1 million, from 12.71 million in February 2009 to 14.8 million in January 2010.

* The number of states/federal districts with an unemployment rate of 10% or higher increased from Feb 7, 2009 to December 17, 2009 (latest data).

* Payroll employment decreased by 3.3 million (132.823 million in Feb 09; 129.527 million in Jan 2010). Private payrolls are at levels not seen since 1999.

* The construction sector lost 810,000 jobs (6,435,000 in Feb 2009/5,625,000 in Jan 2010).

* The manufacturing sector lost 837,000 jobs (12,377,000 in Feb 2009/11,540,000 in Jan 2010).

* Employment in the federal government (excluding the Post Office) increased by 113,200 (2.068 million in Feb 09 / 2.181 million in Jan 2010). The number of federal, state and local employees is now about twice the number in US manufacturing jobs.

* Most jobs supported by the stimulus so far are public employees.

Even worse, as Veronique de Rugy of the Mercatus Center points out, “unemployment in the government sector accounted for 5.9% of the increase in the economy’s total unemployment which has occurred in the past year.  In contrast, job losses in the non-agricultural private sector have accounted for 81.3% of the total increase in unemployment.”

With more union members now working for government bodies than for private businesses, it’s no wonder organized labor’s allies are so intent on defending the stimulus, while the rest of us pay the tab.

For more on public sector unions, see here and here.

For how to deregulate to stimulate, see here.

More Enron-like Behavior by Administration Officials Comes to Light

by Hans Bader on January 7, 2010

in Bailout Watch, Economy, Insurance, Legal, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

Earlier, the Washington Post reported on how the Obama administration pressured Freddie Mac not to disclose to investors and the SEC the $30 billion in losses it was incurring as a result of Obama’s mortgage bailouts for undeserving (including high-income) borrowers.

Now, Bloomberg News reports that then-Federal Reserve Bank head (and now Treasury Secretary) “Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis,” and to hide them from the SEC in its SEC filings.  Such conduct is not too surprising coming from Geithner, a sanctimonious and hypocritical tax cheat.  Geithner also used the government’s bailout of AIG to pay billions of dollars to the wealthy Wall Street investment firm of Goldman Sachs, money that it neither needed to stay afloat, nor was legally entitled to.

Earlier this year, Freddie Mac’s CFO killed himself amidst a sea of red ink, as the administration forced Freddie to run up losses on mortgage bailouts, even though economists and real estate experts have criticized those bailouts as harmful to the economy.  Now, the Obama administration is making Freddie Mac and Fannie Mae deliberately run up losses on bailouts and buying up risky loans, even though the government took over Fannie and Freddie in 2008 in the name of ending their risky practices.  It is rewarding their executives for carrying out such terrible policies by showering them with multimillion dollar pay.

The mortgage crisis was caused partly by the reckless government-sponsored mortgage giants Fannie Mae and Freddie Mac, and partly by the affordable-housing mandates imposed on them.

But Obama’s proposed financial rules overhaul does absolutely nothing about the risky practices of Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

Instead, it pressures banks to make even more risky loans.  The House has approved Obama’s proposal to create a politically-correct entity called the Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.”  The Community Reinvestment Act was a key contributor to the financial crisis.  But the administration’s proposal would direct the new agency to enforce the Community Reinvestment Act without regard for banks’ financial safety and soundness.

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