On 2010-10-17, at 11:14 PM, Sandy Harris wrote:
> On Sat, Oct 16, 2010 at 4:32 AM, Wojtek S <wsoko52 at gmail.com> wrote:
>
>> I am reasonably sure that when the Repugs gain control of the house
>> (or the presidency) there will be a little change in the level of
>> government spending - but a big change in which business cronies will
>> be getting the federal largesse.
>
> I agree.
>
> However, isn't one of the main points of the Tea Party "a plague on
> both their houses", a desire to cut down on government especially
> on gov't spending?
Yes, but.
For example, today's FT reports:
"At hearings on Capitol Hill, in press conferences, television interviews and during the final all-night financial reform marathon in June, Republicans attacked Democrats for not tackling the “government-sponsored enterprises” that support the housing market.
"The GSEs, which buy loans from banks to enable them to write new loans and sustain the supply of housing finance, were seized by the government in 2008 in one of the most traumatic moments of the financial crisis. Fannie and Freddie’s appetite for poisonous subprime mortgages threatened to kill them. They have been in conservatorship ever since but continue to back almost all new mortgages.
"While most of the Republican agenda is likely to be backward looking, they would struggle to avoid tackling the GSEs. And the way they would do it is worrying not only liberals but also bankers, real estate agents and construction companies.
"Gerald Howard, head of the National Association of Home Builders, warns against radical change. 'That’s number one, that’s a line in the sand – that privatisation is not the way to go,' he says.
"The NAHB is pouring money into the midterm elections and giving more to Republicans than Democrats. But its donations come with a message – do not let purist free-market ideology trample on any green shoots in the housing market.
"The truth is, though, that even conservatives on the House financial services committee such as Jeb Hensarling, a Republican from Texas, do not want to wind down overnight institutions that have more than $1,000bn of assets on their books, especially not while the private market for housing finance is moribund.
"Like many Republicans, Mr Royce is sounding more pragmatic. He was an often impassioned opponent of parts of financial reform, but the prospect of power seems to be making more Republicans circumspect.
“ 'I think we need to be very careful, very thoughtful on how we restructure this system,' says Mr Royce. 'The over-arching premise that we should start with is there should not be private sector profits and taxpayer losses. We should develop a system where we encourage private capital back into the market and ratchet that over time in ways that lead to a situation where the housing finance system is reliant again for the most part on private capital.'
"There is nothing in that statement that the Treasury would disagree with. That does not mean the administration is about to reach a working accommodation with congressional Republicans. However, it does suggest the Republican party is not going to lurch as far to the right as liberals fear or the Tea Party movement wishes."