http://news.moneycentral.msn.com/…

Fannie Mae and Freddie Mac shares reached their lowest levels in almost two decades Monday after a Barron’s report said it is increasingly likely the government will have to bail out the mortgage giants.

“It may be curtains soon for the management and shareholders of beleaguered housing giants Fannie Mae and Freddie Mac,” wrote Barron’s Jonathan Laing, saying the Treasury Department is likely to recapitalize them in the months ahead.

“Such a move would almost certainly wipe out existing holders of the agencies’ common stock,” Laing wrote.

He also predicted a bailout would also mean losses for holders of the companies’ preferred shares and holders of their combined $19 billion in subordinated debt.

Fannie Mae stock fell as much as 17 percent Monday. Freddie Mac shares fell as much as 14 percent. Both stocks have lost more than 80 percent of their value this year.

Neither company issued public comments Monday on the Barron’s report. Both companies have previously said they are able to raise sufficient capital on their own. Treasury Secretary Henry Paulson earlier this month indicated a bailout would not be necessary.

The housing bill passed by Congress in July gave the Treasury authority to pump money into Fannie Mae and Freddie Mac by buying their stock, debt or mortgage-backed securities.

Fannie Mae (NYSE: FRE) and Freddie Mac (NYSE: FNM) reported a combined second quarter loss of $3.1 billion. Both companies also slashed their shareholder dividends this month.

I’d say they are their lowest levels ever. It’s difficult to say really because the stocks have both split twice in the past two decades but accounting for inflation alone today’s $4.05 for Freddie would have been $2.34 in 1989. That’s only accounting for inflation up to 2007. In January of 1989 Freddie was trading around $4.25.

http://www.fortbendnow.com/…

In the face of $4 per gallon gasoline and predictions the price will rise to $7 by the end of summer, Congressman Ron Paul (R-Lake Jackson) is calling on Congress to explore how the weakened value of the dollar may be contributing to the rise in oil prices.

Paul, whose 14th Congressional District of Texas includes part of the Katy area and much of Cinco Ranch, said he wants Congress to hold hearings on the relationship between the falling value of the dollar and the recent rise of oil prices.

As ranking member of the House Subcommittee on Domestic and International Monetary Policy, Paul sent a letter earlier this week to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services committee, asking for the hearings.

“The price of oil is currently among the most pressing issues to American workers,” Paul said. “Congress should be examining all factors contributing to the high cost of oil, and monetary policy is one of the key factors in the run-up in price.”

Paul’s letter pointed out that the price of oil in dollars has risen 39 percent this year. Oil in Euros has only risen 30 percent, resulting in degraded purchasing power of the dollar of at least 80 cents of the increased price of a gallon of gas.

“Neither the Federal Reserve nor the Treasury Department have been willing to take responsibility for the dollar’s slide over the past several years, while American consumers have been forced to pay continually higher prices for gasoline, heating oil and numerous other imported products upon which Americans depend,” Paul noted in his letter. “American consumers cannot afford to allow continued lax Congressional oversight of the Federal Reserve and the Treasury Department’s duties as stewards of the dollar, especially since the dollar is a major factor in the skyrocketing price of oil.”

Besides himself, 16 other Members of Congress signed on to the letter, including ranking member of the House Committee on Financial Services Spencer Bachus, and Chairman of the Republican Study Committee, Rep. Jeb Hensarling.

Hopefully DownsizeDC will get something going on this. If anything this could be an educational tool for those who would be participating. The more congress critters who understand economics, even a little bit, the better.

http://www.nytimes.com/…

The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades.

Democratic lawmakers are all but certain to say the proposal does not go far enough in restricting the kinds of practices that caused the financial crisis. Many of the proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation.

According to a summary provided by the administration, the plan would consolidate an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms.

While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.

More regulation, more centralization. Watch our economy continue it’s downward spiral and the D’s and R’s act as if they aren’t pushing us toward a centrally planned economy. It’s absolutely outrageous that they claim the current regulation “failed to recognize rampant excesses in mortgage lending.” Anyone with a preschool level of education in economics realized how absolutely screwed Wall Street was. Tying up all that capital in houses through people without the ability to pay? Lowering interest rates far below market level? The Federal Reserve and the Federal government facilitated this entire situation and now just like was done in 1907 and 1929 those in power will take advantage of the publics ignorance to further their agendas to increase their power and wealth at the expense of the rest of us.

http://www.lewrockwell.com/…

Before the Financial Services Committee, Subcommittee on Domestic and International Monetary Policy, Trade, and Technology, Hearing on HR 5512, March 11, 2008

Mr. Chairman,

I oppose HR 5512 because it is unconstitutional to delegate the determination of the metal content of our coinage to the Secretary of the Treasury. Under Article I Section 8 of the Constitution, the Congress is given the power to coin money and regulate the value thereof. It is a shame that Congress has already unconstitutionally delegated its coinage authority to the Treasury Department, but that is no reason to further delegate our power and essentially abdicate Congressional oversight as the passing of HR 5512 would do.

Oversight by members of Congress, who have an incentive to listen to their constituents, ensures openness and transparency. This bill would eliminate that process and delegate it to unelected bureaucrats. The Secretary of the Treasury would be given sole discretion to alter the metal content of coins, or even to create non-metal coins. Given the history of Congressional delegation and subsequent lax oversight on issues as important as the conflict in Iraq, it would be naïve to believe that Congress would exercise any more oversight over an issue as unimportant to most members as the composition of coins.

While I sympathize with the aim of Section 4 of this bill to save taxpayer dollars by minting steel pennies, it is disappointing that our currency has been so greatly devalued as to make this step necessary. At the time of the penny’s introduction, it actually had some purchasing power. Based on the price of gold, what one penny would have purchased in 1909 requires 47 cents today. It is no wonder then that few people nowadays would stoop to pick up any coin smaller than a quarter.

Congress’ unconstitutional delegation of monetary policy to the Federal Reserve and its reluctance to exercise oversight in that arena have led to a massive devaluation of the dollar. If we fail to end this devaluation, we will undoubtedly hold future hearings as the metal value of our coins continues to outstrip the face value.

HR 5512 is a sad commentary on how far we have fallen, not just since the days of the Founders, but only in the last 75 to 100 years. We could not maintain the gold standard nor the silver standard. We could not maintain the copper standard, and now we cannot even maintain the zinc standard. Paper money inevitably breeds inflation and destroys the value of the currency. That is the reason that this proposal is before us today.

I’m surprised we haven’t heard about people melting down pennies. They are worth like 50% over the face value.

http://www.cnn.com/…

Amir Khan says he becomes frustrated and humiliated every time he enters the United States and federal agents search his computers. Khan, a Pakistani-born U.S. citizen, says it has happened five times since 2003.

He says agents with U.S. Customs and Border Protection have even forced him to give them access to password-protected, confidential information from his company and his banking records.

An IT consultant who travels to Europe, Turkey and Pakistan, Khan says he has cooperated with the questions and searches but feels by now border agents should know he doesn’t pose a threat.

Situations for travelers such as Khan are at issue in a lawsuit filed last week by the Electronic Frontier Foundation and Asian Law Caucus in U.S. District Court for the Northern District of California.

The suit accuses customs agents of “lengthy questioning and intrusive searches” and seeks clarification on the law that allows such searches.

I’d really like to know which law overrides the 4th Amendment. Oh wait… none of them. So which part of the Constitution overrides the 4th Amendment? They don’t have the authority to regulate immigration. That’s a state issue. We however have allowed the general government to take on that authority and in doing so the Supreme Court in 1977 in US v. Ramsey ruled that Customs may search people without probable cause. I find the dissenting view far more convincing.

In 1971 the Department of the Treasury and the Post Office Department first asserted that Congress had granted such authority in an awkwardly drafted statute enacted in 1866. [431 U.S. 606, 626] Under the earlier practice, which had been consistently followed for 105 years, customs officials were not allowed to open foreign mail except in the presence, and with the consent, of the addressees, 1 unless of course a warrant supported by probable cause had been first obtained. There are five reasons why I am convinced that Congress did not authorize the kind of secret searches of private mail that the Executive here conducted.First, throughout our history Congress has respected the individual’s interest in private communication. The notion that private letters could be opened and inspected without notice to the sender or the addressee is abhorrent to the tradition of privacy and freedom to communicate protected by the Bill of Rights. I cannot believe that any member of the Congress would grant such authority without considering its constitutional implications.

Second, the legislative history of the 1866 statute unambiguously discloses that this very concern was voiced during debate by Senator Howe, and that he was assured by the sponsor of the legislation that the bill would not authorize the examination of the United States mails. This colloquy is too plain to be misunderstood:

“Mr. HOWE. The second and third sections of this bill speak of the seizure, search, and examination of all trunks, packages, and envelopes. It seems to me that language is broad enough to cover the United States mails. I suppose it is not the purpose of the bill to authorize the examination of the United States mails.

“Mr. MORRILL [sponsor of the bill]. Of course not.

“Mr. HOWE. I propose to offer an amendment to prevent such a construction.

“Mr. EDMUNDS. There is no danger of such a construction being placed upon this language. It is the language usually employed in these bills.

“Mr. HOWE. If gentlemen are perfectly confident that it will bear no such construction, and will receive no such construction, I do not care to press it.

“The PRESIDING OFFICER. The Senator from Wisconsin withdraws his amendment.”