[How's the auto dealing coming after Obama threw a sabot into the credit world?

Well at least the poor got houses...no wait, they are upside down, and couldn't even make the payments before the depression hit and will lose those houses anyway...]

The Committee accepted a substitute bill authored by Banking Chairman Richard Shelby (R-AL). They disagreed to a Democratic substitute by Ranking Member Paul Sarbanes (D-MD). The Sarbanes substitute would have created an affordable housing fund based on the GSEs’ profits, eased portfolio limits, streamlined program approval and increased the conforming loan limits for high cost areas. It failed 9 yeas to 11 nays, and the Shelby bill passed on a straight party line vote of 11 yeas to 9 nays.

The so-called net capital rule was created in 1975 to allow the SEC to oversee broker-dealers, or companies that trade securities for customers as well as their own accounts. It requires that firms value all of their tradable assets at market prices, and then it applies a haircut, or a discount, to account for the assets' market risk. So equities, for example, have a haircut of 15%, while a 30-year Treasury bill, because it is less risky, has a 6% haircut.

The net capital rule also requires that broker dealers limit their debt-to-net capital ratio to 12-to-1, although they must issue an early warning if they begin approaching this limit, and are forced to stop trading if they exceed it, so broker dealers often keep their debt-to-net capital ratios much lower.

In 2004, the European Union passed a rule allowing the SEC's European counterpart to manage the risk both of broker dealers and their investment banking holding companies. In response, the SEC instituted a similar, voluntary program for broker dealers with capital of at least $5 billion, enabling the agency to oversee both the broker dealers and the holding companies.

This alternative approach, which all five broker-dealers that qualified — Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley — voluntarily joined, altered the way the SEC measured their capital. Using computerized models, the SEC, under its new Consolidated Supervised Entities program, allowed the broker dealers to increase their debt-to-net-capital ratios, sometimes, as in the case of Merrill Lynch, to as high as 40-to-1. It also removed the method for applying haircuts, relying instead on another math-based model for calculating risk that led to a much smaller discount.

One way homeowners attempt to manage their payment risk is to use fixed-rate mortgages, which typically allow homeowners to prepay their debt when interest rates fall but do not involve an increase in payments when interest rates rise. Homeowners pay a lot of money for the right to refinance and for the insurance against increasing mortgage payments. Calculations by market analysts of the "option adjusted spread" on mortgages suggest that the cost of these benefits conferred by fixed-rate mortgages can range from 0.5 percent to 1.2 percent, raising homeowners' annual after-tax mortgage payments by several thousand dollars. Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward.

American homeowners clearly like the certainty of fixed mortgage payments. This preference is in striking contrast to the situation in some other countries, where adjustable-rate mortgages are far more common and where efforts to introduce American-type fixed-rate mortgages generally have not been successful. Fixed-rate mortgages seem unduly expensive to households in other countries. One possible reason is that these mortgages effectively charge homeowners high fees for protection against rising interest rates and for the right to refinance.

American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.

I wish to reach around and pat myself on the back. Way back during the Republican primaries ... we were told by the Republican Party hierarchy that the only chance the Republican Party had (by the way, we were told this also by some of the intellectualoids in our own conservative media) to win was to attract Democrats and moderates; and that the era of Reagan was over, and we had to somehow find a way to become stewards of a Big Government but smarter that gives money away to the Wal-Mart middle class so that they, too, will feel comfortable with us and like us and vote for us.

In that sense, it was said the only opportunity this party has to regain power is John McCain. Only John McCain can get moderates and independents and Democrats to join the Republican Party, "and we can't win," these intellectualoids said, "if that didn't happen." Well, the latest moderate Republican to abandon his party is William Weld, the former governor of Massachusetts who today endorsed the Most Merciful Lord Barack Obama. He joins moderate Republican Colin Powell. He joins former Bush press spokesman Scott McClellan. He joins a number of Republicans like Chuck Hagel, Senator from Nebraska ...

Now, I wish to ask all of you influential pseudointellectual conservative media types who have also abandoned McCain and want to go vote for Obama (and you know who you are without my having to mention your name) what happened to your precious theory? What the hell happened to your theory that only John McCain could enlarge this party, that we had to get moderates and independents? How the hell is it that moderate Republicans are fleeing their own party and we are not attracting other moderates and independents?

... When I saw the Weld thing today I smiled and I fired off a note to all my buddies and I said, "Wait, wait, wait, wait, wait! How can this be? How can this be? This is the kind of guy that our candidate was supposed to be attracting, and we were supposed to be getting all these moderates from the Democrat Party," and we will, by the way. We're going to get some rank and file, average American Democrats that are going to vote for McCain. But these hoity-toity bourgeoisie... Well, they're not the bourgeoisie, but... Well, they are in a sense. They're following their own self-interests, so I say fine. They have just admitted that Republican Party "big tent" philosophy didn't work. It was their philosophy; it was their idea. These are the people, once they steered the party to where it is, they are the ones that abandoned it. - Rush Limbaugh