My Blog Talking About Your Blog

The blog that I found interesting was by Gavin Trevino, “Privatize,To Big of a Risk?” The subject matter was privatizing social security. I found the subject very interesting. I was unaware the proposal for privatizing social security was going into consideration once again. Some facts and figures were given but I would have liked some more information. I enjoyed the pro and con approach taken by the author. He illustrated the arguments from both sides. Overall a good read.

I agree with the author. At first glance privatizing social security seems to be a possible solution. Being able to avoid cuts and tax hikes is always a plus. It sounds promising, being able to take control of your own investments. However, as Trevino points out not all retires are educated about the market. The catastrophe that is social security is unavoidable. Over 40 million post World War II baby boomers will reach the retirement age between the years 2010-2040. (socialsecurity.procon.org) I figure my generation will not be receiving any social security benefits. I know I’m not counting on social security as my retirement plan. There is just too mush investment risk. The first risk is poor investments. The second is the possibility of interest rates being low when an individual is ready to retire. At least with the type of social security in place now there is some protection. Our nation needs a solution to this looming problem

Congress Finally Stepping up to the Plate

On September 6, 2008, the director of Federal Housing Finance Agency (FHFA), announced that the government sponsored enterprises Fannie Mae and Freddie Mac would be placed under conservatorship. Conservatorship is a legal concept in the United States of America, where an entity or organization is subjected to the legal control of an external entity or organization, known as a conservator. That same day U.S. Treasury Secretary Henry Paulson stated that “I attribute the need for today’s action primarily to the inherent conflict and flawed business model embedded in the government sponsored enterprises (GSE) structure, and to the ongoing housing correction.”

            Fast forward almost four years later and the federal government is finally taking a step in the right direction. The House Financial Services Committee voted 52-4 on Tuesday to cap salaries for top executives, stop future bonuses, and to bring the agencies salaries in line with the federal pay scale. These two mortgage giants have foreclosed on millions of homes. They both own or guarantee about half of all mortgages in the United States. Both firms have already received $170 billion in taxpayer bailout money and are requesting $14 billion more. The reason for the bailout, both companies took big loses on risky mortgagees they purchased. It seems unfair to me that the taxpayers are bailing out companies that made bad business decisions.

            These top executives are earning million dollar paychecks and claiming the company needs taxpayer money to stay afloat. This citizen finds that pill very hard to swallow. I think it’s time that these top executives feel the squeeze on their pocket books. It’s all about greed.  Fannie’s CEO Michael J. Williams received $5.6 million last year and Freddie’s CEO Edward Halderman received $5.4 million. While the refinance programs were supposed to help as many as 7 million borrowers it only assisted 1.7 million. Why is the bulk of the money going into the pockets of the executives? Under the recently proposed bill the top executives would only be allowed to earn around $220,000.  It’s hard for me to imagine that these people have really earned those million dollar paychecks. The $220,000 annual salaries seem fitting.  Edward DeMarco, acting director of the Federal Housing Finance Agency, said that the bonuses are being used to keep talented executives with the companies. If these top executives of these too big to fail companies are that talented then they would have never put themselves in such a financial disaster. I understand the need for competitive wages. I also understand the incentive of bonuses. I understand that these executives handle millions of dollars. I’m not opposed to million dollar salaries. What I am opposed to is my hard earned money funding their lavish lifestyles instead of helping my fellow American.

Sources:

Huffington Post
Wikipedia
CNN
Politico

Blogging About a Blog

               The editorial I have chosen to critic is, “Struggling with Mortgage? “Sorry”, says Obama Administration,” by Adrianne Strohmann. I thought her editorial was well written and quite informative. She took the time to research her information and used reputable sources such as MSNBC and the New York Times. The editorial provides a lot of facts and figures and is worth reading. The topic of her editorial is relevant to everyone. The economy’s well being is important to us all. Adrianne herself wrote that we all know someone affected by the mortgage struggle.  Her opinion of disappointment of the Obama administration was made very clear. I agree that HARP was mismanaged just like so may other programs. What I really liked about the editorial is that it encourages the reader to get involved. The author encourages the reader to contact their representative. She even goes as far as to provide a link.

               I agree with the author that the Obama Administration has not lived up to its promises. I feel a more aggressive and time effective plan was needed for the mortgage crises. The regulation of the banks by the administration was awful. The variable interest rates should have never climbed as high as they did. The banks should have been monitored more closely.  Although many were able to stay in their homes so many more homes were foreclosed. Helping 70,000 families is a good start but letting 2.5 million homeowners foreclose is a shame. How is the economy supposed to improve?  On the other hand how does one stop the snowball effect? Is four years long enough for any administration to rectify so may wrongs? Was the public’s expectation too high? I hope Congress listens to the American public. I hope that everyone will not make the same mistakes twice.