A little publicized political story, if played out to the satisfaction of California Democrats (read: Progressives), would not only set the stage for a politically motivated raid on the US Treasury, it would afford President Obama, his administration and political operatives plausible deniability in any “coincidental” benefit to Mr. Obama’s re-election campaign. And if you don’t think that has David Axelrod, Valerie Jarrett and David Plouffe salivating, you haven’t been paying attention for the past three years.
According to a report by TheHill.com:
“A long list of California Democrats is urging President Obama to name a new housing regulator using a controversial recess appointment.
“In a letter to the president, more than two dozen House members said the temporary head of the Federal Housing Finance Agency (FHFA), Edward DeMarco, simply hasn’t done enough to help struggling homeowners avoid foreclosure. The lawmakers are pushing the president to name a permanent director ‘immediately.’
“‘FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners,’ the lawmakers wrote. ‘Installing a permanent director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy.'”
Okay, let’s first examine the FHFA. According to their website:
“The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing & Economic Recovery Act of 2008. The Act gave FHFA the authorities necessary to oversee vital components of our country’s secondary mortgage markets – Fannie Mae, Freddie Mac and the Federal Home Loan Banks…FHFA’s mission is to provide effective supervision, regulation and housing mission oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market…”
The reason the California congressional delegation is pushing for a permanent replacement for Mr. DeMarco has little to do with the well-being of California’s citizens whose mortgages are both underwater or in foreclosure. It has everything to do with 2012 being an election year. The California delegation’s letter to President Obama urging the so-called “recess appointment” of a new FHFA director presents as a gift to the Obama re-election effort. I say “so-called recess appointment” because the US Senate is in pro-forma session and it is unconstitutional for the president to make recess appointments when either house of Congress is in session. I and the rest of the Conservative and Republican rank-and-file are still waiting for congressional Republicans to do something about the initial round of “recess appointments.” Of course, one needs a spine to stand-up to a bully, so we probably shouldn’t hold our collective breath.
I say that the letter presented to the President and his team is a gift because it is a win-win situation that indirectly provides enormous benefit to his re-election campaign.
Should Mr. Obama make an unconstitutional recess appointment to fill the FHFA directorship, the director would be able to take action, almost immediately, to mandate the re-negotiation of any and/or all of the mortgages held by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. That mandate could literally include the forgiveness of sizable portions of monies due to those organizations by mortgage holders who are either underwater, on the bubble of foreclosure or both. This is, effectively, an exercise in debt forgiveness…without the tax liability for the borrower.
Debt forgiveness, by definition, is:
“…a reduction in loan value where a loan is discounted from its original principal or charged off as a bad debt…Under IRS rules [the amount of the reduction] is reportable as income to the borrower for loans discounted or charged off.”
Because this move by the FHFA would be recognized as a mandated re-negotiation of the loan, the borrower wouldn’t be subjected to the IRS rules pertaining to debt forgiveness. That leaves this question: How would Fannie Mae, Freddie Mac and the Federal Home Loan Banks recoup the monies lost in mortgage re-negotiations? If you answered, “from the federal government” or “from the US taxpayers,” give yourself a gold star. The mandated re-negotiated mortgages would literally facilitate a raid on the US Treasury by the Obama Administration under the guise of affordable housing and the “correcting” of the mortgage industry.
Now, here’s the part that makes David Axelrod, Valerie Jarrett and David Plouffe drool.
Being the narcissistic political opportunist that Barack Obama has demonstrated himself to be, any of the so-called “political strategist” talking heads seen blathering on nightly on your cable news channel of choice could tell you that as soon as the first reduced mortgage bills are sent to the “rescued” (read: bailed-out, or, better yet, bribed) voters…er, excuse me, borrowers, Mr. Obama will be on television, radio, in print and on the Internet trumpeting how his administration “saved” or “thwarted the foreclosure of” hundreds of thousands – if not millions – of family homes.
I can hear it now:
“This morning, the Director of the Federal Housing Finance Agency, initiated a plan to save the homes of millions of Americans who were tricked, deceived or otherwise forced into signing on to home mortgages unfairly by the greed merchants of the Wall Street One-Percent. Exacting social justice on these filthy Capitalists, the FHFA director has ordered the heads of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to renegotiate any and all home mortgages that are either underwater or on the brink of foreclosure. While I had nothing to do directly with this decision, I did, in my infinite wisdom, appoint the director and, therefore, am due your support in my bid for re-election to the presidency of the United States. Thank you very much and goodnight. Be sure to tip your bartenders and waitresses on your way out. They work hard. You’ve been great.”
Sir Alex Fraser Tytler, a Scottish lawyer, writer and Professor of Universal History, and Greek & Roman Antiquities at the University of Edinburgh, is quoted as saying:
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess of the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship…”
To clarify, the United States of America is not a Democracy, we are a Constitutional Republic with a democratic electoral system, that understood, Tytler’s axiom still holds true. Once the voting public realizes that they can elect pillagers to office who have no problem achieving full political cowardice in their sycophancy to special interest voting blocs, the gates to the Treasury are no longer secure and the Republic is doomed.
It is for this reason that two events simply must take place.
First, congressional Republican leadership must – immediately – cease being the gaggle of spineless political geldings that they have been since Mr. Obama took office. They must challenge, in every way, shape and form the unconstitutional (read: illegal) recess appointment of Richard Cordray atop the newly established Consumer Financial Protection Bureau and Mr. Obama’s recent appointments to the National Labor Relations Board. This opposition should include consideration of a radical move: organizing a congressional walk-out, ala the tactics of the Democrat lawmakers in Wisconsin and Indiana, who brought those state legislatures to a halt over the legitimate limitations imposed on public-sector labor unions in those states by the duly elected.
And second, Republicans simply must become more aggressive with branding issues, with messaging. This would be a perfect opportunity to get ahead of the message; to frame the issue before the Progressive “history re-writing machine” gets a chance to sell the American public a bill of goods that is fundamentally Socialist in nature (redistribution of wealth is a Socialist tool to placate the masses). Sadly, if the same message wizards in the GOP hierarchy execute their status quo they will once again find themselves on the defensive and operating from a disadvantaged position, just as with the tax-cut extension issue, the deficit issue, the entitlement reform issues, the budget issue, etc.
Should the Republican leadership – both in Congress and at the RNC – refuse to take this battle on with the intention of winning without compromise, we can all be sure that Mr. Obama and his team of Progressive anti-Capitalists will “fundamentally transform” the raiding of the US Treasury – disguised as an affordable housing initiative – into a dedicated voting bloc come November 2012. If the Republican leadership – both elected and at the Party level – allow this to happen then the subsequent demise of the Republic becomes the GOP’s legacy to the human race.