Stimulus Spending, General Motors and Mortgage Lawsuits
President-Elect Barack Obama outlines his plan for more federal spending to stimulate the economy.
Auto executives present restructuring plans to Congress in hopes of avoiding bankruptcy.
The mortgage meltdown spawns more lawsuits related to subprime loans.
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1. ECONOMY
President-Elect Barack Obama outlines his plan for more federal spending to stimulate the economy.
CEI Expert Available to Comment: Special Projects Counsel Hans Bader on why federal stimulus spending is a mistake:
“President-elect Obama wants a massive stimulus package of $700 billion or more. But previous attempts to artificially stimulate the economy have generally been failures. The $160 billion in stimulus rebates early in 2008 failed to stimulate the economy, much less prevent the financial crisis that followed, even as they drove up the federal deficit and the national debt, while punishing hard work and providing pork for left-wing special interest groups.”
2. CONGRESS
Auto executives present restructuring plans to Congress in hopes of avoiding bankruptcy.
CEI Expert Available to Comment: Center for Entrepreneurship Director John Berlau on how a bankruptcy reorganization could actually help a company like General Motors:
“In a Chapter 11 bankruptcy, GM would most likely be reorganized into a new company, sans the current management and heavy costs. This is something that has proved impossible so far due to lax management, generous union contracts, and state dealer franchise laws that make car companies pay an arm and a leg to sever a relationship with a car dealer. A bankruptcy could finally force the tackling of these tough issues.”
3. BUSINESS
The mortgage meltdown spawns more lawsuits related to subprime loans.
CEI Expert Available to Comment: Special Projects Counsel Hans Bader on how financial institutions are now getting sued no matter what they do:
“…bond-rating agencies like Moody’s and Fitch are now getting sued, too, for ‘reverse redlining,’ under the theory that they encouraged risky loans to low-income minorities (who subsequently regretted taking out those loans) by giving respectable ratings to the mortgage-backed securities produced by packaging those mortgage loans. The plaintiffs include the National Community Reinvestment Coalition, which has been pressuring lenders to make risky loans to low-income minorities for years. They blame the ratings-agencies for allowing lenders to make loans to minorities with ‘insufficient borrower income levels.’”
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