The United States Consumer Protection Bureau (CFBP) is a new agency accountable to no one, created by the Dodd-Frank financial legislation of 2010, and conceived by our long time Fairy Godmother and new Senator from Massachusetts, Elizabeth Warren.

I apologize if I seem a bit cynical and despondent at having to pay for a Federal agency whose primary purpose is to require providers of credit to be responsible for the inability of their customers to assume responsibility for the loans they freely enter into. So, as the chosen ones force us all to pay to protect the stupid from their stupidity, please indulge me while I point out the absurdity of it all.

As recently pointed out in the Wall Street Journal, the Dodd-Frank financial-regulatory overhaul amended existing lending laws by making banks legally responsible for determining that a borrower has the ability to repay a mortgage.

The CFPB is charged with spelling out how banks can satisfy the new mandate. The “qualified mortgage” definition being issued by the agency essentially says that if a loan meets certain criteria, then regulators—and courts—will assume it was appropriately underwritten. Clearly, banks will not underwrite “unqualified mortgages” for fear of being sued or fined for less than responsible lending as seen through the eyes of the CFPB.

Under proposed rules from CFPB, loans would be deemed “qualified mortgages” if borrowers are spending no more than 43% of their pretax income on monthly debt payments.

Understand this clearly. The government is saying that in order to assure our nation’s financial stability, a person wishing to borrow money to buy real estate will not get a mortgage unless the monthly debt payments (the amount borrowed plus interest paid in installments over the term of the loan) total less than 43% of the borrower’s monthly pretax income.

Now for a short reveal on our Federal fiscal standards.

The Federal Government has recently been taking in less than $3 trillion a year in income while spending about $4 trillion a year. I refer you to pages 26 and 27 of Mr. Obama’s 2013 Federal budget historical tables.

If the Federal Government were held to standards it insists upon for mortgage borrowers it would only be able to borrow an amount supported by the required annual repayment of principal and interest at no more than 43% of its annual income.

If the current debt were managed as a mortgage loan under the 43% CFPB income standard, the federal government would have to pay off over $1 trillion of debt and interest a year out of its less than $3 trillion annual income, and it would receive no further credit. Yet, the federal government is not paying off any debt and instead is borrowing an additional $1 trillion a year, adding to our $16+ trillion in debt.

But, I ask, what about our nation’s financial stability? Perhaps the United States Consumer Protection Bureau and Elizabeth Warren can protect us from the government.

Regards, Pete Weldon
americanstance.org

Mr. Obama publicly and accurately defined the essence of our entitlement/fiscal problems in his speech of April 12, 2011. It is clear that he fully understands the issues. In this speech Mr. Obama demagogues the Ryan entitlement reform plan, while claiming the power of government will squeeze suppliers to reduce health care spending, proposing to reduce military spending, and insisting on increased tax rates on high incomes while reducing tax deductions, all resulting in what he claimed then would result in a $4 trillion reduction in the national debt over 12 years. This assertion is a semantic convenience, or lie, as Mr. Obama’s own 2013 budget projects the national debt rising from over $16 trillion in 2013 to over $25 trillion in 2022. (See page 64 here.) Mr. Obama never offers specifics on spending reductions. Mr. Obama never once mentions the fiscal benefits of economic growth in this speech, while he repeatedly associates only government spending with the term “investment.”

Now that he has his tax increase and reduction in tax deductions in hand, the only way to force Mr. Obama to engage in entitlement reform is for the House of Representatives to refuse an increase in the debt ceiling and be prepared to shut down the government until Mr. Obama and the Senate agree to specific entitlement changes that will, at a minimum, eliminate unfunded entitlement liabilities over time, and preferably, result in immediate and long lasting reductions in such spending.

The only way to support such a course of action with the American people is on moral grounds, superior in substance to the righteous unsupported morality and lack of specifics continuously offered by Mr. Obama.

That superior moral substance lies in the reality that Mr. Obama’s words are inconsistent with the fact that his only tangible achievements in office to date are limited to giving away free stuff paid for with trillions of dollars in debt that our children will have to repay.

Republicans need to make a broad public effort beginning now stating clearly why Mr. Obama has been wrong on the moral arguments and needs to agree to structural entitlement reforms to secure a future of opportunity and not debt for our children and our nation.

Republican leaders need to get their bull dogs in front the network cameras, editors, and political blogs now and keep them there until Mr. Obama accepts a meaningful compromise that leads us to fiscal sanity.

If Republicans cannot effectively make the superior moral argument to put public pressure on Mr. Obama they deserve what they get in return, which will be both nothing now and lost elections in 2014.

Regards, Pete Weldon
americanstance.org