Friday, February 13, 2009

I Cannot Resist: More Stupidity From Congress

During the hearings with bank CEO's, Barney Frank asked for a foreclosure moratorium. Major banks are responding. Frank observed that it would be unfortunate and unfair for a foreclosure to take place right before a plan went into effect. He made an analogy to soldiers fighting WW II after the war was officially over.

This idea made more sense that Marcy Kaptur's (D) (OHIO) suggestion (in an earlier speech) to be a squatter in your home. "...possession is 99% of the law; you stay in your house." Readers may remember that in an earlier hearing Kaptur famously confused Bernanke and Paulson, repeatedly asking the Fed Chair which bank was the one where he was CEO. She finally got him to admit that he had been "CEO of the Princeton economics department." Do you think there is a wide variation in the skill and knowledge of legislators? Hearings serve many purposes, including a legislative history that may be part of later court rulings. Most legislators read questions prepared by staff and try to generate a video clip for local TV. Same thing when they speak to an empty chamber, inserting a longer text for the record.

Frank's suggestion seems to have gained traction, but what will it mean? At the minimum, I suppose we can expect housing data to be distorted for a few weeks. After that, it depends on the substance.

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