Crapo's crisis prescription: Skip the bad bank and subsidize cheap mortgages
From his perch on the Senate Banking Committee, Idaho Sen. Mike Crapo gets a closer look at the government’s handling of the credit and housing crises than most lawmakers do. So I sat in and listened with interest when he stopped by the Statesman the other day to talk to our editorial board.
Crapo said the credit crunch is still very much with us in Idaho. “We’re getting a tremendous number of complaints from businesses that can’t get money,” he said.
It’s vital right now to make credit available to small- and medium-sized businesses, he said. He thinks that might require federal incentives to boost confidence.
He doesn’t like that top policymakers are talking again about taking toxic assets off the hands of banks that may include Citi, Bank of America and J.P. Morgan Chase. You’ll recall that this was what the Bush administration said it would do when Henry Paulson and Ben Bernanke put a gun to Congress’ head last fall and essentially said, "Give us $700 billion right now or the economy will collapse." Once Congress handed over the money, Paulson decided instead to buy preferred stock in banks to recapitalize them. Now new Treasury Secretary Timothy Geithner proposes what some call a “bad bank” in a still-undefined partnership with the private sector. The bad bank would collect troubled banks’ trash and hope time would turn it to treasure. But Crapo says it is “a stretch” to think taxpayers will eventually get their money back from a bad bank. He thinks stabilizing banks by taking priority positions for taxpayers — the preferred-stock route — is still better.
Crapo is “very, very worried” about all the recent talk of nationalizing banks, too. That’s what the government did with IndyMac in California: The Federal Deposit Insurance Corp. seized it and created a bridge bank to manage its assets and liabilities until the FDIC can sell them back into the private sector. It’s also what the government has done with mortgage guarantors Fannie Mae and Freddie Mac. Some economists argue that temporary nationalization is ultimately the most market-friendly way to solve the lending crisis. I wouldn’t be surprised to see the political resistance to nationalization weaken in coming months as Geithner’s new “stress test” and public-accountability requirements show the world how troubled some of our biggest banks really are.
On the housing front, Crapo likes fellow Senate Republicans’ idea to have the federal government guarantee the refinancing of mortgages at 4 percent interest. “The idea is helpful,” he said. But he acknowledges the plan could cost taxpayers up to $400 billion. Some conservative critics, like the Heritage Foundation, say this plan would be another big government intervention in the marketplace and wouldn’t help much because mortgage interest rates aren’t the real problem with housing anyway.
And finally, on the stimulus front, Crapo worries that the just-enacted $787 billion stimulus law won’t be the end of calls for more government spending to bolster economic demand. Another stimulus bill or a step-up in regular annual appropriations could follow. “I worry that these may be a drive for increase spending continually,” he said.
Crapo acknowledges that the stimulus law will help the economy in the short term — 2009 and 2010. He opposed the bill, of course, joining fellow Republicans in arguing instead for tax cuts to stimulate consumer and business activity. Crapo says the law will spur inflation and hurt economic growth in the long term as we drown in deepening national debt. “We are piling up debt so fast,” he said. “We will not be able to escape the long-term consequences of that.”
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Giving out cheap loans would be insane at this time.
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To read is wonderful. To comprehend art. Falling back to whatever you believed in is NORMAL.
Crapo is a hypocrite, as
Crapo is a hypocrite, as member of that committee he failed to support serious and proper regulation that could have prevented our mess. Mr Crapo consistently voted against all regulation, he made it very clear that he would do what ever it took to support unregulated free market, thanks Crapo. Look what your committee leadership brought to Idahoans and Americans, how could you dare look yourself in the mirror, I guess you feel no responsibility, you just gave the gun didn't fire it, right, hypocrite, others are having to pull our grapes from the fire, thanks to Crapo's efforts. You not a Senator that represents the people of Idaho, your a bought an paid for employee of financial institutions, Crapo has taken a substantial amount of campaign finance money for years, for example in 2008; Citigroup $48,450, Goldman Sachs $34,000,Morgan Stanley $16,000 his contributions just from Securities & Investment was $243,664 and this is only 2008, it goes back years, in 2008 Crapo received 80% of his contributions form out of State, 80%, wow. Now he is trying selling us a pant load of conservative ideology as the American dream, all propaganda, no substance he attempt to become relevant after destroying the financial system.
THE PARTY IS JUST STARTED IDAHO
Good day Idaho! Hey besides local regulation through legislation,did you see the attorney general yesterday talking about a ban on assault rifles and using Mexico as the excuse? If you look at the Illinois gun law passed by Senator Obama, definition of assault weapon, it is any gun that uses a clip. How many of you own one of those? And please, look up the stats on actual gun crimes using real assault (M14, M16, AKA, ect) weapons before you think of a response. Below is a fact sheet on Australia's results of their gun ban after only one year and gun crimes skyrocketed.
Here's a link: http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=15304
So now Obama's team is going after our 2nd amendment. You say a messy process? This is a joke! What happened to our upholding the US Constitution? Idaho’s got to love this. Especially after the big love fest at his rally's.
And what's all this "we're all going to have to sacrifice" speech? Obama has been spending 36 Million dollars a day since he's been in office. And that's not stimulus money. How does that sit with you? Especially after the 150K Palin dress issue got everyone so upset.
Ah yes, the cherry on the top...
Nancey Peloci takes a trip to Rome to the tune of 10 thousand dollars a hour on a plane paid by US taxpayers.
Please wake me up and tell this is a Saturday Night Live parody... after all, nobody could actually be that arrogant and stupid and get away with it.
Our consolation prize for all this spending of our money? Obama promises to send 14 bucks a week to American citizens in tax relief. C'mon...this is an insult to America! What in the world can anyone do with a measley 14 bucks? Burger King?
And as if it couldn't get worse, anyone in the US making 200K will get hit with higher taxes. Go after the rich right?
With hyper inflation our buck will be worth zip. And just like Mexico and Russia a person making 200k in reality will be folks pulling down 30K or less as our dollar is becomes worth less and less. *(Worthless is the key word) A zillion peso's for one loaf of government cheese please?!
Now to pay for the spending using money we don't have all of our costs are going through the roof. How will anyone afford to do anything?
This is clearly bitting off the hand that feeds America jobs. And I can say that with certainty. The folks that make 200k plus are the ones who hire people.
You know, I am not an exceptionally intelligent person but even a kid can figure basic economics. And all this spending, printing worthless money is pissing the world off. China will renig and the USA will fail. After all, what’s the point of giving value to paper money backed by nothing except hyper inflation, no jobs and high taxes?
So here's the 200k question Idaho; will you pay taxes if we go to the projected 70 to 90%? Imean what's the point of working if you have to give it all to government? All hail Obama.
Where's the safe haven for investors? There aren't any.
Again, the stock market plunges after he announces the pharmaceutical companies are going to be hit last night. For matter, anytime our glorious leader speaks the market bottoms out. You think he's giving anyone in this country confidence in our future?
Let me ask, how's your 401k doing after you sacrificed years of forgoing vacations and buying a new car so you could save for some kind of retirement?!! Well...its gone.
Maybe you could apply for that greeter position at Walmart just so you can eat. But get in line with the thousands who beat you to the application process.
Your mom will be moving in with you as mine will probably with me.
Bottom line, half the US didn't vote for this guy. The other ones that switched party affiliation cause they wanted "change" now want to change their mind. And many liberal dem's are speechless. I know as I've spoken with many.
We're screwed unless some folks in Washington wake up and say wait a minute! And it looks like that ain't gonna happen. How does all this sit with you Boise?
See this YouTube Video: http://www.youtube.com/watch?v=3DlTgrMCxPg
Rumpled Stiltskin
Clean your ears!! All the better to hear the black helicopters..
Just cause you can't see them doesn't mean they're not there...
GOOD mortgages would make more sense.
What sort of weaponry are on those excellent choppers?
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To read is wonderful. To comprehend art. Falling back to whatever you believed in is NORMAL.