When Congress Becomes A Joke

PJ Media posted an article today about some recent statements by Congresswoman Maxine Waters.

The article reports:

Waters is the chairwoman of the House Financial Services Committee — the committee that regulates the banks.

During a hearing examining the practices of some of the nation’s biggest banks, Waters complained to a panel of seven bank CEOs that there are more than 44 million Americans that owe … $1.56 trillion in student loan debt.”

She added, “Last year, one million student loan borrowers defaulted, which is on top of the one million borrowers who defaulted the year before.”

She then demanded to know what they intended to do about this massive problem. “What are you guys doing to help us with this student loan debt?” she asked. “Who would like to answer first? Mr. Monahan, big bank.”

I guess she wasn’t paying attention when the Health Care and Education Reconciliation Act of 2010 (HCERA) which put the government in charge of all student loans. The band CEO’s she was questioning both stated that they had stopped making student loans long before 2010.

The article also states:

Waters then quickly changed the subject to small businesses.

The Obama administration put the federal government in charge of student lending in 2010, with the intention of saving taxpayer dollars by “cutting out the middleman,” as President Barack Obama put it.

According to the Washington Times, “student loan debt exploded from $154.9 billion in 2009 to $1.1 trillion at the end of 2017”  with current student debt “estimated at more than $1.5 trillion.”

Earlier in the hearing, Waters grilled the bank execs about their interactions with Russia.

This woman serves in Congress. She continues to be re-elected. That is beyond sad.

What Happens When Expectations Are Raised Too High?

The Daily Caller posted an article today that illustrates the problem with teaching children to expect things they didn’t earn.

The article reports:

Nearly half of all America’s college students have deluded themselves into believing that the federal government will graciously forgive their student loans despite the fact that the federal government forgives only a very low percentage of student loans.

LendEDU, a student loan marketplace website, documented this startling disparity between belief and reality in a nationwide survey of 500 students currently attending America’s colleges and universities, reports the New York Post.

The survey shows that 49.8 percent of the students surveyed think they will be eligible for federal student loan forgiveness.

In reality, only about 10 percent of all college graduates will ever see any portion of their student loans forgiven under current loan forgiveness law.

Under President Obama, the government took over the student loan program in 2010.

Yesterday Fox Business reported:

According to the New York Federal Reserve, U.S. student loan debt has soared to $1.3 trillion becoming the second highest consumer debt category, more than both credit cards and auto loans.

In an exclusive interview with FOX Business’ Liz Claman, Washington College President and former Federal Deposit Insurance Corporation (FDIC) Chair Sheila Bair said the student loan debt crisis could spark next financial crisis, since it is a “tremendous drag” on the U.S. economy.

During the financial crisis of 2008–09, excessive mortgage debt collapsed consumer spending as more families opted to pay off debt. Bair said the same dynamic could be seen if the student debt bubble bursts.

When the housing bubble burst, there were assets that could be sold (although at a loss). There will be no assets to sell if the student debt bubble bursts–a lot of the people with the debt are living in their parent’s basements.

The Daily Caller reports:

Of the $1.31 trillion in outstanding student debt, some $31 billion, is “seriously delinquent,” meaning the debtors are at least 90 days past their payment dates.

Well known economist Milton Friedman is credited with saying, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I think it’s time to get the government out of the student loan business and give that business to the banks. Banks are better judges of how to lend money and how to get paid back. I have a strong suspicion that the taxpayers may get stuck holding the bag on this one.