Daily Read - 2/11/10

In an interview with Bloomberg, President Obama seems to have changed his stance on Wall Street compensation, saying he doesn’t “begrudge” Jamie Dimon's $17 million bonus or Lloyd Blankfein's $9 million.  The president said that $17 million is “an extraordinary amount of money” for Main Street, but “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well...I know both those guys; they are very savvy businessmen.  I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system."  Tell that to all the people with pitchforks, and the people who made death threats against AIG executives last year.

“I know that there are Democrats for sure that we can work with to get things done, but you know what, those aren’t the Democrats running Washington right now,” said Wisconsin Rep. Paul Ryan, the ranking Republican on the House Budget Committee. “The Democrats running Washington right now tell people like me, ‘we’re not going to work with you, we’re doing it our way because we’ve got the votes, and we’re just going to run right over you.’ … You don’t have the common sense, hash-out-the-problem, thinking Democrats running the place right now.”  (ABC News)  However, Harry Reid may lose his seat, and Pelosi may lose the speakership.

Caroline Baum of Bloomberg says "Small Business has Some News for Big Government" (here)  Baum says the left and the right give their reasons for the lack of new jobs, but "Small- business owners list 'poor sales' as the numero uno problem."  Tax credits aren't the solution - "Employers aren’t about to pay a new worker $40,000 to earn a $5,000 credit unless that worker generates $35,000 of revenue", according to William Dunkelberg, chief economist of the National Federation of Independent Business.  Others said the government is canceling out its own policies if it provides a tax credit with one hand, but raises income taxes with the other (many small business owners are in Obama's "rich" category).  And, "Small-business owners aren’t going to expand when they may need the money to pay taxes next year."  One small business owner just wants the government to "“Stay out of our way.”  However, doing nothing scores no political points, but providing a tax credit and punishing "the rich" gives politicians two things to take credit for, even if the policies have no effect.

Laura Vanderkam has a column in the WSJ today arguing for free-market solutions to product safety: Consumer Reports and Good Housekeeping.  Their advantage?  "Good Housekeeping puts its own money behind all its endorsements. No government agency can say that."

"Fannie Mae and Freddie Mac said they will ramp up their purchases of some $200 billion in delinquent home loans that the two government-controlled mortgage-finance companies have guaranteed."  The two firms "have required $111 billion in capital infusions from the U.S. Treasury to stay afloat. In December, the government said it would stand behind unlimited losses over the next three years, up from the previous limit of a combined $400 billion."  (WSJ)

"Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders...Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."  (NY Times, September 30, 1999)

"The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago...The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac...is broken."  'These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''  (NY Times, September 11, 2003)