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Volume X Number 24 - December 22, 2011     RSS Feed
A Periodic Newsletter for Committed Texas Conservatives


In This Issue

When a Primary Battle Uses the Legal System, No One Wins

Rewriting History By The Left, The Bush Tax Cuts Good For All Of Us

Could A Dark Horse Emerge For The Nomination?

Sen. Marco Rubio, a Great Young Leader

Fixing Our Housing Crisis by Bruce Bialosky, Contributing Editor

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HAPPY HOLIDAYS!
TCR Would Like To Wish Everyone a Merry Christmas, Happy Hanukkah, and a Great Conservative New Year!

Thoughts This Fortnight

When a Primary Battle Uses the Legal System,
No One Wins

At TCR, we do not have a problem with incumbents being challenged in a primary as long as the 11th Commandment is followed, so whomever wins the primary is not left mortally wounded for the fall election.

Unfortunately, some have decided to take the Pat Lykos and Mike Anderson DA's race in Harris County, Texas and impact it by legal attacks that appear to be much ado about nothing and designed to injure the incumbent.

With the latest developments, the circular firing squad is forming and it's not going to help the GOP this fall.

TCR has one question for all the so-called expert bloggers as to what happened, if anything? The dispute is supposed to be about withholding of information about the mobile breath test vans test reliability. Except one thing, the DPS experts say the testing does not work when the machine has issues. So if this is accurate this is quite simply a political inquisition aimed at Pat Lykos.

Rewriting History By The Left,
The Bush Tax Cuts Good For All Of Us

While watching the Democrats led by President Obama attacking anyone who defends the Bush tax cuts as a defender of the 1%, we wonder where this big lie came from?

It is important for us to periodically review the facts. The Bush tax cuts did so for everyone who pays taxes, with the biggest percentage drop for those at the lowest rate, going from 15% to 10%.

An important fact is that the deficit was NOT blown up by the Bush tax cuts, but by Obama's runaway spending. The last GOP-passed budget when they ran Congress was for fiscal year 2007 and the budget deficit was $161 billion!

The next important fact, federal government revenue post-Bush tax cuts rose from $1.88 trillion in 2004, and rose each year until 2007 when it was $2.57 trillion.

Obama's debt record is astounding, going from $1.293 trillion in 2010, $1.299 trillion in 2011, and estimated at $1.110 trillion in 2012. Obama has created more debt by runaway spending in three years than all the debt incurred in the entire history of the USA and that's what has run up the deficit.

Could A Dark Horse Emerge For The Nomination?

The only thing consistent with the battle for the GOP nomination is Mitt Romney is at around 25%. Other candidates have risen and fallen, the latest being Newt Gingrich. What this could mean is the late emergence of a dark horse like Jeb Bush, Chris Christie, Mitch Daniels or Congressman Paul Ryan. It is clear that the GOP must put forward the best, most electable Republican to take on President Obama and we should not be afraid to do so.

Sen. Marco Rubio, a Great Young Leader

TCR Comment: There is a great young leader in Washington to watch, former Florida House Speaker and now Senator Marco Rubio, who in his end-of-year floor speech in the U.S. Senate electrified this observer:

"I'm troubled by rhetoric that pits people against each other. Because the second part of that argument is: 'Give us, government, more power so we can step in and right this wrong, so we can take away from the people that have too much and give to those people that do not have enough.' ... People get on boats, people jump fences to get away from that kind of thought process. People flee countries that do that because it doesn't work. It never has. And it will not work here. ... We have never been a nation of haves and have-nots. We are a nation of haves and soon to-haves, of people who have made it and people who will make it. And that's who we need to remain."

Fixing Our Housing Crisis
By Bruce Bialosky, Contributing Editor

There was our President stating once again that he had a plan to fix the housing crisis that is stalling our economy and harming his reelection chances. When he was done making his proposal, it occurred to me that after 35 years of my working in the real estate market this man really had no more idea of how to resolve the problem than the average homeowner. Unfortunately our President and his advisers are clueless and potentially deleterious to the process.

The plan is a follow up to a prior plan known as HARP (Home Affordable Refinance Program) which did not quite achieve what it was aimed to do. About 850,000 people did refinance under the program, but the housing market barely blinked and more houses are underwater and in foreclosure than before HARP with no discernable end in sight. The President, being the President, feels that government is the solution to all problems (even the ones it created such as the housing crisis). He lurched into a new plan that he believes will be the magic elixir for eroding home prices.

While I immediately observed HARP was not the solution, I contacted someone who works with the loan market every day and really understands the problems that still exist. He does not have a Harvard degree and that may be why the President did not call on him. He is Kent Kirkpatrick, one of the owners and CFO of American Capital. American Capital (AC) is a mortgage banker. They are the main street crowd that creates the loans for the housing market. Kirkpatrick, the company compliance officer, stated when the rules were being loosened in the middle of the last decade, AC refused to go along with the game. He lost a lot of folks who went to players like WAMU, who were offering fat compensation packages for people creating the loans the government had requested, and he lost a lot of sleep wondering whether he had done the right thing. Now his company thrives when 93% of mortgage bankers across the country have closed shop.

I asked him about the new version of HARP that the President has instigated on his own without Congressional support as part of his war on Congress. On October 24th, the New York Times applauded the President by stating in their editorial page "At long last, Fannie Mae and Freddie Mac, the government-run mortgage companies, have issued new rules to allow millions of underwater borrowers, who are current on their payments, to refinance their high-rate mortgages into lower-rate loans." Kirkpatrick stated at the time he could not even comment since the rules were actually being issued November 15th. When I finally caught up with Kirkpatrick after Thanksgiving he told me that Fannie Mae and Freddie Mac will not even be considering the loans until at least the end of 2011 or sometime in late February 2012, and that his company will most likely not even touch them.

Kirkpatrick first answered my question: "If Fannie and Freddie knew these people were current on their loans, why couldn't they just send them a notice lowering the borrowers' interest rates?" I told him that despite all the numbers bantered around in the media, the numbers were not accurate. The average interest rate for the same quarter four years ago was 6.23% and the average for the last quarter was 4.14%. A homeowner with a $100,000 mortgage would save about $129 per month, or $1,547 per year. A borrower with a $300,000 mortgage would save $389 per month, or $4,644 per year. Kirkpatrick stated that the government operations really did not own the loans; they just secured the loans so they did not know where the loans were held. How they were to determine who would qualify would have to go through a new loan process. The house organ of the Obama Administration, aka New York Times, stated that between 1.5 million to 2 million people will qualify under the new program, and this will work as long as the bankers don't "lard up the new loans with excessive fees." This statement could not be further from the truth.

First, the President suggested that appraisals be waived. Kirkpatrick made clear no one in their right mind would do a new loan (which is what this is) or even redo a loan without inspecting the existing structure. That is the kind of decision that got us in this position in the first place. After all, how does the lender even know the house is still standing or is not seriously damaged?

Second, Kirkpatrick made clear what the major problem is with the entire program. It is something referred to as "Representations and Warranties." Whoever put together the loan puts together information that they represent to the eventual buyer of the loan to be true. A thing like whether the house is standing, the value is real and the borrower is alive and has a means of payment are what the loan processor is responsible for on the loan. If the loan goes bad, whoever ends up with the paper can kick it back and a company like AC can get stuck with eating the entire loan. No one wants to assume that responsibility on a loan that is 150%-175% of the value of the property. There is tremendous incentive for the borrower to walk.

So who did the estimated 850,000 loans in the first version of HARP? Kirkpatrick observed that the big banks did these to accommodate the Obama Administration even though AC would not get near them. He went on to say that as appreciation for the help from the big banks, Fannie and Freddie are now kicking them in the backside by reviewing all their loans from the good old days of 2008 and back to see if there are any flaws in the paperwork. This is when Fannie and Freddie were instructing the banks to give them any loan no matter the quality of the paperwork. Now the banks are being stabbed in the back for those loans. What does anyone deduce will happen with these new loans, a large portion of which are destined for the foreclosure pile? Kirkpatrick does not want to find out.

There were rumors the government was loosening the Representations and Warranties on these refinanced Fannie Mae and Freddie Mac loans, but that does not appear to be happening. Thus, this program will die with a soft thud unless the New York Times takes a bat to bankers for greed that never existed and misses the flaws in the program that brought it to failure. Kirkpatrick agreed with the position taken by Mitt Romney -- the government needs to get its hands off of trying to fix the home market. They are just prolonging the problem. The politicians need to leave professionals like Kirkpatrick alone, and let them do the work for which they are trained and about which they are knowledgeable, to get the housing market back on track.


Bruce Bialosky is the founder of the Republican Jewish Coalition of California and a former appointee of President Bush.


TCR on the Air

Red, White & Blue featuring TCR Editor Gary Polland and liberal commentator David Jones, Fridays at 7:30 p.m. and replaying Sundays at 5:00 p.m. on PBS Houston Channel 8 and on the web at www.houstonpbs.org.

Upcoming shows:
12/30/11: "Politics of the Budget Deal" with John Beddow and Leo Gold.
01/06/12: Texas State Senator Dan Patrick.
01/13/12: Mayor Annise Parker.
01/20/12: Harris County District Attorney Faceoff.

For a fun feature go to www.houstonpbs.org and under Red White and Blue, you can see commentary about the show and its guests by Gary and David each week. The current show as well as past shows are also available on YouTube.

About Your Editor

Gary Polland is a long-time conservative and Republican spokesman, fund-raiser, and leader who completed three terms as the Harris County Republican Chairman. During his three terms, Gary was described as the most successful county Chairman in America by Human Events - The National Conservative Weekly. He is in his thirteenth year of editing a newsletter dealing with key conservative and Republican issues. The last ten years he has edited Texas Conservative Review. As a public service for the last 6 years, Gary has published election guides for the GOP primary, general elections and city elections, all with the purpose of assisting conservative candidates. Gary is also in his ninth year of co-hosting Red, White and Blue on PBS Houston. Gary is a practicing attorney and strategic consultant. He can be reached at (713) 621-6335.

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