California's attorney general was, until this week, a hold out on the Obama administration mortgage bail-out deal. A New York Times article from Feb. 5 provided one of the key items that California officials were looking for -- a bail out for the California Public Employees' Retirement System, which made some absurd real-estate investments at the height of the market. This is from the Times: "Another critical issue for California is narrowing the amnesty given to banks because under the state's False Claims Act, state officials and huge pension funds like Calpers would be able to collect sizable monetary damages from the banks if they could prove mortgages were improperly packaged into securities that later soured"
Scandal-ridden CalPERS never takes any responsibility for its own actions, even though it invested heavily in a development in Mountain House, Calif., which later became the most upside-down community in the nation. CalPERS used borrowed money to finance this, but the disaster couldn't possibly be the investment fund's fault! Time for another bailout.
I wrote about the Obama plan and this aspect of it in a Bloomberg column this week, "Mortgage Deal Props Up California House of Cards," which included this observation: "Instead of bailing out bad behavior from banks and consumers, it's time for policy makers to let the market work -- in lending, land use and economic policy. In discussing the Obama mortgage proposal, USA Today opined this week that the Republican Party's challenge is 'to come up with an alternative that goes beyond simply saying no.' But saying no is exactly what the nation needs now, especially if yes means another bailout for imprudent Californians."
No one should be bailing out CalPERS, which amounts to a bail out of over-sized public employee pensions.
I wrote about the Obama plan and this aspect of it in a Bloomberg column this week, "Mortgage Deal Props Up California House of Cards," which included this observation: "Instead of bailing out bad behavior from banks and consumers, it's time for policy makers to let the market work -- in lending, land use and economic policy. In discussing the Obama mortgage proposal, USA Today opined this week that the Republican Party's challenge is 'to come up with an alternative that goes beyond simply saying no.' But saying no is exactly what the nation needs now, especially if yes means another bailout for imprudent Californians."
No one should be bailing out CalPERS, which amounts to a bail out of over-sized public employee pensions.
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