Apparently some real eye-opening information came out on today’s State Of The Union program on CNN. Talking Points Memo headlined it as, Bob McDonnell: GOP Governors Deserve Credit For The Recovery, Not Obama.

Virginia Governor and Mitt Romney surrogate Bob McDonnell (R) on Sunday floated what may turn into a Republican talking point if the economy continues to improve: It wasn’t President Obama who made it happen, it was the GOP governors.

“Look, I’m glad the economy is starting to recover, but I think it’s because of what Republican governors are doing in their states, not because of the president,” McDonnell said on CNN’s “State of the Union.”

I can hardly wait to hear what the Republican governors are doing to help the economy recover.  They could claim that by balancing state budgets and laying off hundreds of thousands of state employees, that the newly unemployed stimulated the economy.  They could claim that by attacking workers rights, that the new lower pay and benefits the workers received helped stimulate the economy.  They could claim that stealing companies and their jobs from other states by offering companies tax cut incentives to relocate that they stimulated the national economy.

Maybe the above points are not their claims to success.  Surely they must have some hard evidence to back up their claims.  Of course it is interesting that states like Massachusetts with a Democratic governor and state legislature are leading the recovery.  So enticing companies away from Massachusetts with their state government bailouts in some way is helping Massachusetts.  Maybe they are just taking the bad companies off of our hands.

Well, the actual article on Talking Points Memo is Gingrich: Austerity Is Wrong For America, We Need Pro-Growth Policies Instead.  This is the quote from Meet The Press.

“First of all, David, I don’t think you’ll ever find me talking about an age of austerity. I don’t think that’s the right solution,” Gingrich said. “I am a pro-growth Republican. I’m a pro-growth conservative. I think the answer is to grow the economy, not to punish the American people with austerity.”

He didn’t point out that corporations are sitting on wads of cash, so that there was no need to lower their taxes.

He didn’t point out that everyone is so nervous about the future that they are not buying as much as they should to grow the economy. So the government has to step in and buy now what it will eventually have to buy some time in the future anyway. The American Society of Civil Engineers in its 2009 Report Card for America’s Infrastructure estimates that we need to spend $2.2 trillion dollars over the next 5 years repairing our infrastructure just to prevent it from failing.

He didn’t mention that people with underwater mortgages do not dare spend as much as they could and they so not have the mobility to move where the jobs are. There needs to be a government program to write down some of the principal on their mortgages  to free up a lot of pro-growth energy.

He didn’t mention that the need to provide health insurance to employees is a roadblock for increased hiring from small companies.  A government funded, single-payer health care system will unleash tremendous economic growth from small business.

He didn’t mention that the very wealthy are sitting on trillions of dollars that they are afraid to invest.  They now take the lazy way out by lending it back to the government so that they can at least earn interest on it.  Taxing some of this money away would lower the deficit and encourage growth by putting the money to work.

However, now that his true pro-growth bias is beginning to emerge, can the above statements be far behind?

The article A Mortgage Tornado Warning, Unheeded comes from The New York Times.

LIKE most people, Nye Lavalle had little interest in the mortgage industry until things got personal. Raised in comfortable surroundings in Grosse Pointe, Mich., just outside Detroit, he began his business career in the 1970s, managing professional tennis players. In the 1980s, he ran SMG, a thriving consulting and research firm.

Then he tried to pay off a loan on a home his family had bought in Dallas in 1988. The balance was roughly $100,000, and the property was valued at about $175,000, Mr. Lavalle said. But when he combed through figures provided by his lender, Savings of America, he found substantial discrepancies in the accounting that had inflated his bill by $18,000. The loan servicer had repeatedly charged him late fees for payments he had made on time, as well as for unnecessary appraisals and force-placed hazard insurance, he said.

Mr. Lavalle refused to pay. The bank refused to bend. The balance rose as the bank tacked on lawyers’ fees and the loan was deemed delinquent. The fight continued after his mortgage was allegedly sold to EMC, a Bear Stearns unit.

Unlike most people, Mr. Lavalle had the time and money to fight. He persuaded his family to help him pay for a lawsuit against EMC and Bear Stearns. Seven years and a small fortune later, they lost the house in Dallas. Back then, judges weren’t as interested in mortgage practices as some are now, he said.

The story ties mortgage fraud back to abuses at Fannie Mae or its subcontractors. This report seems to contradict my earlier claims that the shoddy mortgage practices did not originate at the government agencies like Fannie Mae, but started in private industry and were reluctantly adopted at Fannie Mae.  I was specifically talking about mortgage origination fraud of liar loans claimed to be mortgages meeting the standards of due diligence for giving out loans.  The fraud detailed in this article is on a different end of the process, but it certainly damages the credibility of Fannie Mae.

Thus begins my process of looking for evidence that refutes my prior belief in the relative innocence of the federal agencies.  Another example of the need to be wary of confirmation bias.  It is not enough to find evidence that supports your beliefs.  It is also important to look for evidence that refutes your beliefs.  Still the search must be careful.  If my new belief is that my original belief was wrong, then searching only for evidence of how wrong I was is just confirmation bias on the other side.

As Kermit the frog might have said, “It’s not easy finding the truth.”

The Bloomberg/Business Week article, Gingrich Ties to Fannie, Freddie Said to Extend to Speaker Days, has some interesting things to say about the history of Fannie Mae.  For the relation to this blog post, I picked out the following information:

Gingrich expressed support for Fannie Mae, traveling to Atlanta in 1995 to help open a Fannie Mae office promoting home ownership for low- and moderate-income families.

In a press release issued at the time, Gingrich said, “Fannie Mae is an excellent example of a former government institution fulfilling its mandate while functioning in the market economy.”

The reason for my interest in this is that it sets a date before which we know that Fannie Mae was changed from a purely government agency to a government-sponsored enterprise.

OK, this has prompted me to stop being lazy and just look it up in WikiPedia.

The Federal National Mortgage Association, commonly known as Fannie Mae, was founded in 1938 during the Great Depression as part of the New Deal. It is a government-sponsored enterprise (GSE), though it has been a publicly traded company since 1968.

I was surprised to learn that it has been a publicly traded company from as far back as 1968.

The information in WikiPedia is supported by the article A Brief History of Fannie Mae and Freddie Mac from Time magazine.  It is eye opening to see how far reaching are some of the good and bad decisions of government.  Some of the late 1960s criticisms of the Republicans against Fannie and Freddie may have been timely back then.  It may be that the responses to fix those criticisms turned out to be not so good in the long run.