Comments on: Banking Committee Democrats Threaten Private Businessman

By: Kevin S.

Kevin S. — Thu, 21 May 2009 14:09:38 +0000

#6 drobviousso, I had also found Mr. Frey’s response (on Cafe Hayek) and strongly encourage anyone who is a bit fuzzy in their understanding of the issues related to the current lending problems to read his letter, all of it. Along with his analysis of the causes, he has some very sensible recommendations.

By: Ed Driscoll » Thug Congress: “We Will Pursue Further Steps”

Ed Driscoll » Thug Congress: “We Will Pursue Further Steps” — Thu, 21 May 2009 05:08:45 +0000

[...] those ideas to life), but ultimately unworthy of real adulation. But man…you read things like this, and you start to understand how caricatures like Rand’s come to be taken [...]

By: Robz

Robz — Thu, 21 May 2009 00:29:08 +0000

Hedge funds managers are some of the most
politically connected people in the world. Congress
is much more likely to do their bidding than not.

By: Conventional Folly » Terrifying

Conventional Folly » Terrifying — Wed, 20 May 2009 23:13:43 +0000

[...] those ideas to life), but ultimately unworthy of real adulation. But man…you read things like this, and you start to understand how caricatures like Rand’s come to be taken [...]

By: Michael Chaney

Michael Chaney — Wed, 20 May 2009 22:33:01 +0000

#14: Similar to my thoughts. When I saw Bawny Fwank was the one trying to roll back some of the nefarious laws regarding online gambling, my only thought was “Dear God, *anybody* but him”. He’s got too much baggage, and it looks like he’s interested in picking up even more….

By: Stormy Dragon

Stormy Dragon — Wed, 20 May 2009 21:25:58 +0000

hedge fund companies certainly have every right to pursue legal recourse

They have more than a right to do this, they have a legal obligation to their investors to do so.

The current administration seems to think, to borrow a line from Nixon, “if the President does it, it’s not securities fraud”.

By: Mike Leatherwood

Mike Leatherwood — Wed, 20 May 2009 20:49:02 +0000

Remember this when you look at Barney Frank’s effort to legalize online gambling. He has another angle in there, and it is proboably just for his own convenience, not for liberty.

By: SJE

SJE — Wed, 20 May 2009 20:15:25 +0000

#11: Megan McArdle was prediciting the very same a few weeks ago.

By: Mattocracy

Mattocracy — Wed, 20 May 2009 19:36:49 +0000

It sounds like a letter Dick Cheney would write.

By: Gabriel

Gabriel — Wed, 20 May 2009 19:20:56 +0000

On a very closely related note, the hedge fund managers who were invested in Chrysler are now saying that they're not going to lend money to any more unionized companies because they don't want to get blindsided by Obama again. Bloomberg story “Lenders will have to figure out how to price this risk,” Schultze, 39, said in a telephone interview from his office in Purchase, New York. “The obvious one is: Don’t lend to a company with big legacy liabilities or demand a much higher rate of interest because you may be leapfrogged in a bankruptcy.”

By: Boyd Durkin

Boyd Durkin — Wed, 20 May 2009 19:09:54 +0000

The only thing you might be missing is that the Constitution is now only a relic in a museum. All government, all the time, for everything.

How much more of an assault can we expect on capitalism, free markets, wealth (by even modest definitions), and limited government? Probable answer is “total”.

By: Dave

Dave — Wed, 20 May 2009 18:45:58 +0000

What is really disgusting about this is that investors pay a premium, either in reduced interest compensation or a higher initial cost, to be at the front of the payout line if the borrower defaults. Like Michael says, this is a long-established principle in bankruptcy & contract law.

The government has essentially turned that concept on its head and given itself the authority to change that priority as it sees fit. Under this scheme, there’s no way for firms to evaluate the risk of an investment so the smart thing to do is to keep their money away.

I would be interested to know the outcome of their suit.

By: dsmallwood

dsmallwood — Wed, 20 May 2009 18:30:24 +0000

Home_Building & Loan Association

is that where Jimmy Stewart worked? i think i remember that case. That old Mr. Potter was a jerk.

By: Whim

Whim — Wed, 20 May 2009 18:28:55 +0000

Public HEARING?

Hearing implies someone is LISTENING.

The six aforesaid Congresspersons are not in the LISTENING mode.

They are in an ACCUSATORY mode.

Hearing also implies that there is an impartial listener judging the proceeding.

Impartial.

Barney “$60 Bill” Frank?

Maxine “Bad Hair” Waters?

Mel “Dimbulb” Watts?

Carolyn “Baloney” Maloney?

BWAHAHAHAHAHAHAHAHA!

By: drobviousso

drobviousso — Wed, 20 May 2009 18:28:33 +0000

Ooh, I know the answer. He answers via letter in a much more reasonable and mature manor than Frank and the other jack booted thugs deserve.

http://www.scribd.com/doc/8667729/Frey-Letter-to-Congress
“Early this week I was told that my testimony was no longer needed but that a written statement could be submitted for the record. My written statement consists of two parts. The first part seeks to clarify the record regarding what I believe are inaccurate characterizations of my work. The second part seeks to offer specific recommendations on how to improve the American mortgage-backed securitization process in an effort to prevent similar crises in the future.”

By: Bernard

Bernard — Wed, 20 May 2009 18:26:05 +0000

The fact that the letter was written implies that Congress know just how shaky their legal position is here. I don’t see them resorting to intimidation unless they know just how strong a legal challenge would be in reversing their plans.

No doubt if the case does/did go ahead the residing judge will be leaned on in a similar way to ignore process or precedent and find in their favour because the end of the world is nigh and so something must be done (always the favourite position of any politician to be in).

By: Lior

Lior — Wed, 20 May 2009 18:22:33 +0000

To forestall protests: I know the Contracts Clause means something altogether different from its literal text. Ever since the New-Deal Court ruled in Home_Building & Loan Association v. Blaisdell that a State may interfere with existing contracts (in that case with foreclosures due to mortgage default), the real meaning of the clause must have been that a State shall pass laws impairing the obligations of contracts. Living in the US must be an amusing experience.

By: Wayne

Wayne — Wed, 20 May 2009 18:13:53 +0000

Mr. Frey owes a fiduciary duty to the investors in his fund, not to mortgage-holders in foreclosure. No one wants to see a mortgage-holder foreclosed on, but then again no one wants to see someone who is not in foreclosure lose all his invested money. Oh wait — yes, there are people who want to see an investor lose all his money — it’s those six people signing the letter. You’re not missing anything — this is an attempt to forcibly redistribute the wealth in this country.

By: Lior

Lior — Wed, 20 May 2009 18:13:33 +0000

No State shall … pass any … Law impairing the Obligation of Contracts

It seems to me that the representatives have a point: this says nothing about Congress passing laws impairing the obligations of contracts …

[of course at the founding Congress was not thought to have authority to legislate regarding private contracts, but I doubt this will stop your representatives from acting]

By: Michael Pack

Michael Pack — Wed, 20 May 2009 17:35:34 +0000

After trashing the Bill of Rights for years,now their trashing contract law.The auto industry,banks,energy and health care will be run by the government.Rent seekers like G.E will tow the line for profits.And this isn’t socialism?