Is the Government Mandating Incompetent Banking?

For years, I heard from my friends in the banking industry that the government was requiring them to make bad loans. They could stand it, on account of Freddie and Fannie taking the risk off their hands and transferring it to the taxpayers, at least as far as mortgages were concerned, although the bad loans didn’t end there. We all know how that turned out.

Dodd-Frank, legislation that was passed ostensibly to prevent future financial collapses, in fact institutionalized bailouts and bad banking practices. I missed this Wall St. Journal editorial when it came out a week ago, but it’s not too late:

Citigroup CEO Michael Corbat announced last week that Citi is going deep in green technology. Citi “will lend, invest and facilitate $100 billion over 10 years for projects ranging from energy, to clean tech, to water, to green infrastructure. Simply put, it is a $100 billion investment in sustainable growth.” That all this reflects the No. 1 domestic priority of the Obama Administration is no doubt a coincidence.

Banking is increasingly intertwined with government. We are steadily approaching the national socialist ideal in which all industries, while nominally private, are subordinate to government.

Apologies for the skepticism, but banks have entered a new age. It may or may not be the age of environmental economic opportunity. It is unquestionably the age of Dodd-Frank and its creature, the Financial Stability Oversight Council. Banks understand that their first client today is in Washington.

In my own law practice, I have seen this over and over. Everything else is a footnote: what matters to American companies, large and small, is government regulation and the endless threats that emanate from Washington.

Citigroup says it has already met a 2007 objective of raising $50 billion for “climate friendly projects.” With Mr. Corbat’s announcement it will add $100 billion by looking for “opportunities to finance greenhouse gas (GHG) reductions and resource efficiency in other sectors, such as sustainable transportation.”

We don’t doubt there will be such projects worthy of financing when the planets of market economics align. But green projects not subsidized by taxpayers have been at a price disadvantage for years, and their competitiveness isn’t likely to improve as the price of oil and natural gas declines.

Shaping a lending policy around a green agenda while the politics and science of climate change remain controversial and the technology of fossil-fuel extraction is advancing rapidly seems like a recipe for raising risk.

Of course: just like the sub-prime mortgage fiasco. Lending to “green” energy projects that are economically uncompetitive is pretty much exactly like making sub-prime mortgage loans. It is stupid on any traditional analysis, but makes sense if you think the federal government stands behind you, so that you get any possible profit, and the taxpayers eat the loss. That is the situation we have here. The WSJ concludes:

[O]ne of the unspoken political goals of Dodd-Frank was to give the government more influence over credit allocation, and this looks to us like an example. Politicized lending in time always leads to trouble. We thought that lesson had been learned in the housing-mortgage crisis.

What lesson, though, was learned by the people who matter? The sub-prime mortgage crisis worked out great for the government. Create a problem, then pretend to solve it by grabbing more power: what’s not to like? Liberals will be perfectly happy to do it all over again.

Christians Fight Back Against ISIS

The Telegraph has a good article about Syria’s Christians, who are trying to defend themselves against the depredations of ISIS. (What’s more, it’s the beginning of the month, so you can actually read it–the Telegraph has a bizarre business model that causes articles published early in the month to have 10 to 20 times as many readers–I’m guessing here–as articles published at the end of the month. But that’s a digression.)

Christian militias have existed for a number of years, sometimes patrolling neighbourhoods, sometimes venturing further afield. But now they are engaged in their first major battle.

For the last week, they have been fighting the jihadists of the Islamic State of Iraq and the Levant across a major front in north-west Syria, in alliance with the YPG, the Kurdish defence forces. They have had mixed fortunes, but the battle has energised Middle East Christians worldwide – many of them exiles who fled the chaos of post-Saddam Iraq. …

In 2003, the Christian population of Iraq was well over one million. Now it is less than half that. In June last year, more than 600,000 were driven out of their homes when Isil swept across the Nineveh plain, traditional homeland of Assyrian Christians, in northern Iraq.

Few actually felt compelled to fight, though, until the onslaught against Christian villages and churches, first by Jabhat al-Nusra, and later by Isil.

Christians have seen churches blown up, crosses torn down, and those living under jihadist rule have been forced to pay the “jizya”, a special tax.

In a particular irony, Armenian Christians who came to Syria in flight from pogroms in their native Turkey 100 years ago have now been forced to flee in the opposite direction.

The Armenian genocide was a slaughter of millions of Christians by Muslims. I am not sure why history does not remember it as such, but I can guess.

ISIS has attacked a number of Christian villages in Syria and taken hundreds of hostages. Their fate will most likely be frightful, but I haven’t seen any news about them for a few days. As I have written many times before, I am mystified as to why American Christians don’t seem more concerned about the fate of the Christian community in the Middle East, which is on life support.

My own view is that our government should dispatch whatever forces are necessary to Iraq and Syria and destroy ISIS, as promptly as possible. Lest there be any misunderstanding, I mean that we should “kill ourselves out of this war” by annihilating every person who resists on behalf of that devilish movement.

Via InstaPundit.

Did Obama Threaten to Shoot Down Israeli Jets? [Updated]

That is the explosive claim made by a Kuwaiti newspaper, ostensibly based on “well-placed sources,” presumably Israeli. Take it for what it may be worth; this account is from Israeli National News:

The Bethlehem-based news agency Ma’an has cited a Kuwaiti newspaper report Saturday, that US President Barack Obama thwarted an Israeli military attack against Iran’s nuclear facilities in 2014 by threatening to shoot down Israeli jets before they could reach their targets in Iran.

Following Obama’s threat, Prime Minister Binyamin Netanyahu was reportedly forced to abort the planned Iran attack.

According to Al-Jarida, the Netanyahu government took the decision to strike Iran some time in 2014 soon after Israel had discovered the United States and Iran had been involved in secret talks over Iran’s nuclear program and were about to sign an agreement in that regard behind Israel’s back.

The report claimed that an unnamed Israeli minister who has good ties with the US administration revealed the attack plan to Secretary of State John Kerry, and that Obama then threatened to shoot down the Israeli jets before they could reach their targets in Iran.

Al-Jarida quoted “well-placed” sources as saying that Netanyahu, along with Minister of Defense Moshe Yaalon, and then-Foreign Minister Avigdor Liberman, had decided to carry out airstrikes against Iran’s nuclear program after consultations with top security commanders.

This report no doubt will be denied by both American and Israeli spokesmen, if it hasn’t been already. And it is entirely possible that someone is just stirring the pot in anticipation of Benjamin Netanyahu’s speech to Congress on Tuesday. Still, it is noteworthy that the report, true or not, is plausible. That would not have been the case prior to the Obama administration.

UPDATE: This story out of Israel is being taken by some as a refutation of the account in the Kuwaiti newspaper. Benny Gantz, former Chief of Staff of the Israel Defense Force, said in an interview that no order to bomb Iran’s nuclear facilities was ever given, because it was opposed by Israel’s military:

“It never reached, ‘OK, take off and fly,’” said Gantz in the interview, which is set to air Monday night in Israel. But he added: “I want the to believe they listened and took into consideration what I have to say.”

Gantz, who retired in February after 38 years of service, also revealed a dispute between the political leadership, which was moving toward a military strike, and the IDF, opposed to such a move.

But the two stories are not really contradictory. It is entirely possible that the Obama administration, knowing that a strike against Iran was being seriously considered by Israel’s leaders, could have threatened to oppose it militarily. That doesn’t mean that it happened, only that the Kuwaiti report may be true in substance, even if a final decision to strike Iran had not been made in Israel. But of course, there may be other reasons why the story emerged from Kuwait at this moment:

It is very possible the [Kuwaiti] report was written to make Netanyahu appear as a war monger (and Obama a guarantor of peace with Iran) as the Israeli Prime Minister was set to make his address.

I come back to the point I made earlier today: we may never know whether the report out of Kuwait is true, but what is noteworthy is that it is plausible. If it were not plausible, then it wouldn’t serve to “make…Obama [appear] a guarantor of peace with Iran.”

The net neutrality crack-up

“The net neutrality crack-up” is the headline put by the Wall Street Journal over Holman Jenkins’s column on the FCC production of this past week. If you can’t access the column directly, you can access it indirectly here via Google. As long as we’re on the subject, let’s continue with the conclusion of Jenkins’s column:

Which brings us to the pusillanimous Tom Wheeler. We don’t use the adjective lightly.

Let’s be absolutely clear about something. The Federal Communications Commission chief did not go to President Obama and say, “We at the FCC have studied the issue and concluded that utility regulation is necessary to assure net neutrality.”

Nothing like this happened. Mr. Wheeler was still trying to head off utility regulation when Mr. Obama, after election day, suddenly announced his support for what previously had been an extreme regulatory agenda. In one of many ludicrous ironies, Mr. Wheeler had just successfully romanced a core of the Obama political coalition—including the Rev. Jesse Jackson —to oppose utility regulation of the Internet. In a little-noticed, bizarro-world circumstance, the NAACP, the National Urban League, Rev. Jackson’s Rainbow/PUSH and several other civil-rights groups are still rhetorically committed to fighting the White House on Title II.

Conspiracy theorists will have to put aside any idea that utility treatment was the secret objective of Mr. Obama and Mr. Wheeler from the get-go. Mr. Wheeler was blindsided too. It appears that Mr. Obama simply decided, after Democrats’ defeat in the midterm elections, that he would spend the last two years of his presidency catering to left-wing groups. If this had been a plan from the start, he and Mr. Wheeler never would have arranged events so as to portray the FCC chief as the White House’s quivering lap dog. Mr. Wheeler didn’t just flip-flop on utility regulation. He collapsed like a bag of air.

The FCC chief has been lying strenuously about all this for weeks, and perhaps may yet be rewarded with an ambassadorship or some other plum. But the original “Progressives” had higher aspirations when they created the idea of the independent regulatory agency. The FCC’s rule-making process is supposed to be deliberative and strictly defined by law (which is why its net-neut order will now be eminently appealable). It simply is not true that any FCC chairman in Mr. Wheeler’s position would have yielded to a policy diktat from the White House. An FCC chief with true “progressive” spine would have made it his top priority to protect his agency from improper political manipulation.

As I say in the earlier post, everything about this is wrong, including the packaging in the label of “net neutrality.”

Free Country

Steve Dobrogosz is a Power Line reader, an American expatriate living in Sweden and a composer of multifarious talents. His new recording is Free Country, a 70-minute collection of improvisations inspired by country music. I’ve listened to it several times through and can only say I love it.

In addition to the country/blues inspiration, I hear melodic invention throughout. The late, great rock pianist Nicky Hopkins used to do something like this within the confines of conventional rock song structure. I’ve never heard it quite like Steve does it here, but it is beautiful.

I wrote Steve to express my admiration for the collection and ask him what he was up to in it. He wrote back:

I sat down to record an American “country piano” album, a project I’d had in mind for years. The palette broadened a bit beyond traditional country during the sessions – I kept playing as long as I could hear America singing in the keys. The tracks began as spontaneous improvisations (“free country” – “free jazz”) then were edited, lightly or heavily, on the sequencer until they essentially became compositions, but with their improvisational flow, hopefully, still intact.

Released digitally at iTunes, Amazon, Spotify, no physical copies.

Steve’s iTunes page is here. Free Country is available for downloading or sampling on Amazon here. Below is Steve’s number “Jack of Diamonds” from the new collection.

A word from Verizon

Verizon is an outspoken opponent of the government takeover of the Internet by the Federal Communications Commission. It therefore weighed in on Thursday when the FCC voted to approve an order urged by President Obama; the order will result in the imposition of rules on broadband Internet services under a law that was enacted “in the era of the steam locomotive and the telegraph.”

Verizon issued its press release in typewritten form lacking only a bottle of whiteout. The statement is posted here on Verizon’s policy blog.

What about AT&T? AT&T posted a comment here on the company’s public policy blog, but it’s one of those dispatches from corporate America that requires translation. Written more in sorrow than in anger, it expresses regret over the partisan division evident in the FCC’s assertion of its authority.

Verizon’s statement also requires translation, but not because it’s written in corporate speak. Verizon mocks the FCC’s approach, which introduces the heavy hand of government under a New Deal law. Verizon not only issued issued its press release in typewritten form, it also published its statement in Morse Code.

The mockery is not very corporate of Verizon. It betrays an irreverent attitude toward government regulation.

I sense the mischievous spirit of Verizon media relations maestro Ed McFadden in the mix. Ed’s name is on the press release, but he advises that the statement should be attributed to Verizon senior vice president Michael E. Glover. Fortunately, Ed has provided this translation for the Morse Code-impaired:

Today’s decision by the FCC to encumber broadband Internet services with badly antiquated regulations is a radical step that presages a time of uncertainty for consumers, innovators and investors. Over the past two decades a bipartisan, light-touch policy approach unleashed unprecedented investment and enabled the broadband Internet age consumers now enjoy.

The FCC today chose to change the way the commercial Internet has operated since its creation. Changing a platform that has been so successful should be done, if at all, only after careful policy analysis, full transparency, and by the legislature, which is constitutionally charged with determining policy. As a result, it is likely that history will judge today’s actions as misguided.

The FCC’s move is especially regrettable because it is wholly unnecessary. The FCC had targeted tools available to preserve an open Internet, but instead chose to use this order as an excuse to adopt 300-plus pages of broad and open-ended regulatory arcana that will have unintended negative consequences for consumers and various parts of the Internet ecosystem for years to come.

What has been and will remain constant before, during and after the existence of any regulations is Verizon’s commitment to an open Internet that provides consumers with competitive broadband choices and Internet access when, where, and how they want.

Everything about the FCC’s action is wrong, as one might reasonably infer from its celebration by Harry Reid, Chuck Schumer and Al Franken (noted by Fortune here). Though it requires much more comment and analysis, the odds aren’t good that the FCC’s action could be good public policy.

Power Line at 10,000 Feet

If we ever start doing a regular video show in addition to our semi-regular online broadcasts, I think we might have to use this short segment as our show opener:

As it happens, I’m going to be out in Palm Springs next weekend videotaping a long interview with a significant writer and thinker, which will be edited into several segments for Power Line.  Stay tuned for details.

And then there are the still shots:

Power Line Slide

Power Line Slide 2