Rapid Response

WASHINGTON – The government's response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned.

The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.

Since Congress passed $700 billion financial bailout, the remaining institutions considered "too big to fail" have grown larger and failed to restrain the lavish pay for their executives, Barofsky wrote. He said the banks still have an incentive to take on risk because they know the government will save them rather than bring down the financial system.

Barofsky also said his office is investigating 77 cases of possible criminal and civil fraud, including crimes of tax evasion, insider trading, mortgage lending and payment collection, false statements and public corruption.

One case concerns apparent self-dealing by one of the private fund managers Treasury picked to buy bad assets from banks at discounted prices. A portfolio manager at the firm apparently sold a bond out of a private fund, then repurchased it at a higher price for a government-backed fund. A rating agency had just downgraded the bond, so it likely was worth less, not more, when the government fund bought it. The company is not being named pending the outcome of Barofsky's investigation.

Barofsky renewed a call for Treasury to enact clearer walls so that such apparent conflicts are less likely.

Treasury said it welcomed Barofsky's oversight but resisted the call to erect new barriers against conflicts of interest. The new rules "would be detrimental to the program," Treasury spokeswoman Meg Reilly said in a statement. The existing compliance rules "are a rigorous and effective method of protecting taxpayers," she said.

Much of Barofsky's report focused on the government's growing role in the housing market, which he said has increased the risk of another housing bubble.

Over the past year, the federal government has spent hundreds of billions propping up the housing market. About 90 percent of home loans are backed by government controlled entities, mainly Fannie Mae, Freddie Mac and the Federal Housing Administration.

The Federal Reserve is spending $1.25 trillion to hold down mortgage rates, and millions of homeowners have refinanced at lower rates.

"The government has stepped in where the private players have gone away," Barofsky said in an interview. "If we take government resources and replace that market without addressing the serious (underlying) concerns, there really is a risk of" artificially pushing up home prices in the coming years.

The report warned that these supports mean the government "has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor."

Barofsky's report echoed concerns raised by housing experts in recent months, as home sales and prices rebounded. They warn that the primary reason for the turnaround last year has been billions of dollars in federal spending to lower mortgage rates and prop up demand.

Once that spigot of cash is turned off, they caution, the market will be vulnerable to a dramatic turn for the worse. Daniel Alpert, managing partner of investment bank Westwood Capital, wrote in a report that national home prices are bound to fall 8 to 10 percent below the lows of last spring.

"The lion's share of the remaining decline will occur in markets that saw sizable bubbles but have not yet retrenched," he wrote.

Officials from the Obama administration counter that massive federal intervention has helped the housing market stabilize and prevented more dire consequences.

Barofsky's report also disclosed that, while the Obama administration has pledged to spend $75 billion to prevent foreclosures, only a tiny fraction — just over $15 million — has been spent so far. Under the Making Home Affordable program, only about 66,500 borrowers, or 7 percent of those who signed up, had completed the process as of December.

He said the key to preventing future crises is to reform Fannie Mae and Freddie Mac, create and improve loan underwriting and supervision of banks. He stopped short of endorsing specific proposals for overhauling financial regulation, but said many of the proposals would go far to improving the system.

RONALD REAGAN...MISS THIS GUY YET?

"Socialism only works in two places : Heaven where they don't need it and hell where they already have it." -Ronald Reagan

'Here's my strategy on the Cold War: We win, they lose.' - Ronald Reagan

'The most terrifying words in the English language are : I'm from the government and I'm here to help.'-Ronald Reagan

'The trouble with our liberal friends is not that they're ignorant; it's just that they know so much that isn't so.' -Ronald Reagan

'Of the four wars in my lifetime, none came about because the U.S. was too strong.'- Ronald Reagan

'I have wondered at times about what the Ten Commandments would have looked like if Moses had run them through the U.S. Congress..' -Ronald Reagan

'The taxpayer : That's someone who works for the federal government but doesn't have to take the civil service examination.'- Ronald Reagan

'Government is like a baby : An alimentary canal with a big appetite at one end and no sense of responsibility at the other.'- Ronald Reagan

'The nearest thing to eternal life we will ever see on this earth is a government program.' - Ronald Reagan

'It has been said that politics is the second oldest profession.. I have learned that it bears a striking resemblance to the first.'- Ronald Reagan

'Government's view of the economy could be summed up in a few short phrases : If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it' - Ronald Reagan

'Politics is not a bad profession. If you succeed, there are many rewards; if you disgrace yourself, you can always write a book.'- Ronald Reagan

'No arsenal, or no weapon in the arsenals of the world, is as formidable as the will and moral courage of free men and women.'- Ronald Reagan

'If we ever forget that we're one nation under GOD, then we will be a nation gone under.'-Ronald Reagan

For thousands of years, the people of the Arabian Peninsula developed within tribes, tribalism and paganism.
In the seventh century A.D., the Prophet Muhammad offered through Divine Revelation and personal experience a monotheistic Faith built directly on that of his Hebrew and Christian forefathers. His was a religion of Peace, Equality, Tolerance, Compassion and Justice. Furthermore, these goals were to be pursued and achieved within the daily living community and its political life, and not to be sequestered in some austere and separate religious life.
The first Muslim experience with Jews and some Christians was when this new Faith of Islam was ridiculed and shunned by them in Medina during his lifetime. The next Muslim experience with The West and with Christianity was during the Crusades, which destroyed Jerusalem and its inhabitants – the third most holy place for Muslims, then and now.
The Colonial Era produced nothing but misery and confusion for the Islamic world…until the discovery of Oil enabled some of their own leaders to prey upon the people. A prime example was the Royal Family of Saudi Arabia, which in the 1930’s asserted its primacy over the world of Islam and imposed strict tenets of Wahhabism over all Muslims…thereby enhancing its control.
Meanwhile, the Muslim world witnessed the secular and irreligious West nearly destroy itself during the 20th century through two great wars and a prolonged Cold War. The West became more and more secular, anti-religious and decadent in the eyes of Muslims…who as always did not compartmentalize their Faith from their community and politics, but rather saw their Faith as being entirely woven into the fabric of their society. And what they witnessed and had personally experienced was not a high-minded Jeffersonian democracy, but rather the immorality and unjust plunder of an unfettered marketplace, totally alien to their community life and to their Faith. Then came the TV and the Internet, not our shining moment.
And the vast majority of Muslims are having none of it. Although there is great debate within Islam regarding the role of military Jihad and especially of terrorism, they are in the main “Islamists”. What is “Islamism”? In the description of Andrew McCarthy: “It is the belief that Islam is not merely a religious creed but a comprehensive guide to human existence, conformity to which is obligatory, that governs all matters political, social, cultural, and religious, from cradle to grave and beyond”. A far cry from Western secularism and its “Freedom from Religion”.

Haiti: Where will all the money go?

WASHINGTON – How difficult will it be for the United States and other donors to track the millions of dollars in earthquake aid headed to Haiti? U.S. government auditors pulled out of the country years ago after concerns over kidnappings and other crimes scuttled their efforts to monitor Haiti's spending of $45 million in U.S. aid after storms there killed thousands.

Corruption, theft, violence and other security problems and Haiti's sheer shortage of fundamentals — reliable roads, telephone and power lines and a sound financial system — will add to the challenges of making sure aid is spent properly as foreign governments and charities try not only to help Haiti recover from this week's devastating earthquake but to pull itself out of abject poverty.

Past efforts haven't been easy. The Government Accountability Office, the investigative arm of Congress, faced problems on a smaller scale in 2005 and 2006 as auditors tried to review the use of roughly $45 million in aid the U.S. provided after Tropical Storm Jeanne struck Haiti in September 2004, killing more than 2,000 people, injuring more than 2,600 and affecting an estimated 300,000 others.

The inspectors wanted to visit projects funded with the money to measure progress. But after an initial fact-finding trip to Haiti, it was considered too dangerous for them to go back. They could visit only projects deemed safe as destinations. In summer 2005, many employees of the Agency for International Development — which is coordinating the current U.S. response to the earthquake — were temporarily pulled out of Haiti, according to government reports.

Haiti is one of the poorest places on Earth. Most basic public services are lacking, people typically live on less than $2 a day, nearly half the population is illiterate and the government has a history of instability. The public has little opportunity to be sure that aid to the government is used honestly and well. Nor is following the money easy for donors, including the United States, 700 miles away and one of the country's biggest helpers.

"It has been a challenge, and I think it really is one of the things we have to look at when the country has had such long-standing problems that it seems as though we have made little dent there," said Rep. Russ Carnahan, D-Mo., chairman of the House Foreign Affairs Committee's subcommittee on international organizations, human rights and oversight.

The immediate focus is search and rescue and addressing immediate public health needs. But after that, "I think there's going to be a number of questions that arise," Carnahan said.

Just last month, a private group, the Heritage Foundation for Haiti, urged Haiti's government to complete an audit of a $197 million emergency disaster program to respond to corruption allegations over how the money was handled. Haiti's senate cited the allegations when it removed Prime Minister Michele Pierre-Louis in November and replaced her with Jean-Max Bellerive.

President Barack Obama promised at least $100 million in earthquake aid. That comes on top of substantial spending by the United States in Haiti in recent years for economic development such as the country's textile industry, humanitarian assistance, environmental programs, and law enforcement, including trying to stop the use of Haiti as a pass-through point for narcotics en route to the United States.

Apart from earthquake relief, senators working on the next annual foreign assistance budget have proposed at least $282 million for Haiti; the House proposal would provide at least $165 million.

Much of the U.S. government's aid to Haiti comes through the Agency for International Development, which has provided at least $800 million from budget years 2004 through 2008, agency figures show.

At least $700 million more was pledged to Haiti by governments, international givers and charities at an April 2009 donors conference. Former President Bill Clinton, a United Nations special envoy to the country, told the U.N. Security Council in September that he was "100 percent committed to delivering tangible results to the U.N. and most importantly the people of Haiti."

The Haitian government relies on foreign aid to keep itself and its economy operating.

In a December 2008 Gallup survey, 60 percent of Haitians interviewed said there had been times that year when they didn't have enough money to buy food, and 51 percent said there were times when they couldn't afford shelter.

Statistics about Haiti, as gathered by the U.S. government, chronicle a grim standard of living. According to the CIA and State Department, 1 in 8 children in Haiti dies before age 5. The life expectancy is 59 to 62 years. Malaria, typhoid and dengue fevers and other life-threatening illnesses long ago wiped out in the industrialized world still plague Haiti.

WE FIGURED HIM OUT! By Ben Stein

Why is President Barack Obama in such a hurry to get his socialized medicine bill passed?

Because he and his cunning circle realize some basic truths:

The American people in their unimaginable kindness and trust voted for a pig in a poke in 2008. They wanted so much to believe Barack Obama was somehow better and different from other ultra-leftists that they simply took him on faith. They ignored his anti-white writings in his books. They ignored his quiet acceptance of hysterical anti-American diatribes by his minister, Jeremiah Wright.

They ignored his refusal to explain years at a time of his life as a student. They ignored his ultra-left record as a "community organizer," Illinois state legislator, and Senator.

The American people ignored his total zero of an academic record as a student and teacher, his complete lack of scholarship when he was being touted as a scholar.

Now, the American people are starting to wake up to the truth. Barack Obama is a super likeable super leftist, not a fan of this country, way, way too cozy with the terrorist leaders in the Middle East , way beyond naïveté, all the way into active destruction of our interests and our allies and our future. The American people have already awakened to the truth that the stimulus bill -- a great idea in theory -- was really an immense bribe to Democrat interest groups, and in no way an effort to help all Americans.

Now, Americans are waking up to the truth that ObamaCare basically means that every time you are sick or injured, you will have a clerk from the Department of Motor Vehicles telling your doctor what he can and cannot do.

The American people already know that Mr. Obama's plan to lower health costs while expanding coverage and bureaucracy is a myth, a promise of something that never was and never will be -- a bureaucracy lowering costs in a free society. Either the costs go up or the free society goes away.

These are perilous times.. Mrs. Hillary Clinton, our Secretary of State, has given Iran the go-ahead to have nuclear weapons, an unqualified betrayal of the nation. Now, we face a devastating loss of freedom at home in health care. It will be joined by controls on our lives to "protect us" from global warming, itself largely a fraud if believed to be caused by man.
Mr. Obama knows Americans are getting wise and will stop him if he delays at all in taking away our freedoms. There is his urgency and our opportunity. Once freedom is lost, America is lost. Wake up, beloved America.

It is amazing to me, the people that still believe in him. He has done so much to damage to this country and people are still ignorant enough to believe him. He is an embarrassment to the American people.

They may have already ruined my country and yours.
You must, as an American, FORWARD this to all, or you will wake up one morning and find that your freedoms no longer exist.

**Ben Stein is a writer, actor, economist, and lawyer living in Beverly Hills and Malibu . He writes "Ben Stein's Diary" for every issue of The American Spectator.

Watchdog: Bailouts created more risk in system

Haiti: Where will all the money go?