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ARRA’s Section 1611

Saturday, February 28, 2009  |  posted by Hugh Hewitt

Angelo Paparelli is one of the country’s leading immigration lawyers, a partner in Seyfarth Shaw in New York, NY and Irvine, Calif., and President of the Alliance of Business Immigration Lawyers. Angelo has written extensively on the protectionist provision of the porkulus bill that invites other nations to restrict the use of American expertise within their borders while simultaneously raising the cost of doing business during the recession. A second, even more detailed look at the law by Angelo is here with co-author Ted J. Chiappari.

The porkulus is full of stink bombs that continue to appear and which would not have survived even a couple of weeks scrutiny. Senators Collins, Snowe and Specter might have voted for the bill anyway, but they ought to have at least negotiated for a full airing of the text before throwing in the rush to bad law and economics.

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Newspapers and The Party Of Big Government

Saturday, February 28, 2009  |  posted by Hugh Hewitt

Powerline’s John Hinderaker has one of the more important blog posts of recent memory. It uses the editorials of the New York Times from 2003 forward to make the crucial points that the spending already sought and gained by President Obama as well as that he is reaching for in the outyears dwarfs all that President Bush presided over throughout his presidency. John hammers the hapless and failing Times for its lack of integrity or even memory, but the key is not the intellectual dishonesty of the paper, but the vast deficits and tax hikes being sought by the new president and a hard left Congress. Hinderaker’s piece is top quality opinion journalism built on careful attention to the facts of the tax and spending plans of the new president and his Congressional allies. It is the sort of reporting and analysis which ought to be in every newspaper in the country but which appears only in the Wall Street Journal.

The newspaper industry is indeed failing before our eyes, and a great deal of that failure has to be because of the widespread and justified alienation of news consumers who do not trust the legions of “journalists” working in MSM to be critical of the party of government. Yes, the move to the internet has crushed advertising, but this shift was preceded by decades of steady attrition of subscribers who simply grew disgusted with the bias of the papers’ staffs from top to bottom. I wonder what would be the fate of the struggling Los Angeles Times if it consciously adopted a conservative opinion voice and a posture of searching criticism towards Los Angeles (facing a billion dollar budget shortfall because of pension obligations) Sacramento and the Obama Administration. This would require significant restaffing because there are simply not many reporters and editors out there who are even aware of their deep biases much less great numbers of serious center-right professionals to replace the lefties, but I think center-right independents and conservatives across the California and perhaps the country would rally to such a project if it was begun. The D.C. Examiner and the Washington Times are both valuable contributors to the project of serious scrutiny of the Obama agenda, but an old media brand on the West Coast that took on the newly empowered D.C. elite while also bringing accountability to the massively dysfunctional state and local governments of the Golden State would find that the audience its agenda journalism drove away over decades is still there, waiting for an honest newspaper to serve the public interest.

The story on the L.A. deficit is from the Los Angeles Times, btw, and is appeared exactly four days before what is essentially an uncontested reelection for Mayor Villaraigosa. The Times has made no serious, sustained attempt to alert the public to this tidal wave of red ink headed towards the city. Neither did the paper present serious reporting on alternatives to the massive state tax hikes that will cripple the state’s economic recovery, nor is it reporting on the growing tax revolt that could well defeat even the massively funded ballot measures in May that will enable the party of government to sail through tough times without serious pain. Like most MSM, the Times is just a tame, kept newsletter for government-centric interest groups and the government itself. If new ownership turned it into a real newspaper with genuine hostility to the deeply entrenched power of California’s party of government, it could prosper again.

Newspapers don’t have to die. But suicide is the right term for continuing to try and package liberalism as news.

The Lobdell Interview

Saturday, February 28, 2009  |  posted by Hugh Hewitt

Two days later, and the e-mails continue to arrive about my two hour long interview with William Lobdell, author of Losing My Religion: How I Lost My Faith Reporting On Religion On America –and Found Unexpected Peace. The podcast of the first hour is here, the second hour here. I have been forwarding e-mails to Lobdell, but you can write him directly via williamlobdell@yahoo.com. His website is here.

Losing My Religion: How I Lost My Faith Reporting on Religion in America-and Found Unexpected Peace

The Latest from Banker Guy

Saturday, February 28, 2009  |  posted by Hugh Hewitt

From my anonymous bank CEO, whom you can reach via bankerguy2009@gmail.com:

FACT: Banks are making loans.

Maybe not all banks but many banks are making good loans. My bank and many of my competitors are making loans. Having said that, we are not getting a lot of loan requests and loans that we do make are on conservative terms to existing relationships or a few key prospects where we will get a relationship. Relationship means that we have all or most all of the customer’s balances and the customer’s other banking business.

When a bank makes a loan it uses capital. For every dollar loaned, a bank generally reduces capital by ten cents. In a recession where loan losses are probable and capital is very scarce it must be rationed carefully. Conversely, if a banks needs to increase capital it can do so by reducing loans. So if a regulator or the market says you need to raise capital, then you will not make loans and will reduce them.

This raises the topic of TARP capital. The treasury purchased perpetual preferred shares from banks. That investment pays the Treasury a dividend of 5% currently; in addition the Treasury received an option to purchase shares equal to 15% of the amount invested. Banking 101 says that you safely invest capital in order to support deposit taking and lending activities. As noted above, one dollar of capital will support about $10 dollars of deposits and loans. Politicians asking if a bank has loaned its TARP capital do not understand banking. Banks are intermediaries; they take small deposits, aggregate them, and loan them to creditworthy borrowers. They make money by charging more for the loan than their cost of deposits, expenses, and loan losses. (I know this is elementary but it seems so few understand the basics.) If the government wants to increase lending, they should make low-cost deposits with banks which they could then lend.

Let me return to the fact that banks are making loans. My bank and many other banks in my area are making loans on these terms: The borrower must have collateral, like real estate or liquid assets. Loan-to-values would range from 70% to much less depending on the quality of the collateral. Borrowers need to have strong cash flow that well services the loan. We generally will charge Prime plus with a floor of 5.5% or more depending on deposits and the overall relationship. Favored borrowers are commercial and industrial businesses, especially with owner-occupied real estate, income-producing properties, professionals, and individuals. No loans are being made for real estate development or speculative home building. Every loan is with recourse to the individual owner or investor.

We are making some mortgages on single family residences that are above Fannie and Freddie limits. The loan-to-value is at least 80% and the debt-to-income ratio is below 35%. We only make one, three, or five year adjustable rate loans with a 30 year amortization. We charge at least 6.5% for a three or five year loan.

This is the kind of lending that makes sense. It is based on sound credit principals, provides adequate return on capital, and supports good business and the growth of the economy. We are not competing with unregulated non-bank lenders who had much lower capital requirements and lower cost of funds or ignoring credit by snowing rating agencies with complex models resulting in bogus AAA ratings.

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