Tuesday, August 31, 2010
RIYADH (AFP) – A group of Saudis has launched a video plea to US President Barack Obama to free a Saudi man sentenced to 28 years in jail in Colorado for abusing an Indonesian housemaid.
The five-minute video, in Arabic with English subtitles, was made public on Monday.
It features conservative and liberal Saudi figures asking Obama to pardon Humaidan al-Turki, who was convicted by a Colorado court in 2006 for imprisoning and sexually abusing the maid while he was a doctoral student.
They cite numerous pardons by US presidents of men convicted of ostensibly more serious crimes, such as arms and drug smuggling.
"We, as the Saudi public, ask Obama to look at Humaidan al-Turki's issue, using the same eyes" that previous presidents used in granting pardons, it says.
The campaign comes in the wake of a US Supreme Court rejection in April of Turki's appeal.
The case and the stiff sentence angered many Saudis, who supported Turki's argument that he was being victimised in the anti-Muslim atmosphere in the United States in the wake of the September 11, 2001 attacks.
But the Colorado appeals court and state supreme court rejected that, upholding the conviction on 15 counts of enslaving and not paying the maid and sexually abusing her.
Asim al-Ghamdi, one of the ivdeo's makers, said they want to build a Saudi and pan-Arab campaign before directly approaching US officials.
"The first step is sharing it through the new media, like Facebook," he said.
The video features Turki's daughter, conservative cleric Sheikh Salman al-Ouda and progressive writer and journalist Turki al-Dhakil, among others.
In the 18 hours since the video was first made public on YouTube, it was viewed more than 100,000 times, Ghamdi said.
"All of the Saudi people know (Humaidan) very well. He is a very straight person."
"We will not argue on whether he did this," Ghamdi said of the charges on which he was convicted.
"Even if he did all of these things, we think 28 years is too much."
The case has been raised by Saudi officials in several exchanges with US counterparts, but to no avail.
Colorado Attorney General John Suthers travelled to Riyadh in December 2006 to explain the original convictions to Saudi officials.
A US embassy official in Riyadh referred queries on the case and the new video petition to the White House.
Behind the anger over the Arizona immigration mess, the Ground Zero mosque, the economy, and the new directions in foreign policy are some recurring general themes that reverberate in each particular new controversy. In sum, they explain everything from the tea parties to the wholly negative perception of Congress to the slide in presidential popularity.
1. Two sets of rules. The public senses there are two standards in America — one for elite overseers, quite another for the supposedly not-to-be-trusted public. The anger over this hypocrisy surfaces over matters from the trivial to the profound. Sometimes the pique arises because the spread-the-wealth, we-all-have-skin-in-shared-sacrifice presidential sermons don’t apply to those who do the preaching, as in the president’s serial polo-shirted golf excursions or Michelle’s movable feast from Marbella to Martha’s Vineyard.
More profoundly, an Al Gore, a Timothy Geithner, a John Kerry, a John Edwards, a Charles Rangel — the luminaries who call for bigger government, higher taxes, and more green coercion — now appear to the public as disingenuous, living lives in abject contradiction to the utopian bromides they would apply to others. So too with the media. The opinion makers at a failing New York Times, Newsweek, or CBS lost readers and viewers not just because of changing technologies, but because of incessant editorializing in which the educated and affluent, the winners in our system, berated the less educated and less well off, the strugglers in our system, as bigoted or selfish or both.
How, for example, can Americans be asked to pay higher power bills in a recession to subsidize wind power, when the green Kennedy clan worries about windmills marring its vacation-spot view?
2. The bigot card. In reductionist terms, the public now accepts that when particular groups fail to win a 51 percent majority on a particular issue, they resort to invoking racism and prejudice — odd, when candidate Obama promised a new climate of unity and tolerance. Moreover, that disturbing trend has something to do with the president himself, who has injected racial grievance into everything from the Skip Gates controversy to the debate over the Arizona immigration law.
When the open-borders interests, or the gay-marriage advocates, or the adherents of the Ground Zero mosque cannot convince a majority of Americans that their agenda bodes well for the country, they almost instinctively fall back on the charge that America is xenophobic, homophobic, or Islamophobic. Yet the public infers that these charges reflect sour grapes rather than honest analysis: Had Arizona legislators or California voters supported the progressive agenda, then, as with the 2008 Obama victory, they would have been praised in Newsweek and on NPR for their moral sense and compassion. In short, the bigot card has played itself out and is now not much more than a political ploy to win an argument through calumny when logic and persuasion have failed.
3. The law? What law? Americans accept that they cannot pass legislation in violation of the Constitution. But they do not believe that a single judge can nullify the electoral will of millions without good cause. Thus in Arizona and California, there is a sense that judges who favor open borders or gay marriage are willing to use the pretense of constitutional issues to enact such agendas despite their current unpopularity. In a general landscape in which contractual obligations are nullified, as in the Chrysler bailout, and punitive fines are imposed quite arbitrarily, as in the BP cleanup, many believe the Obama administration applies the law in terms of perceived social utility. What is deemed best for the country by an elite few is what the law must be molded and changed to advance.
If there are, for example, not sufficient votes in the Congress to pass amnesty through legislative means, why not bypass federal law through a cabinet officer’s executive fiat?
The rest here.
The Washington Post has suspended veteran sports columnist Mike Wise for publishing fabricated information on Twitter. Heannounced the one-month suspension on his radio show Tuesday.
Wise claimed Monday that he wanted to prove a point about how reporters will run stories in today's fast-moving news environment without independently verifying the information. So Wise tweeted that Pittsburgh Steelers star Ben Roethlisberger, who has been accused of sexually assaulting a Georgia college student, would get a five-game suspension. Of course, since Wise is a respected sportswriter, other news outlets went with the apparent scoop and cited his reporting.
These days, reporters routinely break news on Twitter, only to follow up on blogs, in newspapers or on the air. Understandably, Wise encountered a backlash from his peers, and the Post's sports editor responded by re-circulating among his staff the paper's guidelines on correctly using social media.
Wise wrote on Twitter after the incident that he's "an idiot" and offered "apologies to all involved." But the columnist still didn't appear to grasp just why Twitter users (including other journalists) assume respected journalists are publishing accurate information on the medium. "I was right about nobody checking facts or sourcing," he added along with Monday's apology.
However, Wise acknowledged on his radio show Tuesday he "made a horrendous mistake" and that the hoax cost him some of his "own credibility."
The Post would not confirm Wise's suspension. "We take these matters very seriously; however, we do not discuss personnel issues," a spokeswoman told The Upshot.
Monday, August 30, 2010
Across America, pumps at gas stations are emblazoned with the words, "Contains 10% Ethanol." That's no free market innovation. Since the 1970s, the federal government has heavily subsidized the production of "gasohol"--a blend of 90% gasoline and 10% ethanol that reduces tailpipe emissions. For decades, progressive politicians and environmental groups have revered ethanol as a miracle additive that will help purify America's air. "No country has ever gone to war over ethanol," reads one sign on the Washington, D.C. Metro subway.
There's just one problem: Ethanol fuel is wildly inefficient. The amount of corn required to soak the fuel supply is massive. To shift America's car culture entirely from gasoline to gasohol would require 700,000 square miles of land growing corn exclusively for ethanol production. That would mean converting one-fifth of the United States into a sprawling corn farm.
Then again, the government never found a green boondoggle it didn't love. For five years now, Congress has been mandating that the fuel supply be diluted with ethanol. The Energy Policy Act of 2005 required 7.5 billion gallons of ethanol in the fuel supply by 2012. A Democratic Congress went a step further in 2007, mandating 9 billion gallons by 2008, 15.2 billion by 2012, and 36 billion by 2022.
Unfortunately, that whole Economics 101, supply-and-demand thing got in the way. The maximum amount of ethanol that can be produced to meet demand, called the "blend wall," is expected to level out at 15 billion. That will make it impossible to meet the government's mandates.
The agriculture industry, represented primarily by Archer Daniels Midland and Growth Energy, spied an opportunity. Why not increase the legal gasohol concentration from 10% ethanol to 12% or even 15%? That would immediately ignite ethanol production and allow the government to meet its mandate. More importantly, it would make Big Agriculture some serious money.
The EPA looked ready to raise the limit until science finally intervened. A study surfaced by the National Renewable Energy Laboratory from 2008 that found E15 ethanol caused a raft of problems in cars, including a loss of fuel economy and spikes in exhaust temperatures. Meanwhile the higher concentration of ethanol did nothing to reduce tailpipe emissions. The study also found problems when E15 fuel was used in lawn trimmers.
The car industry exploded in outrage. Most car warranties only cover E10, which could leave customers stuck with hefty bills if their engines were damaged. A study done by the Alliance of Automobile Manufacturers found E15 "made engines run hot, compromised catalytic converters, and even damaged cylinder walls."
To its credit, the EPA ultimately delayed its decision in order to review the science. But in the meantime they'll have an army of powerful agricultural lobbyists leaning on them. Even supported by its scaffolding of government subsidies and mandates, the ethanol industry is collapsing. The recession shuttered several ethanol companies. Others were gobbled up by oil giants at bargain prices. Some estimates suggest ethanol producers are losing 10 cents on every gallon of gasoline. This is all despite the fact that 25% of corn grown in the United States goes towards ethanol production.
The agricultural industry needs E15. And if history is any indication, it'll probably get what it wants.
Read the whole thing here.
NICE's headcount has already jumped from 297 to 390 in the year to April 2010.
Now internal documents reveal it plans to increase it to 461.
The report from the charity Age UK found almost one in three nurses believes their own relative could enter hospital with nobody noticing they were malnourished.
The charity found instances of food trays left out of reach of patients while those at risk of choking were not given puréed food.
The charity has also heard of elderly people receiving no help with cutting food into smaller pieces or opening lids on containers.
Food trays are also sometimes taken away untouched without any questions, according to the report.
Patient groups and opposition politicians said an inquiry was needed to end rising "ageism" where elderly patients are entering hospital malnourished and getting worse under the care of NHS staff.
And campaigners called on the health secretary Nicola Sturgeon to personally investigate reports of "criminal" elderly malnutrition on NHS wards.
Margaret Watt, chairwoman of the Scotland Patients Association, said: "We would ask the health minister to have a look and do an independent inquiry and find out how many are dying from malnutrition.
"It's criminal that people are not being attended to. It smacks of ageism that patients are not being treated by some staff properly.
"Nobody in this day and age should die of malnurishment or suffer from it while in hospital. And if we are allowing that, then we should be charged with negligence.
"It's up to us, morally, to make sure these things don't happen."
Labour's health spokeswoman Jackie Baillie said: "Nobody in Scotland should die from malnutrition. The conclusions of this report are deeply concerning and I would add my own voice to calls for ministers to launch an urgent investigation to see what can be done."
The report found fewer than half of hospitals screen older patients for malnutrition on admission and only a third screen patients during their stay.
Just 5 per cent screen on discharge, despite evidence showing good nutrition both in and out of hospital helps people get better.
The report found many hospitals are largely ignoring guidelines which say people should be screened.
The accompanying survey of 1,000 nurses found fewer than half thought their workplace screens older patients often enough.
According to 71 per cent of nurses this is due to a lack of time, other priorities and training.
Ms Watt said a patient recently approached the association reporting her experience awaiting a hip operation.
"They aimed at the bad actors and they wound up scoring a direct hit on schools that service low-income students," Mr. Graham said in an interview. "That cannot be what the Obama administration wants."
The proposal in anything like its current form will be a major blow, according to executives in the sector. Earlier this month, Craig Huber, a senior analyst at Access 342, an independent stock-research company, lowered his revenue estimate for Kaplan's higher-education unit for the next three years to annual declines of 5% to 7.5% instead of annual growth of 4% to 7.5%.
He's the religious leader of the planned, controversial Ground Zero mosque -- but across the Hudson, Imam Feisal Abdul Rauf is known as an alleged slumlord.
At buildings in Union City and Palisades Park, where Rauf reportedly got tax dollars to renovate low-income apartments, tenants yesterday said their gripes about their lousy housing conditions have been ignored.
PHOENIX – Arizona Gov. Jan Brewer demanded Friday that a reference to the state's controversial immigration law be removed from a State Department report to the United Nations' human rights commissioner.
The U.S. included its legal challenge to the law on a list of ways the federal government is protecting human rights.
In a letter to Secretary of State Hillary Clinton, Brewer says it is "downright offensive" that a state law would be included in the report, which was drafted as part of a UN review of human rights in all member nations every four years.
"The idea of our own American government submitting the duly enacted laws of a state of the United States to 'review' by the United Nations is internationalism run amok and unconstitutional," Brewer wrote.
Arizona's law generally requires police officer enforcing other laws to investigate the immigration status of people they suspect are illegal immigrants.
Critics say it would lead officers to target Hispanics. Supporters, including Brewer, say the law prohibits racial profiling and other human rights abuses.
The U.S. Justice Department sued to block the measure, arguing federal law trumps the state's authority to enforce immigration laws.
A federal judge in July sided with the Justice Department and blocked enforcement of the law's most controversial provisions a day before it was scheduled to take effect.
In its report, the State Department does not specifically allege that Arizona's law would lead to racial profiling.
"A recent Arizona law, S.B. 1070, has generated significant attention and debate at home and around the world," the report says. "The issue is being addressed in a court action that argues that the federal government has the authority to set and enforce immigration law. That action is ongoing; parts of the law are currently enjoined."
A State Department spokesman had no immediate comment on Brewer's letter.
Brewer, a Republican, is running for election in November. Her popularity in Arizona and her national profile have soared since she signed the immigration measure in April
If you think it's offensive for a Muslim group to exploit the 9/11 atrocity, you're an anti-Muslim bigot and un-American to boot. It is a claim so bizarre, so twisted, so utterly at odds with common sense that it's hard to believe anyone would assert it except as some sort of dark joke. Yet for the past few weeks, it has been put forward, apparently in all seriousness, by those who fancy themselves America's best and brightest, from the mayor of New York all the way down to Peter Beinart.
What accounts for this madness? Charles Krauthammer notes a pattern:
Promiscuous charges of bigotry are precisely how our current rulers and their vast media auxiliary react to an obstreperous citizenry that insists on incorrect thinking.Krauthammer portrays this as a cynical game: "Note what connects these issues. In every one, liberals have lost the argument in the court of public opinion. . . . What's a liberal to do? Pull out the bigotry charge, the trump that preempts debate and gives no credit to the seriousness and substance of the contrary argument."
-- Resistance to the vast expansion of government power, intrusiveness and debt, as represented by the Tea Party movement? Why, racist resentment toward a black president.
-- Disgust and alarm with the federal government's unwillingness to curb illegal immigration, as crystallized in the Arizona law? Nativism.
-- Opposition to the most radical redefinition of marriage in human history, as expressed in Proposition 8 in California? Homophobia.
-- Opposition to a 15-story Islamic center and mosque near Ground Zero? Islamophobia.
Now we know why the country has become "ungovernable," last year's excuse for the Democrats' failure of governance: Who can possibly govern a nation of racist, nativist, homophobic Islamophobes?
But this has its limits as a political strategy. Krauthammer writes that "the Democrats are going to get beaten badly in November," and no one will credit him for boldness in that prediction. Some may disagree with his reckoning as to the reason for that likely loss: that "a comeuppance is due the arrogant elites whose undisguised contempt for the great unwashed prevents them from conceding a modicum of serious thought to those who dare oppose them."
But can anyone argue that a show of contempt is a winning political strategy? The question answers itself and implies that the contempt is genuine.
What is the nature of this contempt? In part it is the snobbery of the cognitive elite, exemplified by a recent New York Times Web column by Timothy Egan called "Building a Nation of Know-Nothings"--or by the viciousness directed at Sarah Palin, whose folksy demeanor and state-college background seem terribly déclassé not just to liberals but to a good number of conservatives in places like New York City.
In more cerebral moments, the elitists of the left invoke a kind of Marxism Lite to explain away opinions and values that run counter to their own. Thus Barack Obama's notorious remark to the effect that economic deprivation embitters the proles, so that they cling to guns and religion. (Ironically, Obama recently said through a spokesman that he is Christian.) Here's Robert Reich, Bill Clinton's labor secretary, explaining "The Anatomy of Intolerance" to readers of TalkingPointsMemo.com:
Many Americans (and politicians who [sic] the polls) don't want a mosque at Manhattan's Ground Zero. . . .
Where is all this coming from?
It's called fear. When people are deeply anxious about holding on to their homes, their jobs, and their savings, they look for someone to blame. And all too often they find it in "the other"--in people who look or act differently, who come from foreign lands, who have what seem to be strange religions, who cross our borders illegally. . . .
Economic fear is the handmaiden of intolerance. It's used by demagogues who redirect the fear and anger toward people and groups who aren't really to blame but are easy scapegoats.
So if some Americans are afraid of people "who have what seem to be strange religions," it must be a totally irrational reaction to "economic insecurity." It couldn't possibly have anything to do with an act of mass murder committed in the name of the religion in question.
And Reich doesn't just fail to see the obvious. He dehumanizes his fellow Americans by treating their values, feelings and opinions as no more than reflexive reactions to material conditions. Americans in fact are a very tolerant people. Even in the immediate aftermath of 9/11, there was no serious backlash against Muslims. What makes them angry--what makes us angry--is the bigotry of the elites.
The Ground Zero mosque is an affront to the sensibilities of ordinary Americans. "The center's association with 9/11 is intentional and its location is no geographic coincidence," as the Associated Press has reported. That Americans would find this offensive is a matter of simple common sense. The liberal elites cannot comprehend common sense, and, incredibly, they think that's a virtue. After all, common sense is so common.
The British philosopher Roger Scruton has coined a term to describe this attitude: oikophobia. Xenophobia is fear of the alien; oikophobia is fear of the familiar: "the disposition, in any conflict, to side with 'them' against 'us', and the felt need to denigrate the customs, culture and institutions that are identifiably 'ours.' " What a perfect description of the pro-mosque left.
Scruton was writing in 2004, and his focus was on Britain and Europe, not America. But his warning about the danger of oikophobes--whom he amusingly dubs "oiks"--is very pertinent on this side of the Atlantic today, and it illuminates how what are sometimes dismissed as mere matters of "culture" tie in with economic and social policy:
The oik repudiates national loyalties and defines his goals and ideals against the nation, promoting transnational institutions over national governments, accepting and endorsing laws that are imposed on us from on high by the EU or the UN, though without troubling to consider Terence's question, and defining his political vision in terms of universal values that have been purified of all reference to the particular attachments of a real historical community.
The oik is, in his own eyes, a defender of enlightened universalism against local chauvinism. And it is the rise of the oik that has led to the growing crisis of legitimacy in the nation states of Europe. For we are seeing a massive expansion of the legislative burden on the people of Europe, and a relentless assault on the only loyalties that would enable them voluntarily to bear it. The explosive effect of this has already been felt in Holland and France. It will be felt soon everywhere, and the result may not be what the oiks expect.
There is one important difference between the American oik and his European counterpart. American patriotism is not a blood-and-soil nationalism but an allegiance to a country based in an idea of enlightened universalism. Thus our oiks masquerade as--and may even believe themselves to be--superpatriots, more loyal to American principles than the vast majority of Americans, whom they denounce as "un-American" for feeling an attachment to their actual country as opposed to a collection of abstractions.
Yet the oiks' vision of themselves as an intellectual aristocracy violates the first American principle ever articulated: "We hold these truths to be self-evident, that all men are created equal . . ."
This cannot be reconciled with the elitist notion that most men are economically insecure bitter clinging intolerant bigots who need to be governed by an educated elite. Marxism Lite is not only false; it is, according to the American creed, self-evidently false. That is why the liberal elite finds Americans revolting.
INCREDIBLY WELL BY A YOUNG PERSON, A STUDENT!
Dear American liberals, leftists, social progressives, socialists, Marxists
and Obama supporters, et al:
We have stuck together since the late 1950's for the sake of the kids,
but the whole of this latest election process has made me realize that I
want a divorce. I know we tolerated each other for many years for the sake
of future generations, but sadly, this relationship has clearly run its
Our two ideological sides of America cannot and will not ever agree on
what is right for us all, so let's just end it on friendly terms. We can
smile and chalk it up to irreconcilable differences and go our own way.
Here is a model separation agreement:
Our two groups can equitably divide up the country by landmass each
taking a similar portion. That will be the difficult part, but I am sure
our two sides can come to a friendly agreement. After that, it should be
relatively easy! Our respective representatives can effortlessly divide
other assets since both sides have such distinct and disparate tastes.
We don't like redistributive taxes so you can keep them. You are
welcome to the liberal judges and the ACLU. Since you hate guns and war,
we'll take our firearms, the cops, the NRA and the military. We'll take the
nasty, smelly oil industry and you can go with wind, solar and biodiesel.
You can keep Oprah, Michael Moore and Rosie O'Donnell. You are, however,
responsible for finding a bio-diesel vehicle big enough to move all three of
We'll keep capitalism, greedy corporations, pharmaceutical companies,
Wal-Mart and Wall Street. You can have your beloved lifelong welfare
dwellers, food stamps, homeless, homeboys, hippies, druggies and illegal
aliens. We'll keep the hot Alaskan hockey moms, greedy CEO's and rednecks.
We'll keep the Bibles and give you NBC and Hollywood.
You can make nice with Iran and Palestine and we'll retain the right
to invade and hammer places that threaten us. You can have the peaceniks
and war protesters. When our allies or our way of life are under assault,
we'll help provide them security.
We'll keep our Judeo-Christian values. You are welcome to Islam,
Scientology, Humanism, political correctness and Shirley McClain. You can
also have the U.N. but we will no longer be paying the bill.
We'll keep the SUV's, pickup trucks and oversized luxury cars. You can
take every Subaru station wagon you can find.
You can give everyone healthcare if you can find any practicing
doctors. We'll continue to believe healthcare is a luxury and not a right.
We'll keep "The Battle Hymn of the Republic" and "The National Anthem." I'm
sure you'll be happy to substitute "Imagine", "I'd Like to Teach the World
to Sing", "Kum Ba Ya" or "We Are the World".
We'll practice trickle down economics and you can continue to give
trickle up poverty your best shot.
Since it often so offends you, we'll keep our history, our name and
Would you agree to this? If so, please pass it along to other
like-minded liberal and conservative patriots and if you do not agree, just
hit delete. In the spirit of friendly parting, I'll bet you answer which one
of us will need whose help in 15 years.
John J. Wall
Law Student and an American
P. S. Also, please take Ted Turner, Sean Penn, Martin Sheen, Barbra
Streisand, & Jane Fonda with you.
P. S. S. And you won't have to press 1 for English when you call our
Sunday, August 29, 2010
Ex-employees and others describe a fiefdom of abuse under Carl Greene.
Saturday, August 28, 2010
Hey, lady the government started the sub prime mess. Your friends insisted that people who have no business having a substantial home loan got one anyway. It's your education system that has eliminated any sort basic home finance education from the schools choosing instead to teach cucumber clothing. If they're dumb it's your fault.
Along The Flaming Paper Trail Of Crusader Elizabeth Warren
By ALAN REYNOLDS
Out to protect "uninformed" and "irrational" financial consumers — from themselves. AP View Enlarged Image
The Consumer Financial Protection Agency is the new kid on the block, a stranger among many agencies regulating financial institutions. The new kid has an agreeable name, but may turn out to be a bothersome nanny or the school bully.
The CFPA is the brainchild of Elizabeth Warren, Harvard law professor, author and head of a TARP oversight panel. She is obviously eager to run the agency and, as a Washington Post article noted, "has received fervent backing from consumer advocates, labor unions, academics and scores of Democratic lawmakers. ... If Obama doesn't choose her, he risks infuriating his already-agitated liberal supporters."
Mother Jones added that "progressive groups" like MoveOn.org have "organized petitions and endorsement statements on her behalf."
All this liberal fervor and well-funded agitation looks suspicious. Why do liberals talk, write and petition as if it would make such a huge difference if one person rather than another ran this supposedly kind and gentle new agency? What do they know that you don't?
Warren's writing about the mission of the CFPA provides a preview of what she might try to do with that agency's capricious power. Her most serious effort to promote a CFPA appeared in a rambling 100-page article in the November 2008 Pennsylvania Law Review, "Making Credit Safer." Although it was co-authored with Oren Bar-Gill of New York University, it simplifies things to refer to it as Warren's paper.
Her thesis is that "many consumers are uninformed and irrational," so they need to be protected from themselves. For example, "over half of all African-American and Hispanic borrowers" suffer from "mis placed trust in lenders and mortgage brokers."
Warren cites a newspaper article that suggested mortgage brokers steered borrowers toward subprime loans to collect kickbacks. A few pages later, borrowers are said to be irrational because of a survey that "revealed a significant bias against mortgages generated by brokers."
How dumb are we? Well, says Warren, "Many consumers do not know their credit scores." Count me among those irrational consumers. I vet yearly credit reports for errors, but do not pay the fee to see my scores.
Warren finds it irrational that "a majority of consumers who accepted a credit card offer featuring a low introductory rate did not switch out to a new card with a new introductory rate after the expiration of the introductory period," and then keep switching cards again and again. Such an endless flood of new credit application would, of course, threaten those credit scores.
Warren has repeatedly argued that the "most striking" evidence "that errors are prevalent" in the mortgage market is that "a substantial number of middle-income families (and even some upper-income families) with low default risk sign up for subprime loans. Because these families qualify for prime-rate loans, these data indicate a very costly mistake on the part of these middle-income borrowers."
This is the Warren Myth. Although Warren imagines "the evidence of prime consumers taking subprime loans is most striking," that was the first of "Ten Myths of the Subprime Crisis" debunked by economist Yuliya Demyanyk in a 2009 paper for the Federal Reserve Bank of Cleveland.
Contrary to Warren, Demyanyk explains that prime consumers taking subprime loans is not, in fact, "evidence ... that such borrowers must have been steered unfairly and sometimes fraudulently into the subprime market." What the Warren Myth fails to grasp is that "subprime mortgages are defined in a number of ways — not just by the credit quality of borrowers."
"A loan can be labeled subprime," Demyanyk notes, "because of the type of lender that originated it, features of the mortgage product itself or how it was securitized." Some types of mortgages were automatically labeled subprime, for example, such as "2/28 hybrids" that in 2005 started with average rates of 7.5% for two years but switched to an adjustable rate.
Many mortgages were also securitized into pools that defined risk differently, so a borrower with a high credit score but a low down payment could easily end up within a pool that became defined as consisting primarily of subprime loans — not of subprime borrowers (as gauged by credit scores).
Warren depicts all borrowers as innocent victims. She even includes the "liar's loan" as an example of "innovations that have exploited consumers' imperfect understanding of complex credit products."
Many borrowers who chose low-down-payment subprime loans in 2004-06 were spendthrifts who refinanced into larger mortgages in order to cash out equity and get more cash. The average down payment on subprime loans in 2006 was only 6%, according to the Dallas Fed, compared with 12% for near-prime loans.
Nearly all of those subprime loans were used for refinancing. The smaller the down payment or lower the documentation the higher the risk, which makes such loans worthy of a subprime designation regardless of the borrower's credit history. Speculators hoping to flip houses for a quick tax-free capital gain likewise had a powerful incentive to minimize down payments.
Warren offers a bizarre explanation of the foreclosure crisis. She thinks "the high rate of foreclosures in the subprime market suggests that not all consumers knowingly assumed such a high risk of foreclosure."
What happened is that many who knowingly became overleveraged did not expect to lose their job, or to see house prices collapse, or both.
Warren finds more proof of consumer stupidity from a survey finding "30% of Americans did not know what the letters 'APR' stand for." But most Americans, including blacks and Hispanics, can tell the difference between one year and two weeks.
Warren, by contrast, converts a $30 fee for a two-week $200 loan into "an annual interest rate of almost 400%." That would be true if anyone kept rolling it over all year, as some do with credit cards. In reality, borrowers understand they're paying 15% to get $100-500 a couple of weeks early. That can be cheaper than a bounced-check fee.
Warren says "paying a 400% interest rate ... is very difficult to rationalize when the borrower can draw on substantial liquid assets." The study she cites, however, is not about liquid assets, but about "$1,000 of credit card liquidity."
When it comes to credit cards, though, Warren finds "further evidence of seemingly irrational consumer behavior. The most striking data show that ... more than 90% of consumers with credit card debt have some very liquid assets in checking and savings accounts."
It is rarely prudent to empty your checking and savings accounts to pay off one bill out of many. Warren nonetheless finds it striking that "one-third of credit card borrowers hold more than one month's income in these liquid assets." Investment advisers suggest keeping enough cash on hand to cover three to six months of expenses.
What does Warren dream of doing with all the power that Congress has so capriciously bestowed on this new agency? She would most like to impose national usury laws.
Prior to a 1978 Supreme Court ruling, Warren notes, "The linchpin of consumer credit regulation was usury law. ... (State) usury laws regulated credit by imposing a cap on the interest rate that any lender could charge." Today, however, "any lender with a federal bank charter can locate its operations in a state with high usury rates (e.g., South Dakota or Delaware) and then export that interest rate to customers located anywhere else in the country."
Any economist will tell you that ceilings on interest rates would simply ration-out all but the most creditworthy borrowers, particularly hurting young people and business startups. But Warren is no economist. She's no investment adviser either.
Warren's writing about consumer irrationality in the markets for mortgages, credit cards and payday loans displays massive misinformation and unwarranted hubris. Her nostalgia about usury laws is economically illiterate and potentially disastrous.
The Financial Reform Act was commonly described as "rewriting the rules" of lending. But it was mostly about delegating vast new discretionary powers to regulators who can later make up rules by whim and enforce them with stiff penalties.
Nobody doubts Warren's personal charm or missionary zeal, but her qualifications and competence merit a much closer look.
• Reynolds is a senior fellow with the Cato Institute, and author of "Income and Wealth."