One Of Many Reasons We Should Not Trust The Government With Our Money

Any time the government starts giving away money, you can almost always bet that there will be corruption. The stimulus plan put into effect to help the country get through the coronavirus crisis is not an exception.

The Daily Caller reported yesterday

  • At least $4 million in PPP loans went to a real estate company at the center of a federal bribery investigation involving a Los Angeles city councilman.
  • Shenzhen New World Group, owned by Chinese billionaire Wei Huang, received two PPP loans for hotels it operates in Los Angeles. 
  • Jose Huizar is accused of accepting more than $800,000 in bribes from a real estate company chairman referred to in a federal indictment as “Chairman E.” 
  • Charging documents against Huizar make it clear that the real estate company in question is Shenzhen New World Group, which is working on a 77-story skyscraper project in Huizar’s district. 

The article continues:

The Real Deal, a website that covers the Los Angeles real estate market, first reported the coronavirus relief loans to Shenzhen New World.

The funds, issued under the Paycheck Protection Program, went to two of Shenzhen New World Group’s limited liability corporations (LLCs), Shen Zhen New World I and Shen Zhen New World II. The LLCs control the L.A. Grand Hotel and Sheraton Universal Hotel, respectively.

California business registration documents show that Huang signed the articles of incorporation for both LLCs in 2010. Shenzhen is proposing to redevelop the L.A. Grand Hotel into a 77-story skyscraper.

The Treasury Department on Monday released a database of PPP loan recipients, showing that both of the LLCs received between $2 million and $5 million each.

The article concludes:

The complaint against Huizar, who has held office since 2005, alleges that the Chinese developer provided the bribes in part because of his position as chairman of the city council’s Planning and Land Use Management Committee.

“HUIZAR was poised to significantly benefit Chairman E’s desire and plans to redevelop Property E and transform it into a 77-story skyscraper, making it the tallest building west of the Mississippi River,” the complaint against Huizar says.

“This project would require official acts from HUIZAR at various stages of the City approval process.”

Huizar’s former aide, George Esparza, pleaded guilty on May 27 to racketeering charges as part of the probe.

According to Esparza’s plea agreement, he said that the Chinese developer began paying Huizar after he introduced a motion to keep the head of the Los Angeles Department of Building and Safety in his position.

Virginia Clark, who is listed as the point of contact on Shenzhen New World’s applications for the skyscraper, did not respond to a detailed list of questions about the PPP loans and the FBI investigation of Huizar.

The Small Business Administration, which approves the PPP loans, did not respond to a request for comment. Huizar’s lawyer also did not respond to a request for comment.

Please follow the link above to the article for further details.

Grasping At Straws

The focus on the Mueller investigation seems to be Paul Manafort. Manafort is currently being held in solitary confinement in a Virginia jail because of alleged witness tampering. Does anyone doubt that this is an attempt to get him to make something up that Mueller can use against President Trump? Meanwhile, The Washington Examiner reported yesterday that Mueller has now revealed the relationship between the Trump campaign and Manafort.

Most of the 32 counts against Manafort in the Virginia case concern alleged crimes that took place long before there was a Trump campaign. Some go back as far as 2006. But four of the counts involve a pair of loans Manafort took out between April 2016 and January 2017. For a few months during that time period, Manafort worked for the Trump campaign.

The loans totaled $16 million and came from a financial institution Mueller refers to as Lender D. According to Mueller, Manafort lied to get the loans, overstating his income and understating his debts.

Mueller says that some workers at Lender D knew there was a problem with Manafort’s application, but that one top executive there, a man who wanted a place in the Trump campaign, granted the loan anyway. From the Mueller filing:

“The government intends to present evidence that although various Lender D employees identified serious issues with the defendant’s loan application, the senior executive at Lender D interceded in the process and approved the loan. During the loan application process, the senior executive expressed interest in working on the Trump campaign, told the defendant about his interest, and eventually secured a position advising the Trump campaign. The senior executive later expressed an interest in serving in the administration of President Trump, but did not secure such a position.”

The lending company and the senior executive are not identified in the indictment, but the loans appear to fit an episode reported in the New York Times involving a small bank in Chicago, the Federal Savings Bank, and its chief executive, Stephen Calk, who was named an economic adviser to the Trump campaign in August 2016 but did not join the administration.

The article concludes:

In May, the Wall Street Journal reported that Mueller is investigating whether the loans were “made as part of a quid pro quo arrangement to secure Mr. Calk a job in Mr. Trump’s administration.” Calk has denied any such arrangement.

In any event, Mueller has not suggested that Donald Trump was involved in any of the actions outlined in the Manafort charges. The two Lender D loans are, apparently, the only connection between the Trump campaign and the broad array of criminal activity, some of it more than a decade old, alleged in the Manafort indictments. And Trump himself played no role in it.

Was a special counsel needed for that?

If Mueller investigated every horse trade that took place in Washington, I am sure he would find an awful lot to keep him busy and nothing noteworthy!

 

What Happens When The Government Makes Something Better

Investor’s Business Daily posted an article about what has happened to student loans under the Obama Administration.

This is the picture:

The Obama Administration took over the student loan program in 2010.

The article reports:

In a nutshell, federal loan aid to colleges is pushing up tuition faster than inflation. Students must take out ever higher amounts of debt to pay for their education, but starting salaries haven’t kept up. If students don’t get good jobs when they graduate, many will default.

The study, published by the National Bureau of Economic Research, shows conclusively that growth in one program — the Federal Student Loan Program — was more than enough to account for the entire rise in college tuition from 1987 to 2010 — a stunning conclusion that suggests a massive market failure.

From 2006 to today, total student loan debt soared from $517 billion to $1.3 trillion, a 152% jump, to cover surging tuition costs. Over that same period, real starting wages for college grads were essentially flat.

Sadly, this should be no surprise, given recent history.

Whenever government gets involved in subsidizing anything — from sugar to home mortgages — higher prices emerge, leading to market disruptions and, often, a “crisis.”

At some point, we need to realize that the private sector does a better job at everything than the government. The bubble of the student loan debt will be bailed out by the taxpayers, and the national debt will continue to spiral out of control. This is our future unless we begin to elect people who understand both human nature and free markets.

Recreating The Housing Bubble

On Friday, The Daily Caller posted an article about the government making changes in the mortgage industry that will put the taxpayers on the hook for unpaid loans (sound familiar?).

The article reports:

The administration’s policies and price cuts at the Federal Housing Administration – the latest coming on January 26 — are squeezing the private sector competitors. President Barack Obama and the FHA are engineering things so that just about anyone with a modest down payment who wants a mortgage needs Uncle Sam to get it.

FHA was originally conceived as a vehicle only for low- and moderate-income individuals seeking modest homes and mortgages who were not served by the conventional market. Today, FHA is insuring very large mortgages for people in all income brackets (including ones that absolutely can get mortgage financing in the conventional market). Thanks to prodding from the administration, the FHA mission’s has been transformed in a way that grows the government’s market share, puts private capital in the backseat, and exposes the taxpayers to even greater risks due to their 100 percent guarantee.

After the Dodd Frank law required that lenders to make sure borrowers have the ability to repay mortgage loans, the FHA loosened the standards for FHA loans. This is setting up the taxpayers to be the ones that will have to bail out those loans.

The article concludes:

Fool me once, shame on you. Fool me twice, shame on me. Together the Obama administration and the House and Senate committees looking at the whole business are setting the mortgage market on a path to where — as it now is with student loans — anyone who buys a house will have a government guaranteed loan. This is about as far from the founder’s vision of limited government as one can get. Instead, policymakers should be taking steps to strengthen the private mortgage insurance industry to minimize the exposure of us all to bad policy.

Behind The Scenes In The Student Loan Battle

Today’s Wall Street Journal posted an editorial about the current debate over student loan interest rates.

Today the Senate voted on student-loan subsidies. The news just reported that an attempt to roll back the interest rate increase has failed a procedural hurdle. One proposal suggests that the interest rate on the loans be tied to the 10-year Treasury rate. The advantage of this idea is that the taxpayers do not have to guarantee the lower rate to borrowers while the cost of the loans to the government goes up.

The Congressional Budget Office recently estimated taxpayer losses on student loans to be $95 billion over the next ten years. Remember that the government takeover of student loans was part of ObamaCare. (see rightwinggranny.com)

The article in the Wall Street Journal reports:

Liberals apologize for the price hikes imposed by their friends in the faculty lounge by pretending that universities are starved for revenue. Rep. Frank Pallone (D., N.J.) claimed on MSNBC on Saturday that “the federal government is not making the investment in higher education.” Perhaps he’s forgotten that annual Pell grant spending of $34 billion has roughly doubled in the Obama era, or that Uncle Sugar now originates more than $100 billion in annual loans.

In October 2011, I wrote in rightwinggranny.com:

The article also points out that under the proposed changes, the government would be entirely responsible for college loans. Students would borrow directly from the government and pay the government back. What happens when students default? The taxpayers pick up the tab. Aside from the fact that the benefits to the students of this program are minuscule, we need less government in all aspects of our lives–not more.

In a New York Post article quoted in the above article, John Podhoretz wrote:

One federal study found that between 1982 and 2007, tuition costs rose 432 percent while family income rose only 147 percent.

As taxpayers, we are subsidizing inflationary spending on the part of higher education. There is no incentive to cut costs if you know that the money will keep pouring in and that the government will enable the students to afford the rising tuition. Until parents refuse to pay the rising tuition at some of the prestige schools, we will continue to have this problem.

The Harvard University website reports:

The complete budget at Harvard College (exclusive of transportation) for 2012-2013 is $57,950. Tuition – $37,576; Room and Board – $13,630; College Facilities Fees (for use of library and other University facilities including the Health Services) – $3,290; Minimum for extras (books, clothing, dues, recreation, etc.) – $3,454.

In some parts of America, you can buy a house for that amount.

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Running The Economy When You Don’t Understand Business Principles

The Wall Street Journal posted an article online today entitled, “You Don’t Owe That.”

The article reports:

We’ll have to wait until Friday to see how slowly the U.S. economy expanded in the second quarter. But today Team Obama will tell Congress about its latest proposals to spread the wealth around—specifically from private lenders to the people who owe them money on student loans. The goal is to create new ways for borrowers to avoid repayment.

The government is focusing of ways to allow students to default on their loans. There are about $1 trillion in student loans outstanding; close to $900 billion are federal loans. About 90 percent of recent student loans are held by the government.

The article states:

The new report (by the Consumer Financial Protection Bureau) says that Congress should consider letting borrowers discharge their private student loans through bankruptcy. This would reverse a hard lesson learned during the 1970s. After a surge in former students declaring bankruptcy to avoid repaying their loans, Congress acted to protect lenders beginning in 1977. First it limited the ability of borrowers with government loans to use bankruptcy as a bailout ramp, and later the ban was applied to all student loans (with some exceptions for hardship cases).This reform also protected future borrowers.

Credit miraculously becomes more available when lenders believe they might be repaid.

You would think that the government might want to teach future leaders of American that when you sign a paper saying you will pay something back, you are supposed to mean it.

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Those Who Cannot Remember The Past Are Doomed To Repeat It…

I have posted the YouTube video below before. It is a quick summation of the causes of the collapse of the housing bubble.

I am posting the video now because it relates to an article posted at Investors.com yesterday detailing the effect of actions of the Obama Administration on wealth in the African-American community.

The article at Investors.com points out:

Before the crisis, Obama pushed thousands of credit-poor blacks into homes they couldn’t afford. As a civil-rights attorney, he sued banks to rubberstamp mortgages for urban residents.

Many are now in foreclosure. In fact, the lead client in one of his class-action suits has since lost her home and filed bankruptcy.

I understand the desire of community activists to encourage the dream of home ownership in their communities, but that dream has to be balanced with some degree of reality. Unfortunately, we still have not learned that lesson.

The article concludes:

Obama hasn’t learned from his mistakes.

Far from it, IBD has learned the mammoth credit watchdog agency he created (with input from NPA radicals) will dust off Clinton’s 1994 minority lending guidelines to crack down on stingy lenders. And he’s ordered Holder, now acting as his attorney general, to prosecute banks that don’t open branches in blighted urban areas.

Not only has Obama scapegoated banks for the crisis he helped cause, he’s exploited minority suffering to continue reckless policies that hurt those he claims to champion.

Until Americans begin to look at the entire situation–including the impact of forcing banks to grant loans to those who cannot pay they back, the American economy will not recover. Forcing banks to make sub-prime loans sets up a loss for the bank and interferes in the free market. We cannot continue to ignore market forces and expect our economy to recover.

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The Promised Government Help With College Loans Is Not What It Appears To Be

The western front of the United States Capitol...

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Yesterday John Podhoretz posted an article at the New York Post detailing what President Obama’s proposed changes in how college loans are financed would mean to the average student.

Mr. Podhoretz points out that the federal loan programs have resulted in out of control tuition costs at colleges. He states:

The staggering inflation in the cost of higher education since the federal government got involved in lending money to Americans for college in 1965 beggars description. One federal study found that between 1982 and 2007, tuition costs rose 432 percent while family income rose only 147 percent.

The article further reports:

So say you’re an average student carrying a $27,000 debt. Your monthly payment is about $208. With the reforms Obama is instituting, and assuming an interest rate of 6 percent, your monthly payment will drop $9 a month to $199. Staggering.

The article also points out that under the proposed changes, the government would be entirely responsible for college loans. Students would borrow directly from the government and pay the government back. What happens when students default? The taxpayers pick up the tab. Aside from the fact that the benefits to the students of this program are minuscule, we need less government in all aspects of our lives–not more.

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Elections Matter–Ask The Executives At Solyndra

Ed Morrissey at Hot Air reported today that the executives at Solyndra were putting heavy pressure on the Bush White House in as late as January 2009 to approve a government loan for the company.

The article reports:

On Jan. 12, 2009, Solyndra CEO Chris Gronet sent an Energy Department official an email marked “urgent” expressing outrage that Bush officials had decided a few days earlier that while the loan application had “merit” it needed further study before officials could move forward with a taxpayer-financed loan.

“I was appalled to learn on Friday that our application is being delayed yet again,” Gronet wrote to Energy official Steve Isakowitz, writing there had been “countless communications” back and forth suggesting the application would be reviewed Jan. 15.

The delay was a decision by the Bush administration to wait for an independent market analysis on January 9, 2009, before giving aid to the company.

The article further reports:

The next day, Jan. 13, 2009, [Bush DoE official Lachlan] Seward sent his email to Energy Department colleagues saying it was time to stop engaging with Solyndra officials.

There were no outside influences in this decision, and when the Bush administration looked at the loan request, it simply did not look like a good investment of taxpayer money.

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