Posts Tagged ‘Financial Crisis’

Barney Frank At The Chamber of Commerce

October 27, 2008

As the chairman of the House Banking Committee, Rep. Barney Frank is one of the most important public figures in the country. Frank kept folks at home updated on the fiscal crisis with a speech before the Greater Boston Chamber of Commerce.

Frank pushing to get himself out there locally. He has spoken recently to Wayne Woodlief of the Boston Herald, Ross Kerber of The Boston Globe and the editorial board of the South Coast Standard Times. He’s doing exactly what a local figure should do when he or she feels their getting a raw deal on a big story. I am not surprised that he gave some of his most provocative comments to the New Bedford-based Standard Times. Frank is facing reelection next week, and the southern part of the district is voter rich.

Events like a chamber breakfast give an elected official an opportunity to reach leaders in the area’s business and not-for-profit community.

Introduced by the chief marketing officer of Bank of America, Anne Finucane, Frank took time to separate the heroes from the villains in the current fiscal unraveling. He started off his remarks calling on other banks to follow the example of Bank of America in writing down more than 600,000 borrowers.

The major targets of Frank’s comments were the financial professionals who profited obscenely by way of trafficking in mortgage-backed securities during the years of the real estate boom, walked away with huge bonuses and left the country holding the bag. “Diversification turned out to be a disaster,” he said. “Spreading around is spreading the poison.”

He contrasted those who originated mortgages with those who those who purchased them even within the same company. Citicorp, he said, recently merged the two units and put the mortgage-originators in charged. The mortgage-originators, who were playing with the company’s own money, were more careful while the other group was more reckless, Frank said.

Frank mocked the thinking behind the securities, i.e. that the value of real estate would only go up, saying it would be like “somebody went into the business of selling life insurance to vampires,” securitized the life insurance policy and “now the vampires are dying.”

He also painted a picture of where his committee’s work is going, and it means a major change for the financial services industry. “We are now going to regulate the securitization activities of all financial services,” Frank said.

My sense is that Boston’s cognoscenti received Frank well. I don’t expect him to have a problem next Tuesday. More interesting will be to see how those who make their livings engaged in the trading of various securities react to Frank’s call for additional regulation.

Cahill on CNBC

October 6, 2008

Massachusetts Treasurer Tim Cahill is on CNBC with Erin Burnett right now. He’s speaking to the difficulty in obtaining loans for the Commonwealth right now. He says the current situation is “not dire” but could hold off on trying to obtain financing if the price for credit is too expensive.

Cahill’s being pressed on the financial straights of Massachusetts. Why should Massachusetts need capital right now? Cahill’s answer, which seems directed at Governor Patrick: “You’ve got 200 elected officials and an executive who aren’t always aligned.”

Cahill, the Pride of Quincy, has come a long way since he ran for the Treasurer’s office back in 2002. Judging by today’s national t.v. appearance, he’s keeping his ambitions alive. Here’s what I wrote about him back during that campaign in the Boston Phoenix.

Joint Statement of Senator John McCain and Senator Barack Obama

September 25, 2008

“The American people are facing a moment of economic crisis. No matter how this began, we all have a responsibility to work through it and restore confidence in our economy. The jobs, savings, and prosperity of the American people are at stake.

“Now is a time to come together – Democrats and Republicans – in a spirit of cooperation for the sake of the American people. The plan that has been submitted to Congress by the Bush Administration is flawed, but the effort to protect the American economy must not fail.

“This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe. Now is our chance to come together to prove that Washington is once again capable of leading this country.”

A Lay View of the Financial Crisis

September 25, 2008

I understand the anger on Main Street over the possibility of the $700 billion Wall Street bail out plan. Why should the American public, after all, rescue Wall Street fat cats? Here’s my simple view. The Little Guy certainly didn’t profit during the recent financial boom, and, even if he did, it wasn’t on a scale anywhere near the big wigs. A drastic downturn, however, could touch everyone. Mortgages, home improvement loans, credit cards, commercial credit — the economy needs all these to hum along. If credit dries up, we could all suffer.

So, I suppose the ugly truth is that while only some Americans benefited from good times, everyone gets hurt if things go bad.