Tom Perrelli

More Bailouts, Urge Left-Leaning Journalists

by Hans Bader on August 23, 2011

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Regulation

Left-leaning journalists are urging more mortgage bailouts to try to increase consumer spending, since they erroneously think that inadequate consumer spending is the principal cause of the current bad economy. This is a fallacy: As economist Mark Calabria has noted, consumer spending is currently high as a percentage of the economy compared to most periods in American history, and is low only compared to the unsustainably high levels reached during the housing bubble, when people borrowed rather than saved. It is corporate investment, not consumption, that is too low and needs to rise. Companies, and even Democratic businessmen, are afraid to invest and create new jobs now, because they fear costly, unpredictable new federal regulations and mandates from the Obama administration (such as the 2010 Dodd-Frank financial law, and the health care reform law, whose estimated cost just went up by another $50 billion annually and which will reduce the size of America’s work force by hundreds of thousands of people).

Apparently thinking that the government can create money out of thin air through mortgage bailouts, The New York Times‘s editorial board yesterday urged the Obama administration to pressure banks to cut the principal balances of people who imprudently borrowed too much money, even as it admits that such “principal reductions are seen as rewarding reckless borrowers,” since doing so will “free up money for borrowers to use for paying down principal or consumer spending.” But doing that doesn’t create any new wealth, or free up new money, all it does is transfer money from savers to borrowers. Enriching borrowers at investors’ expense results in investors feeling poorer and spending less money, reducing economic activity related to their purchases. The Times just ignores the fact that forcing banks to write off loans will harm bank shareholders, resulting in them spending less money. Thanks to my recent losses in the declining stock market, which will make it harder for me to ever retire, I have already reduced consumer spending, and to save money, I no longer eat out in restaurants.

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Obama Administration Crafting Yet Another Bailout: Speculators and McMansion Owners May Benefit

by Hans Bader on July 26, 2011 · 2 comments

in Bailout Watch, Economy, Legal, Property Rights

As if America didn’t already have enough bailouts, the Obama administration is planning yet another — one that could enrich “McMansion homeowners and property speculators.”

As Philip van Doorn notes at The Street,

A report on Wednesday that the U.S. Treasury is considering “a plan that could help 1 million or more homeowners avoid foreclosure,” leaves some very disturbing questions unanswered. First and foremost: Why should taxpayers bailout McMansion homeowners and property speculators? According to Bloomberg, the proposal is “aimed at promoting modifications of delinquent or defaulted home loans, including writedowns of principal” for “mortgages that are bundled into mortgage-backed securities not issued by government agencies.” . . .According to the report, the plan would address the difficulty in writing down the principal balances of the “nonconforming,” privately securitized mortgages because “writedowns can’t happen under the covenants governing such securities.” Private-label notes represent about 20% “of the $6.8 trillion in mortgage-backed securities outstanding.”

Supposedly, the plan

won’t cost the Treasury a thing, while obviously forcing investors to take it on the chin. The securitized private-label mortgages didn’t conform to Fannie and Freddie guidelines for a variety of reasons. Some are “jumbo loans,” with initial balances exceeding the agencies’ limit. Others are loans with small initial down payments or other higher-risk “features” that caused the government-sponsored enterprises to stay away. Finally, many of the private-label securitized mortgage loans were collateralized by investment properties or second homes.

If the Treasury indeed announces this plan, while touting its aim of “helping families,” it will be very interesting to see if the families being helped include speculators, wealthy borrowers and those who enjoy a vacation homes in the Hamptons. Of course, if the government places, as President Obama put it, “some pressure” on banks to facilitate writedowns on the private-label mortgages, the banks — especially Bank of America (BAC_) — are likely to suffer as well, possibly beyond their current expectations.

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The Obama’s Administration’s Strange Double Standards on Hate Crimes, Terrorism, and Health Care: Soft on the Guilty, Cruel to the Innocent, Unfair to Taxpayers

by Hans Bader on July 30, 2009 · 3 comments

in Healthcare, International, Legal, Personal Liberty, Politics as Usual, Sanctimony

When black panthers were caught on videotape menacing white voters in Philadelphia, using nightsticks and racial epithets to drive them away from the polls, Obama political appointees, including Assistant Attorney General Tom Perelli, intervened to dismiss the lawsuit that had been won against them by career Justice Department lawyers — dismissing the case after it had already been won! The Obama political appointees insisted that the Justice Department should throw out its victory by not permitting a default judgment against two of the defendants even after the court clerk had already entered a default, claiming lack of evidence — even though the evidence of voter intimidation was captured on videotape! (The Obama appointees did allow the court to enter a toothless injunction against the third of the three defendants, which did nothing more than instruct him not to engage in such criminal acts again. But the defendants have paid no penalty for their crimes).

While bending over backwards to protect black hate-criminals who menaced voters in violation of the Voting Rights Act, the Administration has insisted that others found innocent of hate crimes in state court should be prosecuted all over again in federal court, relying on a loophole in Constitutional protections against double jeopardy. The recently passed federal hate-crimes bill, which Obama has pledged to sign, broadens the federal hate crimes law to the point where it punishes the same conduct already prohibited by state criminal laws and hate-crimes laws, allowing federal prosecutors to bring charges all over again after a jury has found that the defendant is not guilty of hate crimes.

As law professor Gail Heriot, a member of the U.S. Commission on Civil Rights, notes in the Philadelphia Inquirer, advocates of the federal hate crimes law have insisted that even in state cases where the evidence of a hate crime was very weak, leading to acquittals, federal reprosecution is warranted. For example, “Some have even called for federal prosecution of the Duke University lacrosse team members–despite strong evidence of their innocence.” Amazingly, even though DNA evidence proved the Duke Lacrosse players did not commit any rape (much less the racially-motivated rape they were accused of), and the North Carolina attorney general has admitted that they were innocent, there are still those who wish they had been prosecuted in federal court.

The U.S. Commission on Civil Rights voted 6-to-2 to oppose the federal hate-crimes bill. The Commission called the bill a “menace to civil liberties” because “its most important effect will be to allow federal authorities to re-prosecute a broad category of defendants who have already been acquitted by state juries.” Thus, it will erode protections against double jeopardy.

But Congress chose to heed instead the 2 dissenting Commissioners, such as Michael Yaki, who has argued that the bill was necessary to allow people found not guilty of a hate crime in state court to be reprosecuted all over again in federal court. In his July 6 San Francisco Chronicle website commentary “Why We Need the Matthew Shepard Hate Crimes Bill,” Yaki points to the example of Joseph Silva and George Silva, who were found guilty of a crime in California state court, but not guilty of committing it for racial reasons, as an example of people who need to be reprosecuted for hate crimes in federal court. In fact, the Silvas are already being reprosecuted by the Obama Justice Department in federal court under the existing, narrow federal hate-crimes law, which only reaches the minority of hate crimes that affect federally-protected activities. The new hate-crimes law eliminates the longstanding requirement that hate crimes affect federally protected activities before federal prosecutors have jurisdiction to reprosecute them, making most state hate-crimes federal hate-crimes as well. (The Obama Justice Department “strenuously resisted efforts to tighten the bill’s language” to eliminate unjustified prosecutions).

A desire to get around constitutional double-jeopardy protections was also voiced by many backers of the bill, like the Leadership Conference on Civil Rights and MALDEF, which pointed to a state jury’s acquittal of Pennsylvania teenagers accused of a hate crime against an illegal alien as a reason for passing the federal hate-crimes bill.

While seeking to erode the constitutional rights of American citizens, the Obama Administration has given foreign terrorists rights that they are not entitled to under the Constitution, such as giving enemy combatants captured in Afghanistan Miranda warnings even though that is not legally required. Terrorists captured overseas by U.S. troops are not entitled by the U.S. Constitution to Miranda warnings. Nor are Miranda warnings required by Afghan law, international law, or treaties like the International Covenant on Civil and Political Rights.

Even the liberal Washington Post, which has not endorsed a Republican for President since 1952, has criticized Obama’s foreign policy, admitting that Obama has shown “willful disregard of political oppression” by left-wing dictators. Meanwhile, he has attacked friendly governments in places like Honduras, the Wall Street Journal notes. All too often, Obama has behaved like a friend to our enemies, and an enemy to our friends.

Many supporters of the federal hate-crimes bill want to allow those found innocent to be reprosecuted in federal court. As one supporter put it, “the federal hate crimes bill serves as a vital safety valve in case a state hate-crimes prosecution fails.” The claim that the justice system has “failed” when a jury returns a not-guilty verdict is truly scary and contrary to the constitutional presumption of innocence and the right to trial by jury.

But it is a view widely shared among supporters of the hate-crimes bill. Syndicated columnist Jacob Sullum pointed out in 1998 that Janet Reno, Clinton’s Attorney General, backed the bill as a way of providing a federal “forum” for prosecution if prosecutors fail to obtain a conviction “in the state court.”

Supporters of the hate crimes bill also see it as a way to prosecute people even in cases where the evidence is so weak that state prosecutors have decided not to prosecute. Attorney General Eric Holder has pushed for the hate crimes bill as a way to prosecute people whom state prosecutors refuse to prosecute because of a lack of evidence. To justify broadening federal hate-crimes law, he cited three examples where state prosecutors refused to prosecute, citing a lack of evidence. In each, a federal jury acquitted the accused, finding them not guilty.

Advocates of a broader federal hate-crimes law have pointed to the Duke lacrosse case as an example of where federal prosecutors should have stepped in and prosecuted the accused players — even though the state prosecution in that case was dropped because the defendants were actually innocent, as North Carolina’s attorney general conceded, and were falsely accused of rape by a woman with a history of violence (including trying to run over someone with her car) and making false accusations.

Given the politically-charged nature of many hate-crimes trials, Kimberly Potter of New York University was probably right when she told Congress back in 1998 that if the federal hate crimes bill is enacted, “the acquittal of defendants in state court will frequently trigger demands for federal prosecution.”

Obama is also guilty of double standards in health-care. He’s trying to push through an ill-conceived health-care overhaul at home which will give preferential treatment to illegal aliens by qualifying them for federal health-care coverage, while exempting them from proposed taxes that would apply only to citizens.

One of Obama’s own advisers says his health-care plan will harm people with insurance while raising their taxes. CNN says Obamacare will take away 5 freedoms. It will also destroy many affordable health-care plans while breaking Obama’s campaign promises.