“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker



Friday, August 24, 2007

Congressional Highway Spending

Over the past few months, the Wall Street Journal has published a collection of seemingly unrelated articles concerning Federal highway spending and Congressional earmarks.

However, the two have a common theme- Congressional pork barrel spending and profligacy.

Through a technique known as 'public-private partnership,' highways such as the Chicago Skyway and the Indiana Toll Road are being spun to private companies, thus relieving the governments of the debt and operation of such roads. As the Journal article points out, PPPs are also being used to construct entirely new roads, rather than have various governmental entities, and their residents, wait for years for Federal grants and aid.

Ironically, given the recent collapse of the Interstate highway bridge in Minneapolis, James Oberstar, the chairman of the House Transportation Committee, warned, in a letter to every state, that the states should not enter into PPPs, and that he may even "undo" some existing ones.

Rather than, as Oberstar, ironically, contends, PPPs may not "adequately protect the public interest," the Journal piece points out that what the new funding solutions really do is threaten Oberstar's, and every other House member's ability to use earmarks on the Transportation Committee to curry favor back home. There are 75 (of 435) House members on this committee. That, in itself, tells you how valuable it is for House members to avail themselves of this spending authority.

The Journal article notes that in the last highway bill, which carried a tab of $295B, projects included snowmobile trails, parking lots, bike trails and museums. Not, apparently, sufficient maintenance of Interstate bridges. Nor, as the article points out, solutions to today's really pressing transportation problems- local highways for commuters. Not the construction of more city-to-city connections.

The reality of the situation is that PPPs allow local communities and states to contract for the provision of transportation solutions by going around the Federal government. By allowing a private authority to build, operate and maintain a highway, in exchange for tolls, local authorities assure that the right transportation solutions are provided.

In time, as the Journal points out, these methods of solving transportation problems will lessen the importance of Oberstar's House committee. Either way, drivers will pay for roads, but with PPPs, their local governments make sure that they get what they need.

Tuesday, August 21, 2007

Doddering Chris Dodd On The Electronic Stump Today

As I write this, I am listening to CNBC's coverage of doddering Senator (D-CT), and Presidential candidate Chris Dodd, demagogue the current mortgage finance situation as only a liberal can.

Dodd had taken a meeting this morning with Treasury Secretary Paulson and Fed Chair Ben Bernanke, due to his role as Senate Banking Committee chair.

While inserting the odd, but incorrect, statement that the current Bush administration has 'run up more debt than all the previous 42 administrations combined,' Dodd is trying his best to look like a populist.

He's for forgiving some of the borrowers who, being adults, freely borrowed money for housing using rather dangerous sub-prime loans. Dodd is on the warpath against the ratings agencies, as if they are the only sources of information on the creditworthiness of borrowers or debt instruments. He's also clearly pushing for easy money, via a Fed rate cut.

On his way by the Fed, he also lashed out at what he implied has been lax regulatory oversight of banks, by the Fed, in the area of home loans. Too bad Chris doesn't realize that many of the institutions now lending in the mortgage market are not supervised by the Fed.

Time to go back to school, Chris, and learn something about the sector which is the focus of the Senate Banking Committee which you so ineptly chair.

Lastly, he's putting heavy pressure on Bush's administration to allow the inept and poorly-run Fannie Mae and Freddie Mac organizations into the jumbo loan business. This is, of course, in answer to those institutions blithely offering to buy jumbo loans in the marketplace, thus setting a precedent for them to begin crowding out private lenders, and moving into the jumbo origination business.

It's unfortunate that Dodd, as chairman of the Senate Banking Committee, is being so totally political in his reactions to the current fixed income markets turbulence.

If you need any evidence of Dodd's unfitness for the Presidency, this act of playing politics, and inciting more worry and panic among homeowners and investors over current the housing finance situation, ought to be sufficient.