Wednesday, November 30, 2011

Is Just One U.S. Representative Good For Brevard?

Under the current Florida Senate redistricting proposal, Brevard County would no longer be split into two congressional districts.  

Instead, Florida's Space Coast would be entirely in one congressional district along with Indian River County.

The proposed redistricting map is an attempt to both be in conformity with Florida redistricting amendments passed by voters last year which requires that voting districts follow continuous geographic boundaries, including county boundaries.

A single U.S. Representative for Brevard County will have important ramifications.  The Congressional seat will almost guarantee assignments to Congressional science, space, and defense-related committees.

Also, the new representative will be focused like a laser on the interests that really concern Brevard County voters which is the local economy. questioned the advocacy of current U.S. representatives Bill Posey and Sandy Adams for Brevard County in its articles titled,  'Do U.S. Reps. Posey and Adams Represent Brevard County Voters or Foreign Tax Cheats?' and 'Once Again, Posey and Adams Team Up in Defense of International Financial Fraudsters'.

The summary of those articles (posted below) is that both Representatives Posey and Adams wasted their time and political capital fighting for issues that do not concern the voters of Brevard County.  

Despite Financial Meltdown, Rep. Posey Fights for Less Regulation of Banks

Despite the total global financial meltdown caused by lack of oversight of banks and the resulting U.S. taxpayer bailout of U.S. and foreign banks, Rep. Bill Posey (R-FL) is fighting for less oversight of banks which he calls a "jobs killer." 

Rep. Posey issued the following press release:

Washington, Jul 8 - The House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit held a hearing today to consider legislative proposals to address the arbitrary and job-killing bank examination practices of federal bank regulators as applied to local community banks.

Central to the hearing was Congressman Bill Posey’s legislation to halt the recent trend of regulators arbitrarily requiring banks to classify good loans as bad loans resulting severe financial penalties for local banks. A serious consequence of this overreaction by federal regulators is fewer loans to small businesses and families across every community.

“It was clear from today’s hearing that the bank regulators are out of touch with what’s happening on Main Street and how these federal bank examiners are killing job creation across the nation,” said Posey “There is a total disconnect between what business leaders and community banks are experiencing across America and what Washington regulators say is actually happening. Bottom line is small businesses and entrepreneurs need reliable access to capital in order to expand and create jobs.”

The Common Sense Economic Recovery Act (H.R. 1723) would stop regulators from assigning performing loans to non-accrual status. This impairs the bank’s financial health, chokes their ability to lend and can lead them to foreclose on borrowers. The legislation would let banks treat a loan as a performing loan if it is 1) current, 2) no more than 30 days delinquent in last 6 months, 3) an amortizing loan, and 4) not funded through an interest reserve account. The bill also directs regulators to report to Congress ways to prevent contradictory guidance from the financial regulators. The bill would sunset two years after enactment. Posey’s bill currently has 41 cosponsors. 

Proposed Legislation Would Allow Banks To Cook Their Books (Even More)

Apparently, the prior change in accounting rules to myth-to-market, plus the purchase of 'toxic" assets by the Federal Reserve, TARP, Homebuyer Tax Credits, a near 0% discount rate, selective prosecution of REMICs' tax laws by the I.R.S., and the assumption of ninja loans by Fannie and Freddie are just not enough to satisfy the banks' balance sheets.
U.S. Rep. Bill Posey (R-FL) has issued a press release announcing the introduction of H.R. 1723 titled "The Common Sense Economic Recovery Act of 2011."  The press release and text of the bill are posted below this article.

Rep. Posey spins his bill by stating, "We’re trying to help homeowners, small business owners and our local community banks stay afloat....regulators should not force banks to foreclose on property owners asking for a modification or consider your loan to be in non-accrual status."  

Rep. Posey repeats the tired sales pitch that has been used to justify giving banks money hand-over-first for the last three years - that helping banks would help them lend to small business.  But data shows that banks are not lending more even after the industry benefited by over $1 trillion in the last three years thanks to Uncle Sam's policies and programs.

In reality, the proposed legislation would help big banks as well as 'local community banks' cook the books by allowing a different formula to be used to calculate the financial strength of a financial institution. Specifically, the bill would change the status of some mortgage loans from non-accrual to accrual status on banks' balance sheets. 

Posey's Legislation Would Hurt Seniors and Local Governments, Help Banks

On March 21, 2011, Congressman Bill Posey (R-Rockledge) announced in a press release that he is re-introducing the Senior Citizens Income Security Act of 2011 (H.R. 1140).  Rep. Posey's spin is that the proposed legislation would " senior citizens improve their economic well being..."

The devil, of course, is always in the details.  H.R. 1140 would make corporate bonds, certificate of deposits, savings account, and other private financial investments' interest on tax par with that of municipal bonds. 

Presently, local and state government bonds are issued at a lower interest rate because the after-tax-yield on municipal bonds receives a 28% (depending on the individual's tax bracket) premium than that of private investments. 

If Rep. Posey's proposed legislation was passed, there would be no such distinction which would result in banks LOWERING the interest rate paid on CDs, savings accounts, corporate bonds, etc.  

Meanwhile, local governments would have to RAISE the interest rate on their bonds in order to have a competitive yield.  This would increase borrowing costs for local governments that would then have to RAISE property taxes to compensate for the loss in their operating budgets.

Additionally, seniors with existing municipal bond fund investments would see a NET LOSS in their portfolios because the value of those existing municipal bonds would drop sharply. 

The entire text of the legislation can be found here.  An excerpt from H.R. 1140 is posted below:  

‘(a) In General- Gross income does not include the sum of amounts received during the taxable year by an individual as--
‘(1) dividends from a domestic corporation,
‘(2) interest, and
‘(3) capital gains.
‘(b) Limitation- The aggregate amount excluded under subsection (a) for any taxable year shall not exceed $250 ($500 in the case of a joint return), as identified by the taxpayer on the return of tax for such year.
‘(c) Interest- For purposes of this section, the term ‘interest’ means--
‘(1) interest on deposits with a bank (as defined in section 581),
‘(2) amounts (whether or not designated as interest) paid in respect of deposits, investment certificates, or withdrawable or repurchasable shares, by--
‘(A) a mutual savings bank, cooperative bank, domestic building and loan association, industrial loan association or bank, or credit union, or
‘(B) any other savings or thrift institution which is chartered and supervised under Federal or State law, the deposits or accounts in which are insured under Federal or State law or which are protected and guaranteed under State law,
‘(3) interest on--
‘(A) evidences of indebtedness (including bonds, debentures, notes, and certificates) issued by a domestic corporation in registered form, and
‘(B) to the extent provided in regulations prescribed by the Secretary, other evidences of indebtedness issued by a domestic corporation of a type offered by corporations to the public,
‘(4) interest on obligations of the United States, a State, or a political subdivision of a State (not excluded from gross income of the taxpayer under any other provision of law), and
‘(5) interest attributable to participation shares in a trust established and maintained by a corporation established pursuant to Federal law.