Funded and trained by Iran, the Islamic jihadists position their rocket and/or mortar launching sites inside school yards, hospital courtyards and high-density residential areas and fire them into Israel. Predictably, Israel exercises its inherent right of self-defense under international law and under Article 51 of the United Nations Charter. And, as is intended by the Islamic jihadists, the Israeli counterattacks unintentionally cause collateral damage.

Predictably, the world media blame the victim, Israel, instead of the perpetrators – the Islamic jihadists. At some point, one would think the “innocent” Palestinians of Gaza would catch on to this deadly scam and expel Hamas -- the root cause of the Israeli counter-fires and ground incursions.

But then, the Palestinians have been scammed before. In 2000, at Camp David, President Bill Clinton badgered Israeli Prime Minister, Barak Ehud, into giving Palestinian leader, Yasser Arafat, virtually all Arafat had asked for, to include providing Israeli-held land for the creation of an independent Palestinian state in exchange for recognition of the State of Israel’s right to exist. Arafat refused because peace in the Middle East peace was not the objective of Arafat or Iran. Their objective was the elimination of Israeli, along with enriching Arafat’s Swiss bank accounts.

If ordinary Palestinians had to suffer, so be it. Given the 1981 assassination of Egyptian President Anwar Sadat for signing a peace treaty with Israel, Arafat probably felt that signing the Camp David Accords of 2000 would be signing his own death warrant.

But, for a change, the world media blamed Arafat for the Camp David collapse. Stung by the hitherto not seen media response, Arafat ordered a terrorist intifada, to include suicide bombings of Israeli civilians. When the Israelis retaliated, causing unintended collateral damage, the world media returned to Arafat’s side. Soon, there were calls for a cease fire, calls for boycotts of Israeli goods, calls for the withdrawal of foreign aid for Israeli, and even talk of war crimes. Arafat and Iran had hit upon a sure-fire formula for success. Just as we saw the IDF forced to quell rocket fire from Lebanon in 2006, we are seeing the formula repeated in Gaza.

At the root of all this violence is Iran. Since coming to power in 1979, a coalition of Sunnis and Shiites, under the then leadership of Ayatollah Kohmeini (now under the Ayatollah Ali Khamenei), have plotted the destruction of Israel. Michael Ledeen, a scholar at the Foundation for Defense of Democracies says, “…when you hear people saying that Sunnis and Shiites can’t work together, you should run, because those people don’t know what they are talking about.” In today’s Iraq, that is exactly what we see: a coalition of Shiites and Sunnis. While not a Jeffersonian democracy, the Iraqi government is pleasantly pluralistic.

It is conflict with Israel and the West that feeds the warring frenzy of the “Arab youth bubble,” (cited by the late Samuel P. Huntington in his The Clash of Civilizations) and gives unemployed Muslims something to do. (In the 1960s, the U.S. experienced a “youth bubble,” resulting in thousands of youth eager to go to war – but only on college campuses against the Johnson and Nixon Administrations.)

The Israelis say, “If the Muslims would put down their weapons today, there would be no more violence. If we put down our weapons today, there would be no more Israel.” Michael Ledeen opines that Iran already has nuclear weapons. Of course, the time to nuke Israeli would be when the Iranians figure U.S. foreign policy has shifted toward them and away from Israel. For sure, that won’t happen prior to January 20, 2009.

William Hamilton, a syndicated columnist and a featured commentator for USA Today, studied at Harvard’s JFK School of Government. Dr. Hamilton is a former assistant professor of political science and history at Nebraska Wesleyan University.

©2009. William Hamilton.

Although Thomas Jefferson (co-founder of the Democratic Party) was a slave owner, he professed to be opposed, in principle, to slavery. Jefferson said that he only kept slaves as a matter of financial necessity. Right before he died, Jefferson freed his five most-trusted slaves. On his death, his remaining slaves were sold to other slave owners to pay off Jefferson’s debts.

Jefferson was reputed to be one of the more enlightened slave owners of his time. But during the time that Jefferson was the American minister to France (1785-1789), he learned some disturbing facts about the origins of the slave trade. The circumstances by which his own slaves or their ancestors came to be slaves became of great concern to Jefferson. As a result, Jefferson developed an antipathy toward the Arab slave traders, in particular, and toward Muslims, in general.

While in Paris, Jefferson bought a copy of the Koran. Jefferson’s study of what professed to be a religion of peace left him perplexed. He could not reconcile some of the teachings of the Koran with the practices of the Arab slave traders who ranged the southern coast of the Mediterranean and both coasts of Africa, capturing black slaves or buying them from black warlords who had captured them during tribal warfare.

Only interested in healthy, black males, young females and young boys, the Arab pirates often killed off entire villages of older men and women. Strong backs were in demand to work the plantations of the Caribbean and the American South. Muslim law (allowing Muslim men to possess four wives and as many concubines as they can afford) provided a ready market for the females. To provide eunuchs to work inside the Hareems, black boys as young as 9 or 10 were castrated. Few of the boys survived “surgery” performed without anesthesia and antibiotics. Most suffered a slow and painful death.

The grisly work of the Arab pirates was either unknown or an abstraction to the plantation owners of the New World. In 1776, the American Revolution changed all that. That’s when American shipping lost the protection of the English Navy. American merchant shipping became easy prey for the Arab pirates who saw the ransom of Americans ships and their crews as another cash cow. With no blue-water navy to protect American shipping, the United States temporized by paying “tribute” to Morocco, Algeria, Tunisia and Tripoli (Libya). By 1800, 20-percent of America’s annual revenues were being paid to ransom American citizens.

In 1786, Thomas Jefferson and John Adams (our ambassador to England) met with the Algerian ambassador to England. Jefferson and Adams asked what had Americans ever done to provoke the Arabs to violence? The Algerian ambassador explained the Koran teaches that non-Muslims are sinners who can be enslaved, and any Muslim who is killed during that process is sure to enter Paradise.

During that meeting, Jefferson discovered the roots of Islamic Jihad. Indeed, what Jefferson learned would eventually cause Jefferson to be the leading proponent of war between the fledgling United States and the “Barbary States” of Morocco, Algeria, Tunisia and Tripoli (Libya).

Elected President of the United States in 1801, Jefferson said of the Barbary Pirates: “Millions for defense, but not one cent for tribute.” Jefferson dispatched the nascent U.S. Navy and our Marines to “the shores of Tripoli.” To protect their throats from slashing Arab scimitars, the Marines wore stiff leather collars. To this day, they are called: “Leathernecks.” They kicked some serious Arab butt.

And so it was that the third U.S. President launched the first American war against Islamic Jihad. If the 44th U.S. President (who happens to be black) prosecutes the war against Islamic Jihad with the vigor of a Thomas Jefferson (who was repulsed by what the Arab slavers were doing to blacks), history will have come full circle. But don’t hold your breath.

William Hamilton, a syndicated columnist and a featured commentator for USA Today, studied at Harvard’s JFK School of Government. Dr. Hamilton is a former assistant professor of political science and history at Nebraska Wesleyan University.

©2008. William Hamilton. Used with permission.

On September 15, with banking giant Lehman Brothers filing for bankruptcy protection, Obama was given the opening to begin weaving his anti-capitalist storyline. And that he did. Artfully blurring the mortgage industry crisis with generalized tax policy, Obama declared,

"I certainly don't fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to. It's a philosophy we've had for the last eight years, one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else."

The words were carefully chosen.  That day in Colorado marked his return to the teleprompter and a strictly refocused campaign message intent on surreptitiously fusing the mortgage industry woes and free-market capitalism in general. Confident the American people are primed for his socialist brand of "change," Obama maintained his anti-capitalist theme, "What we have seen in the last few days is nothing less than the final verdict on an economic philosophy that has completely failed." According to Obama, capitalism has been "rendered . . . a colossal failure."

His chat with a Toledo, Ohio, plumber showcases his socialist, redistributionist ideology:

"It's not that I want to punish your success. I just want to make sure that everybody who is behind you, that they've got a chance for success too. . . . I think when you spread the wealth around, it's good for everybody."

He had already said as much at an April debate where he said his plan was to "look at raising the capital gains tax for purposes of fairness" (after having just admitted that raising the tax would reduce revenues!). For Obama, increased federal revenue be damned, tax increases are nonetheless necessary for redistributionist "fairness."

Contrary to the Obama narrative, however, it is not free-market capitalism at the root of the current mortgage industry crisis, but rather the very socialism Obama hawks. The historical record makes this fact unmistakably clear.

The Growing Government Hand

1933-1938

President Franklin D. Roosevelt initiated a series of "New Deal" reform programs designed to affect the mortgage market and homeownership. Fannie Mae, the Federal National Mortgage Association, was established to facilitate liquidity among lending institutions.

1968

As part of President Johnson's Great Society reform plan, much of Fannie Mae became a private owned yet government chartered company, a government sponsored enterprise (GSE) providing authority to issue mortgage-backed securities (MBS). Fannie Mae buys home mortgages in order to preserve liquidity in the secondary mortgage market. Though private, it remained backed by the Federal government.

1970

President Nixon chartered Freddie Mac, the Federal Home Loan Mortgage Corporation, as a GSE to compete with Fannie Mae. Designed to help grow the secondary mortgage market, Freddie Mac purchases mortgages from lending institutions to either be securitized as MBS and sold in the secondary market or held by Freddie Mac. At this time the secondary market for conventional mortgages was small.

1977

Sen. Proxmire (D-Wisconsin) introduced a "creeping socialism" community reinvestment Senate bill. Opponents argued the bill would allocate credit without regard for merits of loan applications, thereby threatening depository institutions. Proponents countered that it was only to ensure that lenders did not ignore good borrowing prospects in their communities. The bill's sponsor stressed it would neither force high-risk lending nor substitute the views of regulators or those of banks.

President Carter, pressed by grassroots organizations -- though opposed by the banking industry, signed into law the Community Reinvestment Act (CRA). In the years following the Act has undergone several revisions.

To boost community development laws, CRA was a provision designed to stem bank "redlining," the practice of drawing a red line around low-income communities and denying lending in these areas. The original intent of CRA was to encourage banks to foster homeownership opportunities in these underserved communities in which the lending institutions are chartered.

According to Section 801 of title VIII, "regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs [i.e., credit and deposit services] of the communities in which they are chartered to do business." Accordingly, "regulated financial institutions have continuing and affirmative obligation" to meet these needs. Moreover, the title required each "appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions."

1980s

With CRA came increased oversight of lending institutions to ensure they were giving credit to low- and moderate-income communities. Regulators expressed that CRA was not designed to compel credit allocation, nor did it require risky lending practices. Moreover, ECOA (Equal Credit Opportunity Act) and FHA, not CRA, were in place to address discrimination in lending. But community organization groups like the radical ACORN began efforts to reshape CRA into government-imposition, in accord with what "affirmative obligation" might suggest. They began pressing the semantic open door and stretching the "discrimination" provision to complain about enforcement of the regulations as lending institutions resisted bad lending practices in poor minority communities.

August 1989

To deal with the savings & loan fallout of the 1980s, Congress enacted the Financial Institutions Reform Recovery and Enforcement Act. In a move with ominous portent, FIRREA mandated public release of lender evaluations and performance ratings, resulting in added pressure on the banking industry. Such public oversight enabled bullying abuses of community organization groups like ACORN to further influence bank lending practices.

1990s

With the mechanisms in place, the community organizing groups began developing directed strategies to exert more and more pressure on the lending industry in the cloak of complicity with CRA. Community organizer Barack Obama worked closely with ACORN activists. Employing the radical Alinsky intimidation tactics Obama had learned and was teaching -- "direct action" -- activists crowded bank lobbies, blocked drive-up teller lanes and demonstrated at the homes of bankers to browbeat risky lending in poor and minority communities. Those who resisted were accused of racism to the media and government officials.

The agitators could now stall or hijack bank mergers by filing complaints of non-compliance against the institutions. Lawsuits alleging redlining and racism began flooding the court system. With the prospect of expansions and mergers threatened, banks settled cases and, significantly, increasingly made loans they would not have normally made. The net effect, as ACORN litigation increased, was that credit standards lowered.

Initially the GSEs resisted purchasing these risky mortgages but eventually the Clinton Administration instructed them to substantially increase the percentage of these mortgages in their portfolios. The government-backed Fannie Mae and Freddie Mac of the Clinton reforms became "a feeding trough," in the phrase of Peter Ferrara.

The poor communities and their exploitive leaders benefited from the capitalization with a surge of homeownership, at least on the surface. Wall Street benefited from increased sales of Fannie Mae and Freddie Mac and guaranteed mortgage-backed securities, as the housing market benefited from new capital channeled from Fannie and Freddie. And the GSE heads profited, with political support in Washington in the form of campaign contributions.

In the period 1989-2008, topping the list of recipients of contributions from Fannie Mae and Freddie Mac is the chairman of the Senate Banking Committee, Sen. Dodd (D-Connecticut), who received $165,400. Second on the list is Sen. Obama (D-Illinois), receiving $126,349 with only three years in the Senate. Rep. Frank (D-Massachusetts), received $42,350.

February 1990

Madeline Talbott, a well-known radical ACORN leader and banking industry agitator, challenged the merger of a Chicago thrift, Bell Federal Savings and Loan Association, who responded that they were being bullied into irresponsible "affirmative-action lending policy."

1991

ACORN interfered with a House Banking Committee meeting for two days protesting a move to bring CRA reform.

1992

Enforcement of CRA was "sporadic," as the Washington Times notes, until a Federal Reserve Bank of Boston study asserted that there were "substantially higher denial rates for black and Hispanic applicants than for white applicants." Co-author Lynn Browne was approached by co-author Alicia Munnell to do the study because "community activists were complaining that mortgage loans were not being made in minority communities."

According to the Times, however, "the study had mishandled statistics on minority default rates. When the errors were accounted for, the same study showed no evidence that nonwhite mortgage applicants were being discriminated against."

Frank Quaratiello, writing in the Boston Herald, cites Stan Liebowitz, "My guess is that they were interested in finding a particular result." Said Liebowitz, "Richard Syron was head of the Boston Fed at the time. He went on to be the head of Freddie Mac. They were looking for mortgage discrimination and they found it."

According to Quaratiello, Syron became Freddie Mac CEO and chairman in 2003 and "faced increasing pressure to buy up more and more risky mortgages, some of which the Boston Fed's guide had, in effect, served to legitimize." Regarding Syron's total compensation in 2007 of $18.3 million, Liebowitz reportedly quipped, "Nice reward for presiding over unprofessional research behavior, bankrupting Freddie Mac and crippling our financial system, all in the name of politically correct lending."

September 1992

The Chicago Tribune described the ACORN agenda as "affirmative action lending." And, writes  Kurtz, "ACORN was issuing fact sheets bragging about relaxations of credit standards that it had won on behalf of minorities."

October 1992

Congress, enacting the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, allowed legislation to "amend and extend certain laws relating to housing and community development." The Act created the Office of Federal Housing Enterprise Oversight (OFHEO) within HUD to "ensure that Fannie Mae and Freddie Mac are adequately capitalized and operating safely." It also "established HUD-imposed housing goals for financing of affordable housing and housing in central cities and other rural and underserved areas."

Rep. Jim Leach (R-Iowa) warned about the impending danger non-regulated GSEs posed. As the Washington Post reports, his concern was that Congress was "hamstringing" the regulator. Complaint was that OFHEO was a "weak regulator." Leach worried that Fannie Mae and Freddie Mac were changing "from being agencies of the public at large to money machines for the stockholding few."

Rep. Barney Frank (D-Massachusetts) countered, as the Post reports, "the companies served a public purpose. They were in the business of lowering the price of mortgage loans."

September 1993

The Chicago Sun-Times reports an initiative led by ACORN's Talbott with five area lenders "participating in a $55 million national pilot program with affordable-housing group ACORN to make mortgages for low- and moderate-income people with troubled credit histories." Kurtz notes that the initiative included two of her former targets, Bell Federal Savings and Avondale Federal Savings, who had apparently capitulated under pressure.

July 1994

Represented by Obama and others, Plaintiffs filed a class action lawsuit alleging that Citibank had "intentionally discriminated against the Plaintiffs on the basis of race with respect to a credit transaction," calling their action "racial discrimination and discriminatory redlining practices."

November 1994

President Clinton addresses homeownership: "I think we all agree that more Americans should own their own homes, for reasons that are economic and tangible and reasons that are emotional and intangible but go to the heart of what it means to harbor, to nourish, to expand the American dream. . . . I am determined to see that you have the opportunity and together we can make that opportunity for the young families of our country. I am committed to a new and unprecedented partnership between industry leaders and community leaders and Government to recommit our Nation to the idea of homeownership and to create more homeowners than ever before."

June 1995

Republicans had won control of Congress and planned CRA reforms. The Clinton Administration, however, allied with Rep. Frank, Sen. Kennedy (D-Massachusetts) and Rep. Waters (D-California), did an end-around by directing HUD Secretary Andrew Cuomo to inject GSEs into the subprime mortgage market.

As Kurtz notes,"ACORN had come to Congress not only to protect the CRA from GOP reforms but also to expand the reach of quota-based lending to Fannie, Freddie and beyond." What resulted was the broadening of the "acceptability of risky subprime loans throughout the financial system, thus precipitating our current crisis."

The administration announced the bold new homeownership strategy which included monumental loosening of credit standards and imposition of subprime lending quotas. HUD reported that President Clinton had committed "to increasing the homeownership rate to 67.5 percent by the year 2000." The plan was "to reduce the financial, information, and systemic barriers to homeownership" which was "amplified by local partnerships at work in over 100 cities."

Kurtz concludes, "Urged on by ACORN, congressional Democrats and the Clinton administration helped push tolerance for high-risk loans through every sector of the banking system -- far beyond the sort of banks originally subject to the CRA. So it was the efforts of ACORN and its Democratic allies that first spread the subprime virus from the CRA to Fannie and Freddie and thence to the entire financial system. Soon, Democratic politicians and regulators actually began to take pride in lowered credit standards as a sign of ‘fairness' -- and the contagion spread."

Attorney General Janet Reno, with a number of bank lending discrimination settlements already, sternly announces, "We will tackle lending discrimination wherever it appears." With the new policy in full force, "No loan is exempt; no bank is immune." "For those who thumb their nose at us, I promise vigorous enforcement," reiterated Reno.

1997

HUD Secretary Cuomo said "GSE presence in the subprime market could be of significant benefit to lower-income families, minorities, and families living in underserved areas . . ."

1998

By falsifying signatures on Fannie Mae accounting transactions, $200 million in expenses was shifted from 1998 to later periods, thereby triggering $27.1 million in bonuses for top executives. James A. Johnson received $1.932 million; Franklin D. Raines received $1.11 million; Lawrence M. Small received $1.108 million; Jamie S. Gorelick received $779,625; Timothy Howard received $493,750; Robert J. Levin received $493,750.

April 1998

HUD announced a $2.1 billion settlement with AccuBanc Mortgage Corp. for alleged discrimination against minority loan applicants. The funds would provide poor families with down payments and low interest mortgages. Announcing the Accubank settlement, Secretary Cuomo said, "discrimination isn't always that obvious. Sometimes more subtle but in many ways more insidious, an institutionalized discrimination that's hidden behind a smiling face."

Before the camera, Cuomo admitted the mandate amounted to "affirmative action" lending that would result in a "higher default rate." The institution would "take a greater risk on these mortgages, yes; to give families mortgages who they would not have given otherwise, yes; they would not have qualified but for this affirmative action on the part of the bank, yes. It is by income, and is it also by minorities? Yes. . . . With the 2.1 billion, lending that amount in mortgages which will be a higher risk, and I'm sure there will be a higher default rate on those mortgages than on the rest of the portfolio."

May 1999

The LA Times reports that African Americans homeownership is increasing three times as fast as that of whites, with Latino homeowners is growing five times as fast, attributing the growth to breathing "the first real life into enforcement of the Community Reinvestment Act." This breath of "life" mandated that Fannie Mae and Freddie Mac buy mortgages with deviant down-payments and debt-to-income ratios which allowed lenders to approve mortgages for lower-income families that would have been denied otherwise.

By now all pretense had disappeared, lending practices were based upon concerns of discrimination in the banking system regardless the consequences. The administration threatened to veto a bill passed by the Senate which had "shortsightedly voted to retrench" CRA, as the advocative Times put it.

Under pressure, Fannie Mae was resisting increased targeting, arguing that the result would be more loan defaults. Barry Zigas, heading Fannie Mae's low-income efforts, argued, "There is obviously a limit beyond which [we] can't push [the banks] to produce," the Times reported.

Fall of 1999

Treasury Secretary Lawrence Summers warned, "Debates about systemic risk should also now include government-sponsored enterprises, which are large and growing rapidly."

September 1999

With pressure from the Clinton Administration, Fannie Mae eased credit requirements on loans it would purchase from lenders, making it easier for banks to lend to borrowers unqualified for conventional loans. Raines explained that "there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market," reported the New York Times.

With this action, Fannie Mae put itself at substantial risk in the event of an economic downturn. "From the perspective of many people, including me, this is another thrift industry growing up around us," warned Peter Wallison. "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry." The danger was known.

September 1999

A study by Freddie Mac, confirming earlier Federal Reserve and FDIC studies, contradicts race discrimination arguments for CRA. The study found that African-Americans with annual incomes of $65-$75,000 have on average worse credit records than whites making under $25,000, showing that the difficulty in qualifying was not because of race but because of bad credit records. The Federal Reserve Bank of Dallas accordingly entitled a paper "Red Lining or Red Herring?"

2000

The National Community Reinvestment Coalition instructed on how to exploit the new CRA regulations, "Timely comments can have a strong influence on a bank's CRA rating." NCRC asserted, "To avoid the possibility of a denied or delayed application, lending institutions have an incentive to make formal agreements with community organizations." That is, the mere threat to intervene in the CRA review process had equipped the ACORN groups for the massive shakedown.

Moreover, ACORN had been given a compelling incentive, as CRA allowed the organizations to collect a fee from the banks for their services in marketing the loans. The Senate Banking Committee had estimated that, as a result of CRA, $9.5 billion had gone to pay for services and salaries of the organizers.

Winter 2000

City Journal warned that the Clinton administration had turned CRA into "a vast extortion scheme against the nation's banks," committing $1 trillion for mortgages and development projects, most of it funneled through the community organizers.

March 2000

Rep. Richard Baker (R-Louisiana) proposed a bill to reform Fannie and Freddie's oversight in a House Subcommittee on Capital Markets.

Rep. Frank (D-Massachusetts) dismissed the idea, saying concerns about the two were "overblown" and that there was "no federal liability there whatsoever."

Treasury Undersecretary Gary Gensler testified in favor of GSE regulation. He argued that the bill would promote private market discipline, increase transparency and preserve market competition, reducing the potential for subsidized competitors to distort financial markets.

Fannie Mae spokesmen responded by calling the testimony "inept," "irresponsible," and "unprofessional."

Wallison of the American Enterprise Institute testified to the subcommittee that the bill was "a milestone in Congressional efforts to gain control of the Government Sponsored Enterprises." He added that the "political courage and stamina that was required to introduce this bill and to continue to press it forward cannot be overstated." He emphasized that the bill was only an "interim step in the necessary process of dismantling the GSEs and eliminating both their threat to the taxpayers and to the private financial sector of our economy."

Wallison explained why Fannie and Freddie "pose a serious problem for both the public and private sectors." First, they contain an inherent contradiction. "It is a shareholder-owned company, with the fiduciary obligation to maximize profits, and a government-chartered and empowered agency with a public mission. It should be obvious that it cannot achieve both objectives. If it maximizes profits, it will fail to perform its government mission to its full potential. If it performs its government mission fully, it will fail to maximize profits."

He sounded an alarm on a "vicious and dangerous cycle." "Fannie and Freddie must grow in order to maintain their profitability and hence their high stock prices, but there is no countervailing check on their growth - no effective competition, no required government approvals, and no fear in the financial markets that there is any risk associated with financing this growth. Moreover, their fiduciary obligations to their shareholders require them to exploit their subsidy to the fullest extent possible. These are agencies that are - in the fullest sense of the phrase - out of control."

Congressional Democrats and GSE representatives vigorously attacked any such criticism. "We think that the statements evidence a contempt for the nation's housing and mortgage markets," rebuffed Sharon McHale, Freddie Mac spokeswoman. Congressional Democrats and GSE representatives prevailed.

June 2000

Fred L. Smith Jr., writing  in Investor's Business Daily, recalls testifying before the House Financial Services Committee that GSE "special privileges create a serious hazard to the market, to taxpayers [and] to the economy." He warned that these GSEs were "strange organizations, neither private-sector fish nor political-sector fowl" and that "as a result, no one is quite sure how these entities should be evaluated or held accountable." These new debt portfolios "will certainly increase the likelihood of a Fannie-Freddie default."

Rep. Paul Kanjorski (D-Pennsylvania): "Mr. Smith, that is almost a fallacious argument," adding that rapid growth of GSE debt holdings was nothing to worry about as it simply reflected "inflation and the growth of population. "Everything, proportionately, is that much larger."

Rep. Marge Roukema (R-New Jersey): "very few banks or S&Ls could, even in this day and age, even now, meet the stress-testing requirements which Fannie and Freddie are required to meet."

Rep. Carolyn Maloney (D-New York) regarding the Treasury Department line of credit: "It is really symbolic, it is obsolete, it has never been used." "Would you explain why it would be important to repeal something that seems to be of little use?"

Smith: "as long as the pipeline is there, it is like it is very expandable. . . . It is only $2 billion today. It could be $200 billion tomorrow."

Because of Democrat obfuscation, Smith's "tomorrow" arrived in 2008 when Treasury Secretary Henry Paulson put Fannie and Freddie into conservatorship.

April 2001

Fiscal Year 2002 Budget declares that the size of Fannie Mae and Freddie Mac is "a potential problem," because "financial trouble of a large GSE could cause strong repercussions in financial markets, affecting Federally insured entities and economic activity," says a White House release.

July 2001

Subcommittee hearing on a bill proposed by Rep. Baker to transfer supervisory and regulatory authority over Fannie Mae and Freddie Mac to the Board of Governors of the Federal Reserve System and abolish the OFHEO.

Rep. Paul Kanjorski (D-Pennsylvania) responded: "This bill would dramatically restructure the current regulatory system for Fannie Mae and Freddie Mac. In my opinion, it also represents a solution in search of a problem. Nearly a decade ago, Congress created a rational, reasonable, and responsive system for supervising GSE activities, and that system with two regulators is operating increasingly effectively. H.R. 1409 would unfortunately interrupt this continual progress."

March 2002

Business Week interview with Fannie Mae Vice-Chairman Jamie Gorelick about the prospects for the coming year:

Gorelick: "we are expecting a very, very strong 2002."

Gorelick: "We believe we are managed safely. . . . Fannie Mae is among the handful of top-quality institutions. . . . . And we have consistently exceeded every standard that the examiners have set for us."

May 2002

In an OMB Prompt Letter to OFHEO, the President calls for the disclosure and corporate governance principles contained in his 10-point plan for corporate responsibility to apply to Fannie Mae and Freddie Mac.

February 2003

OFHEO reports that "although investors perceive an implicit Federal guarantee of [GSE] obligations . . . the government has provided no explicit legal backing for them," warning that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market, according to a White House release.

2003

Rep. Richard Baker (R-Louisiana), chairman of the House Financial Services subcommittee with GSE oversight over Fannie Mae and Freddie Mac, was informed by OFHEO "on the salaries paid to executives at both companies," according to the Washington Post. Reportedly, "Fannie Mae threatened to sue Baker if he released it, he recalled. Fearing the expense of a court battle, he kept the data secret for a year." "The political arrogance exhibited in their heyday, there has never been before or since a private entity that exerted that kind of political power," he said.

June 2003

Freddie Mac reported it had understated its profits by $6.9 billion. OFHEO director Armando Falcon Jr. requested that the White House audit Fannie Mae.

July 2003

Sens. Chuck Hagel (R-Nebraska), Elizabeth Dole (R-North Carolina) and John Sununu (R-New Hampshire) introduced legislation to address Regulation of Fannie Mae and Freddie Mac. The bill was blocked by Democrats.

September 2003

In an interview with Ron Insana for CNN Money, Rep. Baker warned, "I have concerns that if appropriate resources aren't allocated for internal risk management, the consequences will be far more severe than just a real estate slowdown. The losses would fall quickly through the capital these companies have and down to shareholders and taxpayers. These companies have some of the lowest capital margins of any financial institution in the nation, yet, at the same time, they are two of the largest. The concern is that if something doesn't work out the way they predict, the American taxpayer could be called on to pay off the debt in some sort of bailout."

The New York Times reports that the Administration recommended "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago," calling for new supervision of Fannie Mae and Freddie Mac by the Treasury Department. Reportedly, Congressional Democrats "fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing."

Treasury Secretary John Snow testifies  that Congress enact "legislation to create a new Federal agency to regulate and supervise the financial activities of our housing-related government sponsored enterprises" and set prudent and appropriate minimum capital adequacy requirements, says a White House release.

Rep. Barney Frank (D-Massachusetts): "I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. . . . I do not think at this point there is a problem with a threat to the Treasury. . . . I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals.

Rep. Barney Frank (D-Massachusetts): "These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis. . . . The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

Rep. Melvin Watt (D-North Carolina): "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing."

October 2003

Fannie Mae discloses $1.2 billion accounting error.

November 2003

Council of the Economic Advisers Chairman Greg Mankiw warned, "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole. This risk is a systemic issue also because the debt obligations of the housing GSEs are widely held by other financial institutions. The importance of GSE debt in the portfolios of other financial entities means that even a small mistake in GSE risk management could have ripple effects throughout the financial system," from a White House release.

Mankiw explains that any "legislation to reform GSE regulation should empower the new regulator with sufficient strength and credibility to reduce systemic risk." To reduce the potential for systemic instability, the regulator would have "broad authority to set both risk-based and minimum capital standards" and "receivership powers necessary to wind down the affairs of a troubled GSE," says a White House release.

February 2004

Fiscal Year 2005 Budget again highlights the risk posed by the explosive growth of the GSEs and their low levels of required capital, and called for creation of a new, world-class regulator: "The Administration has determined that the safety and soundness regulators of the housing GSEs lack sufficient power and stature to meet their responsibilities, and therefore . . . should be replaced with a new strengthened regulator," reports a White House release.

Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator," says a White House release.

June 2004

Deputy Secretary of Treasury Samuel Bodman spotlights the risk posed by the GSEs and called for reform, saying "We do not have a world-class system of supervision of the housing government sponsored enterprises (GSEs), even though the importance of the housing financial system that the GSEs serve demands the best in supervision to ensure the long-term vitality of that system. Therefore, the Administration has called for a new, first class, regulatory supervisor for the three housing GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Banking System," the White House reports.

September 2004

OFHEO reported that Fannie Mae and CEO Raines had manipulated its accounting to overstate its profits. Congress and the Bush administration sought strong new regulation and authority to put the GSEs under conservatorship if necessary. As the Washington Post reports, Fannie Mae and Freddie Mac responded by orchestrating a major campaign "by traditional allies including real estate agents, home builders and mortgage lenders. Fannie Mae ran radio and television ads ahead of a key Senate committee meeting, depicting a Latino couple who fretted that if the bill passed, mortgage rates would go up." Again, GSE pressure prevailed.

October 2004

Rep. Baker again warned about the coming crisis in the Wall Street Journal: "Then there's the lesson of a company, Frankenstein-like, seemingly grown so powerful that it can intimidate and arrogantly flout all accountability to the very government that created it."

Baker adds, "Although their bonds bear the disclaimer ‘not backed by the full faith and credit of the U.S. government,' the market does not believe it and looks right past the companies' risk strategies to the taxpayers' pockets."

In a subcommittee testimony, Democrats vehemently reject regulation of Fannie Mae in the face of dire warning of a Fannie Mae oversight report. A few of them, Black Caucus members in particular, are very angry at the OFHEO Director as they attempt to defend Fannie Mae and protect their CRA extortion racket.

Chairman Baker (R-Louisiana): "It is indeed a very troubling report, but it is a report of extraordinary importance not only to those who wish to own a home, but as to the taxpayers of this country who would pay the cost of the clean up of an enterprise failure. . . . The analysis makes clear that more resources must be brought to bear to ensure the highest standards of conduct are not only required, but more importantly, they are actually met."

Rep. Maxine Waters (D-California): "Through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke."

Rep. Maxine Waters (D-California): "Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Mr. Frank Raines."

Rep. Gregory Meeks (D-New York): "And as well as the fact that I'm just pissed off at OFHEO, because if it wasn't for you I don't think that we'd be here in the first place, and now the problem that we have and that we're faced with is: maybe some individuals who wanted to do away with GSEs in the first place, you've given them an excuse to try to have this forum so that we can talk about it and maybe change the, uh, the direction and the mission of what the GSEs had, which they've done a tremendous job. There's been nothing that was indicated that's wrong, you know, with uh Fannie Mae. Freddie Mac has come up on its own. And the question that then presents is the competence that, that, that, that your agency has, uh, with reference to, uh, uh, deciding and regulating these GSEs. Uh, and so, uh, I wish I could sit here and say that I'm not upset with you, but I am very upset because, you know, what you do is give, you know, maybe giving any reason to, as Mr. Gonzales said, to give someone a heart surgery when they really don't need it."

Rep. Ed Royce (R-California): "In addition to our important oversight role in this committee, I hope that we will move swiftly to create a new regulatory structure for Fannie Mae, for Freddie Mac, and the federal home loan banks."

Rep. Lacy Clay (D-Missouri): "This hearing is about the political lynching of Franklin Raines."

Rep. Ed Royce (R-California): "There is a very simple solution. Congress must create a new regulator with powers at least equal to those of other financial regulators, such as the OCC or Federal Reserve."

Rep. Gregory Meeks (D-New York): "What would make you, why should I have confidence? Why should anyone have confidence, and uh, in, in you as a regulator at this point?"

Armando Falcon, OFHEO Director: "Sir, Congressman, OFHEO did not improperly apply accounting rules. Freddie Mac did. OFHEO did not fail to manage earnings properly. Freddie Mac did. So this isn't about the agency engaging in improper conduct. It's about Freddie Mac."

Rep. Christopher Shays (R-Connecticut): "And we passed Sarbanes-Oxley, which was a very tough response to that, and then I realized that Fannie Mae and Freddie Mac wouldn't even come under it. They weren't under the ‘34 act, they weren't under the ‘33 act, they play by their own rules, and I and I'm tempted to ask how many people in this room are on the payroll of Fannie Mae, because what they do is they basically hire every lobbyist they can possibly hire. They hire some people to lobby and they hire some people not to lobby so that the opposition can't hire them."

Rep. Artur Davis (D-Alabama): "So the concern that I have is you're making very specific, what you have correctly acknowledged, broad and categorical judgments about the management of this institution, about the willfulness of practices that may or may not be in controversy. You've imputed various motives to the people running the organization. You went to the board and put a 48-hour ultimatum on them without having any specific regulatory authority to put that kind of ultimatum on ‘em. Uh, that sounds like some kind of an invisible line has been crossed."

Rep. Christopher Shays (R-Connecticut): "Fannie Mae has manipulated, in my judgment, OFHEO for years. And for OFHEO to finally come out with a report as strong as it is, tells me that's got to be the minimum not the maximum."

Rep. Barney Frank (D-Massachusetts): "Uh, I, this, you, you, you seem to me saying, ‘Well, these are in areas which could raise safety and soundness problems.' I don't see anything in your report that raises safety and soundness problems."

Rep. Maxine Waters (D-California): "Under the outstanding leadership of Mr. Frank Raines, everything in the 1992 Act has worked just fine. In fact, the GSEs have exceeded their housing goals. What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100% loans."

Rep. Lacy Clay (D-Missouri): "I find this to be inconsistent and a and a rush to judgment. I get the feeling that the markets are not worried about the safety and soundness of Fannie Mae as OFHEO says that it is, but of course the markets are not political."

Rep. Barney Frank (D-Massachusetts): "But I have seen nothing in here that suggests that the safety and soundness are at issue, and I think it serves us badly to raise safety and soundness as kind of a general shibboleth when it does not seem to me to be an issue."

Rep. Don Manzullo (R-Illinois): "Mr. Raines, 1.1 million bonus and a $526,000 salary. Jamie Gorelick, $779,000 bonus on a salary of 567,000. This is, what you state on page eleven is nothing less than staggering."

Rep. Don Manzullo (R-Illinois): "The 1998 earnings per share number turned out to be $3.23 and 9 mills, a result that Fannie Mae met the EPS maximum payout goal right down to the penny."

Rep. Don Manzullo (R-Illinois): "Fannie Mae understood the rules and simply chose not to follow them that if Fannie Mae had followed the practices, there wouldn't have been a bonus that year."

Rep. Christopher Shays (R-Connecticut): "And you have about 3% of your portfolio set aside. If a bank gets below 4%, they are in deep trouble. So I just want you to explain to me why I shouldn't be satisfied with 3%?"

Franklin Raines, Fannie Mae CEO: "Because banks don't, there aren't any banks who only have multifamily and single-family loans."

Franklin Raines, Fannie Mae CEO: "These assets are so riskless that their capital for holding them should be under 2%."

January 2005-July 2006

Sen. Chuck Hagel (R-Nebraska), co-sponsored by Sens. Sununu and Dole and later Sen. McCain, re-introduced legislation to address GSE regulation.

"The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006," reports the Wall Street Journal.

Greenspan testified that the size of GSE portfolios "poses a risk to the global financial system. It would be difficult, if not impossible, to bail out the lenders [GSEs] . . . should one get into financial trouble." He added, "If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis . . . We put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for homeownership."

Greenspan warned that if the GSEs "continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road . . . We are placing the total financial system of the future at a substantial risk."

Bloomberg writes, "If that bill had become law, then the world today would be different. . . . But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter. That such a reckless political stand could have been taken by the Democrats was obscene even then."

April 2005

Treasury Secretary John Snow again calls for GSE reform, "Events that have transpired since I testified before this Committee in 2003 reinforce concerns over the systemic risks posed by the GSEs and further highlight the need for real GSE reform to ensure that our housing finance system remains a strong and vibrant source of funding for expanding homeownership opportunities in America. . . . Half-measures will only exacerbate the risks to our financial system," from a White House release.

May 2005

At AEI Online, Wallison warned that "allowing Fannie and Freddie to continue on their present course is simply to create risks for the taxpayers, and to the economy generally, in order to improve the profits of their shareholders and the compensation of their managements. It is a classic case of socializing the risk while privatizing the profit."

January 2006

Chairman Greenspan, in a letter to Sens. Sununu, Hagel and Dole, warned that the GSE practice of buying their own MBS "creates substantial systemic risk while yielding negligible additional benefits for homeowners, renters, or mortgage originators." He stated, ". . . the GSEs and their government regulator need specific and unambiguous Congressional guidance about the intended purpose and functions of Fannie's and Freddie's investment portfolios."

March 2006

Sens. Sununu and Hagel introduced an amendment to a Lobbying Reform Bill directing GAO to study GSE lobbying and requiring HUD to audit the GSEs annually.

May 2006

After years of Democrats blocking the legislation, Sens. Hagel, Sununu, Dole and McCain write a letter to Majority Leader William Frist and Chairman Richard Shelby expressing demanding that GSE regulatory reform be "enacted this year" to avoid "the enormous risk that Fannie Mae and Freddie Mac pose to the Housing market, the overall financial system, and the economy as a whole."

May 2006

Sen. McCain (R-Arizona) addressed the Senate, "Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were ‘illusions deliberately and systematically created' by the company's senior management. . . . Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. . . . OFHEO's report solidifies my view that the GSEs need to be reformed without delay."

McCain stressed, "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole. I urge my colleagues to support swift action on this GSE reform legislation."

April 2007

Sens. Sununu, Hagel, Dole, and Mel Martinez (R-Florida) re-introduced legislation to improve GSE oversight.

April 2007

In "A Nightmare Grows Darker," the New York Times writes that the "democratization of credit" is "turning the American dream of homeownership into a nightmare for many borrowers." The "newfangled mortgage loans" called "affordability loans" "represent 60 percent of foreclosures."

September 2007

President Bush: "These institutions provide liquidity in the mortgage market that benefits millions of homeowners, and it is vital they operate safely and operate soundly. So I've called on Congress to pass legislation that strengthens independent regulation of the GSEs . . . the United States Senate needs to pass this legislation soon."

2007-2008

The housing bubble began to burst, bad mortgages began to default, and finally the Fannie Mae and Freddie Mac portfolios were revealed to be what they were, in collapse. And the testimony is evident as to why. As Wallison noted, "Fannie and Freddie were, I would say, the poster children for corporate welfare."

September 2008

Rep. Arthur Davis, whose testimony is found above in October 2004, now admits Democrats were in error: "Like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong."

Today 2008

The narrative is of another socialist experiment failed, this time a massive federal effort, imperiling the whole US banking industry. Facing this economic disaster, will an informed American people put their trust Obama's socialist ideology to bring remedy? To do so is to trust in an acetylene torch to put out the fire.

A lifelong Democrat who has held political office and been a committeeman, Philip Berg, has brought suit over the real questions raised by the absence of a valid Obama birth certificate. His narrative of the various questions Obama has refused to answer is devastating. Graphics and sound are well-deployed to avoid tedium as factual data is conveyed in a way that allows viewers to absorb it. When he contrasts Obama's behavior when challenged (use perfectly valid legal technicalities to delay) with John McCain's full disclosure of all documentary evidence under a similar challenge (remember the flap over his birth in the Panama Canal Zone? -- who raised those questions, anyway?), there is no doubt in a viewer's mind that there is something seriously wrong here.

The only way Obama can satisfactorily respond is to release his suposed Hawaiian birth certificate. If he has it, why hasn't he released it? If he does release it, game over. So why drag this out on technical grounds? It doesn't make sense.

If this video gets widely viewed and discussed, Obama's support will crumble in the face of continued stonewalling.

I am grateful for the efforts of the people who put this op together. It is brilliantly timed. I do know that there are one or more smart Democrats who haven't forgiven Obama and who don't want to see him elected. They know how to design and implement really effective plans to get things done.

They might even want to get Obama thrown off the ballot and replaced by the second place finisher before Election Day. Or, if the Democratic Party stonewalls and the court delays, pick up the pieces.

But, from an overall perspective (prior to the end of the two political conventions and prior to the advent of Alaska Governor Sarah Palin on the national scene), the expectation had been in the 60-percent range for a Democrat victory. Now, the data show McCain-Palin with a 50.3-percent chance of victory and Obama-Biden at 48.7-percent. Polling data aside, it is probably fair to say that the 18-percent will decide how to vote based on their concerns about three issues:

First, the economy, which is mostly a victim of our failure to develop our own energy resources. So, the camp that offers the most practical energy solutions will score on that. Albert Einstein defined insanity as: “Doing the same thing over and over again while expecting a different result.” That admonition applies to our repeated failures to develop our own energy resources and our repeated failures to understand that inevitable hurricanes dictate the need for more, not less, off-shore oil exploration and to construct more refining capacity much farther inland.

Secondly, the threat of terrorism. Even The Washington Post admits al-Qaeda has been defeated in Iraq. Al-Qaeda’s shattered fragments are living in caves along the Pakistan-Afghanistan border. Even so, enough radical Islamist jihadists remain here and there to be a threat to the U.S. and Western Europe. Yet the failure of al-Qaeda to mount another attack on the American mainland since 9/11, 2001 cuts both ways. Some will recognize that as an achievement of the Bush Administration. Others may conclude the danger is past and will vote for a softer approach to the radical Islamic jihadists.

Thirdly, what do we do about a resurgent and combative Russia? Voters will have to decide which candidate can better deal with the petulant Putin. Barring a coup, Putin, the former KGB officer, might remain prime-minister-for-life.

Ruler of a mineral-rich land mass spanning 11 time zones, Vladimir Putin understands our dependence on foreign oil. In fact, our petro dollars are providing Putin the means to send a Russian aircraft carrier task force into the Mediterranean. Moreover, Putin and the pro-communist Hugo Chavez are planning joint naval maneuvers in the waters off Venezuela. Last week, two Russian long-range bombers landed in Venezuela.

While the USSR may have died in 1991, it left some rather robust remains. A few months before the Soviets submerged; this observer was in Moscow looking at the readiness of Soviet military vehicles and equipment. Even the most casual observer would conclude that Soviet forces were being maintained at a high state of readiness. No vehicle oil was dripping onto the streets of Moscow or Minsk or Leningrad. No broken headlights or tail-light covers or torn or missing tarps -- the minutia that tell a larger readiness story -- were seen. To the bitter end, the Soviets were buying more guns than butter. So, the return of a well-oiled Russian Bear should come as no surprise.

Meanwhile, both camps worry about endorsements from the “wrong” people. In a recent interview on WABC Radio, Hamas political adviser, Ahmed Yousef, said his terrorist group supports Obama. McCain worries about endorsements from the too-far right. Obama says he worries that McCain doesn’t do e-mail.

Soon, when those virtually uncontrolled 527 groups start blazing away on TV at the uncommitted 18-percent, all of us should worry because, as they say in war and politics: Truth is the first casualty.

Retired Army officer, syndicated columnist and featured commentator for USA Today, William Hamilton, is a graduate of the U.S. Naval War College and a member of the Association of Former Intelligence Officers.

©2008. William Hamilton.

Barak H. Obama has played the race card so deftly that anyone, of any color, who comments on Obama’s ever-changing positions on world and domestic affairs must first establish their non-racist credentials; in my case, marching for Dr. King in the Deep South in the 1960s.

That said, one cannot help but note that Barak Obama, who has captured his party’s nomination by catering to the far Left, is now trying to run to the Right of GOP candidate, John McCain. So, who is the true Obama?

Is it the Obama who called for the almost immediate withdrawal of U.S. troops from Iraq, but now shows signs of changing his mind? Or, the Obama who backed merit pay for teachers but, appearing before the teachers’ union, opposed it? Or, the strongly pro-abortion Obama who now says partial-birth abortion is abhorrent? Or, the Obama who, in his naviete, told a pro-Israel group that he favored an “undivided” Jerusalem, only to learn that “undivided” is Middle East-speak for expelling the Jews from Jerusalem?

Or, the Obama who supported strict gun control, but now says individuals have a Second Amendment right to keep and bear arms? Or, the Obama who wanted telephone companies punished for cooperating with government efforts to listen in on phone calls from overseas terrorists to their contacts within the U.S, but just voted to give immunity to the telephone companies? Or, the Obama that opposed President Bush’s church-based services for the needy, but now says those are okay?

In fairness, it should be noted that John McCain opposed the Bush tax cuts because they were not accompanied by spending cuts. Now McCain wants the Bush tax cuts made permanent. Earlier, McCain opposed offshore oil drilling, but now supports it. Initially, McCain was for immigration amnesty, but now he says: Secure the borders and then we’ll talk about what to do with 12 million illegal immigrants.

The carefully scripted Obama is a brilliant orator; however, when Obama speaks off-the-cuff, he sometimes contracts foot-in-mouth disease. Likewise, President John F. Kennedy was at his best when following scripts written by Theodore Sorenson; however, when his own knowledge failed him, JFK covered with a keen Irish wit that Obama does not possess. Even so, BHO is trying to position himself as the latter-day JFK.

While the memory of Camelot burns brightly with some Americans, JFK’s foreign-policy mistakes that led Soviet leader, Nikita Khrushchev, to erect the Berlin Wall, to think he could get away with nuclear-capable missiles in Cuba and that led to JFK’s attempt to play foreign-policy catch-up by deepening the U.S. involvement in Vietnam, may not be positions with which BHO wants to be associated

Obama and his handlers have already made one mistake by proposing that BHO visit Berlin’s Brandenburg Gate to reprise JFK’s June 26, 1963 speech. Sorry. JFK did not speak at the Brandenburg Gate. JFK spoke in Rudolph Wilde Platz. It was President Reagan who, on June 12, 1987, spoke at the Brandenburg Gate and said, “Mr. Gorbachev, tear down this wall!”

Nor should BHO, who thinks all American children should learn Spanish, repeat JFK’s German-language error. When JFK announced, “Ich bin ein Berliner,” he said, in Berliner slang, that he was a jelly-filled donut. In the USA, they are called: Bismarcks.

JFK should have said, “Ich bin Berliner,” meaning “a citizen of Berlin.” If JFK had said, “Ich bin Berliner,” the crowd of over 150,000 would not have lapsed into a moment of stunned silence while it tried to comprehend what JFK actually meant. That stunned moment of silence has been edited out of most recordings of JFK’s speech. Only the eventual wild applause is heard. Oh, did I mention that I was in Rudolph Wilde Platz that day?

Obama’s Kumbahyah notion of a U.S “speak-softly,-no-stick” foreign policy is favored by many Europeans. BHO will be cheered in Europe as one of them. But that may not get BHO elected as one of us.

William Hamilton, a syndicated columnist and featured commentator for USA Today, studied at Harvard’s JFK School of Government. During the Kennedy Administration, Dr. Hamilton served in Western Europe as an intelligence officer.

©2008. William Hamilton.

In summer of 1989, Novosti (the Soviet Press Agency) invited 12 American journalists to tour the USSR. At the time, yours truly was editor-in-chief of The Capital Times of Lincoln, Nebraska. My wife, Penny, was special-features editor and a Lincoln radio and TV personality. Somehow, she and I were selected to join ten other American journalists for 17 days of interviews with senior Soviet officials.

As our group assembled at New York’s JFK Airport, we were introduced to a quiet, shy, handsome, young man who, at the time, was editorial-page editor for The Washington Times. His name was Tony Snow. Tony, to the regret of everyone who, later, knew him or knew of his work on radio, as a speech writer for President George H.W. Bush, as the seven-year host of Fox News Sunday, and as press secretary for President George W. Bush, died last Friday of colon cancer, at age 53.

The ring master for our group of 12 was the irrepressible essayist and novelist, Larry Moffitt. Larry sent me off to buy a supply of duty-free whisky to be used to “influence” certain friends Larry knew from his previous ventures behind the Iron Curtain. Tony Snow was dispatched to buy as many cartons of Marlboro cigarettes as the law would allow. None of us smoked; however, the cigarettes would prove indispensable in dealing with customs inspectors and getting Moscow taxi drivers to stop for us. Larry showed us how to pack the cartons of cigarettes inside our suitcases so the Soviet customs inspectors would be able to set them aside and then “forget” to put them back.

The most exciting part of the trip for me was getting through KGB passport control at Moscow’s Sheremetyevo Airport. In an earlier life, I had operated in Europe under a variety of names and with a variety of passports. Would the computer being used by the KGB officials say I should be denied entry or even arrested? Fortunately, he gave me the same bored look that he gave to Penny, Tony, Larry and the others. I was in.

Tony was the kind of guy who put the word “gentle” into gentleman. But he was no pushover. One evening our group, AKA the Dirty Dozen, (the City of Moscow had shut down the central hot-water plant for repairs), was invited to a Russian wedding. Vodka was flowing. The Russians were dancing. Then, a really huge and very drunk Russian came over to our table to pick a fight. In a flash, Tony, who was 6-foot-two and very fit, was in between our table of superannuated journalists and the bellicose Russian. I think the Russian was grateful that his comrades pulled him away before Tony could deck him.

In Moscow, Novosti provided a small carry bus to take us (and our KGB minder) to interview the senior officials Novosti wanted interviewed. Tony wanted to interview “real” Russians, so he induced one of us to pretend a wasp bite. During the ensuing confusion, Tony slipped off the bus in search of “real” Russians. When he discovered Tony was missing, our minder almost fainted.

One night near Minsk, we were hosted at dinner by the director of a Collective Farm. As a youth, our host had been badly wounded by the Nazis. An old Babushka (grandmother) nursed him back to health with fermented mare’s milk. Recounting that story, the director made us toast her memory with a shot of fermented mare’s milk. Yuk.

As the senior journalist (in age), I jumped up to offer a response-toast -- but with vodka. Tony caught on to my ploy. He followed immediately with a vodka toast. Then, the rest of the Dirty Dozen caught on and we kept the vodka toasts going around the table to the point our vodka-addled host forgot all about any more toasts with fermented mare’s milk. Whew.

Tony Snow was someone you never forget. We just wish he could have stayed with us a lot longer.

William Hamilton, a syndicated columnist and featured commentator for USA Today, studied government and politics at Harvard’s JFK School of Government. Dr. Hamilton is a member of the Association of Former Intelligence Officers (AFIO)

©2008. William Hamilton.

This week is the one-year anniversary of Democrats winning Congress. But House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid probably aren't in a celebrating mood. The goodwill they enjoyed after their victory is gone. Their bright campaign promises are unfulfilled. Democratic leadership is in disarray. And Congress's approval rating has fallen to its lowest point in history.

The problems the Democrats are now experiencing begin with the federal budget. Or rather, the lack of one. In 2006, Democrats criticized Congress for dragging its feet on the budget and pledged that they would do better. Instead, they did worse. The new fiscal year started Oct. 1--five weeks ago--but Democrats have yet to send the president a single annual appropriations bill. It's been at least 20 years since Congress has gone this late in passing any appropriation bills, an indication of the mess the Pelosi-Reid Congress is now in.

Even worse, the Democrats have made clear all their talk about "fiscal discipline" is just that--talk. They're proposing to spend $205 billion more than the president has proposed over the next five years. And the opening wedge of this binge is $22 billion more in spending proposed for the coming year. Only in Washington could someone in public life be so clueless to say, as Sen. Reid and Rep. Pelosi have, that $22 billion is a "relatively small" difference.

Let's also be clear about what it means to roll back the president's 2001 and 2003 tax cuts, as the Democrats want to do. Every income-tax payer will pay more as all tax rates rise. Families will pay $500 more per child as they lose the child tax credit. Taxes on small businesses would go up by an average of about $4,000. Retirees will pay higher taxes on investment retirement income. And now we have the $1 trillion tax increase proposed as "tax reform" by the Democrats' chief tax writer last month.

Beholden to MoveOn.org and other left-wing groups, Democratic leaders have ignored the progress made in Iraq by the surge, diminished the efforts of our military, and wasted precious time with failed attempts to force an immediate withdrawal from Iraq. They continue to try to implement this course, which would lead to chaos in the region, the creation of a possible terror state with the third largest oil reserves in the world, and a major propaganda victory for Osama bin Laden as well as for Iran, Hamas and Hezbollah. After promising on the campaign trail to "support our troops," Democrats tried to cut off funding for our military while our soldiers and Marines are under fire from the enemy. For 19 Senate Democrats, this was simply a bridge too far, so they voted against their own leadership's proposal. Democrats also tried to stuff an emergency war-spending bill with billions of dollars of pork for individual members. Now the party's leaders are stalling an emergency supplemental bill with funding for body armor, bullets and mine-resistant vehicles.

After pledging a "Congress that strongly honors our responsibility to protect our people from terrorism," Democrats have refused to make permanent reforms of the Foreign Intelligence Surveillance Act that the Director of National Intelligence said were needed to close "critical gaps in our intelligence capability." Their presidential candidates fell all over each other in a recent debate to pledge an end to the Terrorist Surveillance Program. Then Senate Democratic leaders, thinking there was an opening for political advantage, slow-walked the confirmation of Judge Michael Mukasey to be the next attorney general. It's obvious that this is a man who knows the important role the Justice Department plays in the war on terror. Delaying his confirmation is only making it harder to prosecute the war.

Democrats promised "civility and bipartisanship." Instead, they stiff-armed their Republican colleagues, refused to include them in budget negotiations between the two houses, and have launched more than 400 investigations and made more than 675 requests for documents, interviews or testimony. They refused a bipartisan compromise on an expansion of the State Children's Health Insurance Program, instead wasting precious time sending the president a bill they knew he would veto. And they did this knowing that they wouldn't be able to override that veto. Why? Because their pollsters told them putting the children's health-care program at risk would score political points. Instead, it left them looking cynical.

The list of Congress's failures grows each month. No energy bill. No action on health care. No action on the mortgage crisis. No immigration reform. No progress on renewing No Child Left Behind. Precious little action on judges and not enough on reducing trade barriers. Congress has not done its work. And these failures will have consequences.

Democrats had a moment after the 2006 election, but now that moment has passed. They've squandered it. They have demonstrated both the inability and unwillingness to govern. Instead, after more than a decade in the congressional minority, they reflexively look for short-term partisan advantage and attempt to appease the party's most strident fringe. Now that Democrats have the reins of congressional power, their true colors are coming out and the public doesn't like what it sees.

The Democratic victory in 2006 was narrow. They won the House by 85,961 votes out of over 80 million cast and the Senate by a mere 3,562 out of over 62 million cast. A party that wins control by that narrow margin can quickly see its fortunes reversed when it fails to act responsibly, fails to fulfill its promises, and fails to lead.

 "Used with permission from OpinionJournal.com, a web site from Dow Jones & Company, Inc." Link to article

Country music fans may recall Deana Carter’s song: “Did I shave my legs just for this?” It’s the lament of a woman who thought her efforts to improve her appearance would help her find a worthy male companion. Apparently, the person she attracted wasn’t worthy of her efforts.

That brings to mind that many of the Islamic suicide bombers shave off their body hair in an effort to be “clean” prior to their promised entry into Islamic Paradise and their opportunity to ravish the promised 72 virgins.

This might strike those of a different religious persuasion as rather odd. Assuming there might be some physical manifestation of the “clean” suicide bomber that reaches Islamic Paradise, wouldn’t those bits and pieces be embedded with elements of the explosives used, such as ammonium nitrate (fertilizer), and, thereby, be unclean?

But what if Allah or whoever tends the Islamic Pearly Gates, says, “Hold it, Abdul. You can’t come here. Shaving off all your body hair doesn’t overcome the fact you stink like fertilizer. Besides, we are running out of virgins.”

Imagine, standing right behind the keeper of the Islamic Pearly Gates, is a huge crowd of Muslims -- all the innocent victims of Abdul’s bombing attack on their local market. They are shouting encouragement to the Keeper of the Islamic Pearly Gates chanting, “Kill infidels, Yes! Kill us, No! Keep that hairless, stinky Abdul out of here!”

This fictional example brings us to the two fundament questions that might be plaguing many of the adherents of Islam. The Koran (4:29-30) forbids suicide. Moreover, in a hadith, the Prophet Muhammad opines that suicide and the taking of the lives of the innocent – particularly, women and children – are prohibited.

But today’s jihadists interpret these writings in such a way to make a “suicide exception” if jihad is declared and waged against the infidels. So it is that young Muslim boys (even some girls) are taught they have a duty to blow themselves up in the interest of jihad. Collateral damage is excused on the basis that if the innocent bystanders are good Muslims to begin with, then they will be in Islamic Paradise alongside the suicide bomber who killed them. Yeah, right.

Wait a minute. If all it takes to enter Islamic Paradise is just being a good Muslim, what’s the point of committing suicide and running the risk that whoever controls the entrance to Islamic Paradise might not buy the so-called “jihad exception.” After all, Muhammad is not around to tell us what he really meant.

That being the case, it is all a matter of interpretation -- the truth of which isn’t available by resort to google.com or ask.com or Yahoo! (Of course, if you haven’t been a good Muslim to begin with, the suicide gambit could overcome a lot of drinking, whoring, reading Hustler and Playboy and books by Al Gore, Michael Moore, Gloria Steinem and Betty Friedan.)

This raises the possibility that the earlier interpretations: i.e., don’t kill yourself, don’t kill the innocent, could still be in effect. So, suppose the Keepers of the Islamic Pearly Gates hold to Koran (4:29-30) where it states: “O ye who believe! Eat not up your property among yourselves in vanities… nor kill or destroy yourselves.” And follow what Muhammad said, in a hadith: “He who commits suicide by throttling shall keep on throttling himself in Hell-fire forever, and he who commits suicide by stabbing himself shall keep on stabbing himself in the Hell-fire.”

In other words, if young Abdul commits suicide by blowing himself up, then he shall keep on blowing himself up over and over again in the Hell-fire for all eternity. Maybe, Abdul will be asking himself: “Did I shave off all my body hair just for this?”

Syndicated columnist and featured commentator for USA Today, William Hamilton, is a Distinguished Graduate of the U.S. Naval War College and a former research fellow at the U.S. Military History Institute of the U.S. Army War College. Writing as William Penn, he, and his wife, are the co-authors of The Grand Conspiracy and The Panama Conspiracy – two thrillers about terrorism directed against the United States.

©2007. William Hamilton.

Dr. Hamilton can be contacted at:
P.O. Box 2001
Granby, CO 80446

Email: william@central-view.com

The jihadists of radical Islam behave like the Hydra – the many-headed water serpent of Greek mythology. When one of the Hydra’s heads was cut off, two new heads would appear. Ultimately, Hercules was able to kill the Hydra by cutting off all the heads and then setting fire to the monster’s neck.

Now that the Surge is putting serious pressure on the jihadists in Iraq, the jihadists are causing trouble in Afghanistan and Pakistan. Unfortunately, our Judeo-Christian Hercules isn’t militarily strong enough and cannot gain sufficient tactical intelligence to deal with all the Hydra-like heads that keep popping up.

For those who see every glass as half-empty rather than half-full, our situation vis-a-vis the Islamic terrorists is abominable. Those who see every glass as half-full can point out that the fighting is taking place in Iraq, in Afghanistan, in parts of Pakistan and not here in the continental United States. Better over there than over here.

If we had the will to create armed forces sufficient to be everywhere at once and chop off the Hydra-heads the moment they erupt, we would not need an effective, civilian intelligence-gathering agency But if your armed forces are small, relative to the multiple threats they must face, then an effective, civilian intelligence-gathering agency is essential.

Unfortunately, our current ability to gather and analyze actionable intelligence on a timely basis is virtually non-existent. The harsh reality is that service in the embassies, consulates and CIA stations across the Crescent of Islam is not very attractive to the elitist Ivy-Leaguers who, at one time, wanted to join the diplomatic corps or to serve abroad for the CIA.

So few Foreign Service Officers (FSOs) are willing to staff our new embassy in Baghdad that some FSOs are being ordered to Baghdad or else. Even the dullest FSO or CIA officer understands that learning Arabic or Farsi or Hindu or Urdu or Punjabi is a one-way ticket to places where hot showers and cold, vodka-martinis (shaken, not stirred) are rare.

In Legacy of Ashes: The History of the CIA, author Tim Weiner opines, “To succeed, the CIA [needs] to find men and women with the discipline and self-sacrifice of the nation’s best military officers, the cultural awareness and historical knowledge of the nation’s best diplomats, and the sense of curiosity and adventure possessed by the nation’s best foreign correspondents.”

While some of our foreign correspondents, such as Arnaud de Borchgrave, are still willing to venture into some rather smelly places, the kidnappings and even beheadings of some reporters by the radical Islamists are creating “green-zone commandos” who, a la Vietnam, stay inside the safe areas to interview each other over iced drinks.

Having been deceived by the CIA more than once (for example, WMD in Iraq), Vice President Dick Cheney and former Secretary of Defense, Donald Rumsfeld, created a substitute CIA within the Office of the Secretary of Defense (OSD). It remains to be seen if Rumsfeld’s replacement, former CIA Director, Robert Gates, will take advantage of the skilled and dedicated military intelligence personnel now available to him.

For example, for at least 50 years, the Army’s Foreign Area Officer (FAO) Program has produced officers with the discipline and self-sacrifice needed to undergo years of language training plus actual, in-country, cultural training and then go back to serve in many of the world’s armpit countries.

The U.S. Army Special Forces “A” Teams are language- and culture-trained to live side-by-side with the ordinary people of third-world countries. Incredibly, at the time of 9/11, only a handful of CIA officers could understand conversational Arabic.

We now face the Herculean task of producing a new generation of intelligence officers and diplomatic corps personnel with the discipline and self-sacrifice to match that of the American military. Until that new generation can be recruited and trained, our chances having a civilian intelligence agency capable of even finding the neck of the Hydra-headed monster are somewhere between slim and none.

About the Author: Syndicated columnist and featured commentator for USA Today, William Hamilton, is a member of the Association of Former Intelligence Officers. Writing as William Penn, he and his wife are the co-authors of The Grand Conspiracy and The Panama Conspiracy – two thrillers about terrorism directed against the United States.