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Letter to the Editor

June 04, 2010

Rowland misses the mark on economics



To the editor:

What do 9/11 Truthers, President Obama Birthers and Columnist Tim Rowland On Financial Subjects have in common? They all have an imprecise view of reality.

Rowland - again - wants us to accept his view of how the world works best. Some weeks back, it was having our local elected representatives get as much pork as possible, to compete with everyone else's elected representatives, to get as much state money as possible. Now, after reading one "tell-all" book, he concludes that government regulation is needed for the derivative mortgage market.

The criteria for these mortgage loans were set by government-owned Fannie Mae and Freddie Mac. It was our very own U.S. Congress who advised Fannie and Freddie that they MUST extend these affordable loans to those same borrowers Rowland characterizes as "duped with low-cost teaser rates." Fannie and Freddie are EXEMPT from any new financial regulation and currently (5/14/2010) owe the taxpayers $145,000,000,000 (that's billion) in bailout money. "Experts" cannot tell us how much U.S. taxpayers will eventually have to shell out. (P.S. Tim, all the big financial institutions have paid their bailout money back with interest.) They also continue to be funded "off-budget," meaning they owe taxpayers no accountability for how much money they need, let alone how they spend it. (This is exactly how Greece treated their military expenditures and their 130 "special accounts.")

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Furthermore, the packaging and marketing of these sophisticated derivatives were bought by sophisticated investors with the brains and talent to carry out their own due diligence. George Soros, Goldman Sachs and Deutsche Bank play in this game, not Ma and Pa investors like me. In my view, "caveat emptor" is the only regulation needed.

Rowland caps his suspect logic by saying: " anyone with a brain who studied the matter in any depth should have seen it coming." But then President George W. Bush, among others, did see it coming. As far back as 2003, he made many attempts to rein in the lending and spending. Unfortunately those who benefited most from doing nothing - Sens. Obama, Schumer, Dodd and Rep. Frank - pooh-poohed that as a fairy tale. (It's so much more fun to blame the Evil Derivatives Fairy.)

But let's get back to Rowland's "duped with low-cost teaser rates" defaulting homeowners. Is he referring, perhaps, to a public sector announcement on the back page of the very same Herald-Mail whose headline reads: "$500 DOWN CAN BUY YOU A HOME?"

In his concluding paragraph Rowland states: "And if it takes government intervention to put an end to this financially sociopathic behavior, then so be it." Let's see if I have this right: It is socially acceptable for the Obama administration to backstop losses for Fannie and Freddie through 2012, no matter how high they go, but it is "sociopathic" for free enterprise institutions to sell things others want to buy.

Perhaps in a future column, Tim Rowland can expound on his "strongly held belief in capitalism and free markets." Until he does, his nanny-state-bordering-on-socialist words will have to speak for him.

Tom Janus
Hagerstown

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