Monthly Archives: May, 2023
Snapchat AI: How Artificial Intelligence’s Liberal Bias is Influencing Young Minds
The Tiffany Blueprint
Wisconsin Treasurer John Leiber Joins National Pushback on New Mortgage Fees
(The Center Square) – Pennsylvania Treasurer Stacy Garrity leads a coalition of state financial officials pushing back against new federal mortgage fees they call “unconscionable.”
“This new policy makes it more expensive for people with good credit to buy houses – and that’s absurd,” she said. “Americans who have built a good credit score and saved enough to make a strong down payment should not be penalized and forced to pay more on their mortgage every single month.”
The letter, sent Monday to President Joe Biden and Federal Housing Finance Agency Director Sandra L. Thompson, includes the signatures of 33 officials from 26 states – all of whom insist the administration should roll back the modified fee structure that applies to borrowers with more favorable credit profiles.
The new rates, which went into effect Monday, raise upfront fees for borrowers with credit scores over 680 and down payments between 15% and 20%. The extra money collected subsidizes buyers with less favorable finances – part of the administration’s strategy to make homeownership more accessible for borrowers with less wealth and upward mobility.
Only mortgages backed by Freddie Mac and Fannie Mae – which included more than half of home loans taken out in 2020 – will see the fee increase.
Garrity and other critics said the backward incentive boils down to a middle-class tax hike that takes “money away from the people who played by the rules and did things right.”
In multiple media reports, housing analysts say borrowers with better financial profiles still get lower interest rates and pay less overall compared to buyers with less favorable loan terms. The higher interest rates, smaller down payments, and added cost of mortgage insurance typically eclipse any savings on up front fees in a matter of years.
In the letter, the officials shared in the administration’s goal of increasing home ownership, but said “confiscating” the money from “hardworking, middle-class American families” and using it as a “handout” goes too far.
Instead, they want to see the federal government adopt policies to reduce inflation, cut energy costs and lower interest rates – all factors that would boost discretionary income and give people more leeway to save for a down payment.
BadgersVote: University of Wisconsin’s ‘Get Out the Liberal Vote’ Campaign
Assembly Speaker Robin Vos: Milwaukee Voters Will Decide Local Sales Tax Increase
(The Center Square) – If Milwaukee wants to raise its sales tax, it’s going to have to convince voters it’s the right thing to do.
Assembly Speaker Robin Vos was on UPFRONT over the weekend, and said there’s no appetite among Republicans at the Wisconsin Capitol to remove the referendum requirement for a Milwaukee and Milwaukee County sales tax increase from the new shared revenue proposal.
“I guess if there’s a counter-proposal, I’m always willing to take a look at it, but that’s certainly not where we are today,” Vos said.
Milwaukee’s mayor on Friday expressed a bit of frustration with the requirement that Milwaukee and Milwaukee County get voter approval before raising taxes.
“That’s why I said there are some disagreements. And some areas where there is still an opportunity to work on this,” Mayor Cavalier Johnson said.
Republican leaders at the Statehouse have said for months that local governments should go to local voters in order to raise taxes.
Vos, on UPFRONT, said that’s how most communities in Wisconsin get the things they need.
“That’s no different than what it is for most municipalities around the state when they go and ask permission to increase their levy for police or try to build a new school,” Vos said.
He did, however, acknowledge that the vote could fail.
“It’s certainly a possibility, which would be catastrophic for the city,” Vos said.
Milwaukee County Executive David Crowley was also on UPFRONT over the weekend.
He said if there is going to have to be a vote to raise taxes in Milwaukee County, he’d like to see it happen as soon as possible.
“It’s going to take a lot of education, as far as where we are and what we’ve done to help lower many of the costs that we have, but also what we need moving forward,” Crowley said. “We have to put it on the ballot rather quickly. At the end of the day, we want to make sure we can start collecting these revenues as quickly as possible.”
If voters would approve, the city of Milwaukee would be able to increase its sales tax up to 2%. Milwaukee County would be able to add 0.375% to its sales tax.
The Milwaukee and Milwaukee County taxes are just part of a half-billion dollar proposal to send more state money to local governments across Wisconsin.
Vos said the legislation on the plan, which will include more specifics, should be finalized sometime this week.
Is JP Morgan’s Purchase of Failed Bank From FDIC a Government Bailout?
The FDIC took over the embattled San Francisco bank, First Republic, and auctioned it off, with JP Morgan taking over as regulators hope to fend off a domino effect in the banking sector.
“Our government invited us and others to step up, and we did,” Jamie Dimon, chairman and CEO of JPMorgan Chase said in a statement after the purchase.
But critics point out that JP Morgan profits sizeably off the deal and argue it amounts to a government bailout.
First Republic’s collapse is the biggest bank failure since the 2008 financial crisis, when the federal government bailed out banks with billions of taxpayer dollars. In this new deal, JP Morgan took on about $92 billion in First Republic’s deposits and another roughly $203 billion in assets.
“JPM is paying about $10.6 billion, but is getting $13 billion from the FDIC, or in other words, we the taxpayer,” E.J. Antoni, an economic expert at the Heritage Foundation, said. "That means JPM already booked a profit on the deal. Another $50 billion is available from the FDIC to JPM if losses from First Republic’s assets continue to mount. To cover the existing and any future losses, the FDIC will levy a ‘special assessment’ on banks that is passed to customers.”
Dimon admitted his company “modestly benefits” in the deal.
“The service JPM is providing here is to provide a massive amount of liquidity to meet depositor’s demands,” Antoni said. “That will prevent the sale of some $30 billion in securities that First Republic had which have lost value, if sold today. If held to maturity, however, those securities will still pay their anticipated rate of return."
Other experts say comparing this to a traditional bank bailout goes too far and emphasize that stabilizing the banking sector was necessary for the sake of the broader economy. First Republic is the third U.S. bank to fail since March of this year.
Notably, the FDIC is funded by insurance premiums paid by banks, not by Congressional appropriations.
“I would not call this a bailout,” Gary Wolfram, an economics professor at Hillsdale College, told The Center Square. “It is an attempt to stabilize the banking system. The reason the FDIC was created nearly 90 years ago was to guard against ‘runs’ on banks. Individual banks hold only a fraction of their deposits on reserve with the Fed, and if we all went in to get our money you have the scene from the Jimmy Stewart movie, 'It’s a Wonderful Life.'
“While J.P. Morgan may benefit, it is taking on $92 billion in deposits that were in First Republic (as well as the loans and securities) and it is large enough that people will probably not withdraw their deposits for fear that J.P. Morgan will fail,” he added.
Antoni argues taxpayers will still foot the bill.
“The FDIC levies fees on banks which are passed on to customers. Anything, like an overdraft fee, contributes to this,” he said. “The interest rate on a loan will be slightly higher and the interest rate you get paid on your savings account will be slightly lower. This functions like a particularly regressive tax because low-income people are much more likely to pay things like overdraft fees. However, the FDIC also has an existing line of credit with the Treasury of $100 billion. Tapping into that costs the taxpayer. Additionally, when the FDIC has really gotten into trouble in the past, the Treasury has not only expanded that line of credit but simply paid for outstanding FDIC bills, meaning those dollars were never repaid.”
While calling this a bailout is up for debate, the federal government is taking the blame for fueling inflation and then hiking interest rates to compensate for inflation, which is what has put the strain on the banking sector.
“The Fed is offering an alternative to the FDIC guaranteeing all deposits as it did with the other two banks,” Wolfram said. “It is following the Swiss authorities actions with Credit Suisee. The recent swift and large increase in interest rates by the Fed resulted in a sudden decrease in the value of bond holdings of banks, such as Silicon Valley, and now it is trying to deal with the result of this. This is complicated by the massive deficits of the federal government and the Fed’s attempts to deal with inflation caused by the massive increase in the money supply (a 40% increase in M2 that started in March 2020).”