James Grant, editor of Grant’s Interest Rate Observer, talks about the overhaul of U.S. financial regulation and says we are on the road to Socialization of Credit.
Grant also discusses Federal Reserve monetary policy.
Federal Guarantees for Small Auto Dealer Floorplan Loans
Inquiring minds are reading Bill aimed at giving auto dealers more credit is signed into law
The federal government is keeping up its effort to stimulate the economy, while the economy is keeping up its resistance to those efforts. The latest effort to prod spending comes in a bill that, among other things, increases the federal guarantee for small dealer floorplan loans from the Small Business Administration from $2 million to $5 million. Part of the bill would also reinstate fee waivers that ran out in May, meaning loan applicants could save more than $50,000 in fess alone on a $2 million loan.
The bill passed the House and Senate along party lines and President Obama signed it into law yesterday afternoon. This is expected to be the last jobs bill to leave Congress before the midterm elections in November.
We have already seen Paulson force government money down the throats of banks at bazooka point. More recently, Congress passed a bill to have government “partner” with banks to make billions of dollars available to community banks for loans to small businesses.
Fortunately both banks and corporations have resisted this effort. For details, please see …
- $30 Billion Offer No One Wants – Small Businesses Hit by Deflation
- Ass Backwards: Senate to Shelve Bush Tax Cuts for Individuals; House to Pass Small Business Tax Cuts
Socialization of Credit Well Underway
Given the vast majority of housing loans are Fannie Mae, Freddie Mac, and the FHA, and given ongoing efforts by the Fed and Congress to “stimulate lending”, it is safe to say that socialization of credit is already here.
This is not a good thing.
Mike “Mish” Shedlock