5.28.2009

Congressional Use of Strong-Arm, Gestapo Tactics





Back in October 2008, the New York Times wrote up an article here about hedge funds and managers that were at odds with what Congress was proposing in regards to privately held and securitized mortgages. Two funds in particular – Greenwich Financial and Braddock Financial, held postitions in securities backed by mortgage companies to be affected and were arguing that Congress could not change the terms of contracts of those mortgages, thereby hurting their investments in said securities. Greenwich and Braddock thought that Congress had no authority to bypass contract law. I agree.



Now I know that the concept of the hedge-fund business on main street seems convoluted – most people don’t either know much about/don’t approve of hedge funds. Visualize back-room meetings, cigar-smoke-laden air, fat white -guy fat-cats sitting around and conspiring against us ‘little-guys’. That’s the media-created picture of the hedge fund business. It couldn’t be farther from the truth. Hedge funds are simply pooled resources of a variety of investment classes whereby only high-net-worth individuals, pensions and corporations can apply. It is typically a high risk/reward type investment, a mutual fund with less restrictions for investors in the higher economic strata.

Anyway, back to the intention of the article. The most vocal opponent of congressional action a Mr. William Frey, the president of Greenwich sent out letters to banks expressing concern about the impact of the Hope for Homeowners plan (a federally subsidized loan-modification program), also stating that ”any investor in mortgage-backed securities has the right to insist that their contract be enforced.” I agree as well, any branch of the government should not be able to inject themselves into a private industry and change contracts at their whim, crisis or not, good intentions or nil.


Congressional leaders caught wind of William Frey’s letter and implicit intent. They didn’t like it. And in current statist, strong-arm Washington style tactic, they subpoenaed him. The letter from the Committee on Financial Services to Frey was recently made available and is below –











Note the condescending tone – “We were outraged to read….that you are actively opposing our efforts…..(we request),for you to appear at such a hearing, and if this cannot be arranged on a voluntary basis, then will pursue further steps.”

The most shocking part of the letter? Can you imagine this – “to take steps so actively in opposition to what is currently in the national economic interest is deeply troubling and will clearly have serious implications….”

For me to hear the phrase, ”economic national interests”, in itself is a naked exposition of a collectivist mentality. Note national collectivist stars Barney Frank and Maxine Waters’ signatures.

Those who fail to learn from history are doomed to repeat it…..




17 comments:

conservative generation said…

UGH! This government is disgusting. I wrote something similar on the atrocities on contract law in regards to automaker bondholders. What is scarry is that no one is taking these government bullies to court. I can’t count the number of stakeholders that have a right to sue Obama.

Left Coast Rebel said…

CG – And these things are clearly unconstitutional, out of the realm of the rule of law, contract law, and the essence of what our country stands for. Imagine the next bullhorn authoritarian in office, he may go after YOU or ME. Liberals may be targets of these tactics eventually too…..

Ananda girl said…

I do not claim to understand this one yet. But I am steadfast against the government being able to alter legal contracts. It does boggle my mind. But thank you for your reading material. I will use it.

Thanks for coming to Oodles of Funch today,LCR, though I dare say you would have been more interested in one I did last week that had some history to it called Isn’t It Funny How Somethings Look So Much Alike. Still, not a thought pool like you have here. (Funch is pretty fluffy most days.) But you are always welcome there and happily recieved.

Left Coast Rebel said…

Ananda – A lot of folks don’t understand the hedge fund biz so that’s ok, like you say, it’s really an issue of contract law and the sanctity of legal contracts. Oodles is a great site, I’ll check out your mentioned article. Be sure to send any active-minded friends over her too…..

conservative generation said…

LCR,

What’s more interesting is Obama is actually and brazenly engaged in the tactics that the left spent 8 years trying to pin on Bush. The best part is that the left is proud of Obama for doing it too.

Ananda girl said…

LCR– Will send as many as will come, though you know some of mine already. Again, thanks for the reading material. I’ll get this eventually thanks to folk like you and your generous readers.

RightKlik said…

“…thought that Congress had no authority to bypass contract law.”

What a wonderful time it was when we could hold quaint notions such as that.

Now we have an oligarchy!

Larry Walker Jr said…
This post has been removed by the author.
Larry Walker Jr said…

I can’t stand Barney Frank. He only sees this as obstruction to his wacky plan and doesn’t even address the merits of the argument.

BTW – I grew up in CA and am now on the ‘right’ coast, thus my wit in calling you ‘lefty’.

Left Coast Rebel said…

CG – Yes, the Obamanation is engaging in the same EXACT tactics that the Left accused Bush of for years…..trouble is the media covers for him and covers up for him…

Ananda – Thank you!

RK – Oligarchy, Fascism, Statism, all of the abvove….

Left Coast Rebel said…

Larry W – I can’t stand Barney either, check the past blog entries here for some info that I dug up about him, one of the most corrupt leftists in the country….BTW, that’s Lefty Coastie to you….thanks for reading!

nacilbupera said…

LCR: Great story! The government is illegally seizing power at such an alarmist rate that it is nearly impossible to keep up on all the power grabs.
I had to LOL though, as I realized in reading the letter to Frey that the socialist NYT still has at least 6 readers left: Barney Frank & Gang!

Left Coast Rebel said…

naclibupera – I know what you mean, I am blogging for several hours each day and can’t even keep everything straight…..I guess that they know that the ‘shock and awe’ strategy works! LOL, I think you are onto something with the NYT, do you think that their 6 loyal readers will one day give them a bail out?

Libertarian Advocate said…

Rep Frank’s letter to Greenwich Financial’s Frey is more than chilling, it is a downright frightening abuse of Frank’s power and amounts – in my view – to a constructive violation of Frey’s 1A free speech rights.

More than that though, Rep. Frank’s use of threat and expression of outrage at Frey’s temerity to publicly object to Frank et als’ wanton overeaching of authority indicates the congressman could well suffer from Narcissistic Personality Disorder (“NPD”) to a patholigical degree.

Normally, people with that affliction are just obnoxious – at least when they have no power base from which to project their tantrums. However, a government/civil servant of ANY flavor, in the grip of NPD is downright dangerous to liberty.

So, I disagree that the central issue is just about the sanctity of contract law, rather, CL is a significant trigger issue that raises serious issues about congressional power and the abuse of same.

The Pajama Underground said…

First of all, thanks for putting the hedge fund into layman’s terms. I think everyone benifits when the shroud of mystery is removed. Second, the document reads exactly like something I would expect the despicable Fat Barney Frank to sign his name to. Any attempt to resist a federal power grab gets hisn cholesterol-choked blood boiling.

KrisEveland said…

There is no free will in this country anymore. We are all subject to what the gov’t wants to hear or not hear. Nobody is safe from their strong arm tactics.

Left Coast Rebel said…

Libertarian A – I agree, perhaps I didn’t focus as much on the congressional abuse of power issue, it seems to be the overarching blanket issue here…

Pajama – You are welcome, my brother has worked for several hedge funds and there really isn’t anything mystical about them, nothing to scapegoat! Can you believe that document? Never in my adult life would I have thought that our government would become so brazenly abusive – in clear daylight.

Kris – I agree that there isn’t free will, and no one is safe when they have power like this. We HAVE to fight back…..

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