April 11, 2017
‘Net worth sweep’ and Obamacare’s endless bailouts
By Jon N. Hall
One
ObamaCare bailout folks are familiar with is for “risk corridors.” Those
bailouts involve direct payments to insurance companies that suffer losses in
the ObamaCare exchanges. A less well known bailout is “Net Worth Sweep,” which
involve raids on private property.
On
March 23, the Daily Caller ran Drew Johnson’s “Trump Should Stop Obama Scheme That Steals
Money For Obamacare.” Johnson reports on the theft of monies from both
Fannie Mae and Freddie Mac to give to health insurance companies that can’t
make a profit under ObamaCare:
Since 2013, however, all of the profits generated by Fannie
and Freddie have been swept into the Treasury Department’s general funds. Not a
dime has been returned to investors or set aside for a rainy day.
This raiding of Fannie and Freddie profits has become known
as the “Net Worth Sweep.” The maneuver, which takes place regularly with no
Congressional authority, inappropriately diverted $240 billion in dividends
from investors to federal programs such as Obamacare.
On
March 31, Investors Unite ran “Another Quarter of Fannie and Freddie’s
Profits Swept into a Government Slush Fund”:
The latest scheduled quarterly dividend payment had been
watched particularly closely because it was the first tangible action by the
new Administration on Fannie and Freddie. Since the Obama Treasury took advantage
of the conservatorship in 2012 to implement the Net Worth Sweep and drain
enough of Fannie and Freddie’s capital to weaken but not kill them, the
situation for taxpayers, home buyers, capital markets and, of course,
shareholders has gone from bad to worse. The day when the under-capitalized
government sponsored enterprises come to the taxpayer for more money draws near.
On
March 3, Forbes ran
Richard Epstein’s “D.C. Circuit Refuses To See Limits To
Government Power And Inexcusably Upholds The Net Worth Sweep.” Epstein, a
fellow at the Hoover Institution, details the Feb. 21 opinion in a case brought
by Perry Capital LLC against Obama Treasury Sec. Lew. The 5-page article may be
too technical for some readers, but I’ll quote from his final paragraph:
In closing, there is a simple test by which to measure the
probity of the combined actions of FHFA and Treasury. If FHFA were replaced by
a private trustee, and Treasury were replaced by a private supplier of fresh
debt or equity capital, both parties would end up in jail if they concocted a
scheme that resembled the NWS. Everyone would cut through the various
smokescreens to see that the excess dividends were a naked raid on the
interests of the other shareholders as happened here. The great tragedy of the
majority opinion is it follows the all-too-common practice of giving the
government a free pass when its own motives are as corrupt, or more so, than
comparable private parties in similar roles and with similar legal duties. From
the time that I started to work on this issue, I always said that litigating
against the government is like playing craps with loaded dice. So far the sorry
performance in Perry Capital has validated that gloomy prediction. The time is
running short, but there needs to be some serious judicial action either in the
Circuit Court or Supreme Court to correct against the egregious statutory
contortions and manifest injustice of sustaining the Net Worth Sweep.
Net
Worth Sweep brings to mind the bailouts of the auto companies during the Obama
era, when bondholders got the shaft. I remember when we had private property in
these United States.
On
April 4, Tucker Carlson hosted Josh Rosner, who gave a quick gloss of these
“irregularities,” shall we call them, in the Obama administration. Fox News
doesn’t seem to have posted the segment, but I found it here. Or watch it here:
America’s Super-rich Live 15 Years Longer!
………….. America’s Bludgeoned Middle-Class Dies Young, Addicted and Poor!
WHICH SIDE OF THE EQUATION ARE YOU DIGGING YOUR CHILDRENS’ GRAVES?
*
“Millions
of middle class families have been driven to bankruptcy by illness
and
medical bills.”
*
“This dramatic contrast in
life expectancy between the rich and poor is directly correlated to the growth of
obscene wealth at the top among a tiny elite and entrenched poverty among
growing numbers of people at the bottom.”….. BUT AMERICA STILL FINDS
BILLIONS TO HAND TO MEXICAN INVADERS, WHICH INCLUDES “FREE” HEALTHCARE.
*
In the first part of the Lancet series,
“Inequality and the health-care system in the USA,” the British medical
journal’s researchers found that these income-based disparities in US life
expectancy are worsened by the for-profit US health care system itself, which
relies on private insurers, pharmaceutical companies and health care chains. It
is also the most expensive health system in the world.
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