Wednesday, October 13, 2010


The effects of mandates by Congress are not felt for years.  Today, there is too much credit given to Obama for providing free cell phones and free airtime to welfare recipients.  This was actually one of President Clinton’s bills – it was sold to Congress as a way to provide Internet to schools and libraries - it was named the Telecommunications Act of 1996.  In one advertisement by a cellular company – they are promoting free cell phones and minutes to “income-eligible consumers”.  The Telecommunications Act of 1996 is described below:

All phones (land line or cell) have been taxed since this Act passed (taxing began in 1997 when the FCC scrambled to enact its' mandate and sent out notices to the phone companies).  It is listed on your provider’s bill under taxes, fees, and surcharges as Federal Universal Service Fund or USF.  The bill mandates the FCC to maintain the intentions of the bill - “that the Federal-State Joint Board and the FCC should determine those other principles that, consistent with the 1996 Act, are necessary to protect the public interest”.  Thus congress does not need to take any other action to authorize anything deemed by the FCC to be in the “public interest" for the above mandates.  Thus cell phones for low income individuals – have no congressional fingerprints on it.  Today, these recipients of the benefit have dubbed their cell phones as their “Obama phone”.

Another example of the effects of these congressional mandates not being felt for years -  The Housing and Community Development Act of 1992 and the Removal of Regulatory Barriers to Affordable Housing Act of 1992 mandated the Department of  Housing and Urban Development (HUD) to set goals for lower income and underserved housing areas for the GSEs Fannie Mae and Freddie Mac.

The changes HUD has made in bank loans and lending for housing (e.g. adjustable rate mortgage loans) did not have to be approved by congress as the agency was given the power by the Act just as was noted in the previous example – without congressional fingerprints on it.  However one endeavour is noted in the above link - in November 2007, at a time when the housing market was slowing, HUD initiated a program to change lending policies which provided seller concessions to buyers of HUD homes, allowing them to use a down payment of $100.00 (one hundred dollars).   By September of 2008, we had the “subprime” mortgage crisis - sub prime borrowers typically have weakened credit histories and reduced repayment capacity which the Acts of 1992 were to address – you can decide how they did.
Listen to congressional hearings in the congress on this topic:

In conclusion, if you haven't learned anything in the last two years, hopefully you learned congress doesn't read the bills - you have to - it is all political.  If you like the effects of the Telecommunications Act of 1996 and The Housing and Community Development Act of 1992/Removal of Regulatory Barriers to Affordable Housing Act of 1992 – I think you are going to LOVE the Financial Regulatory Reform Bill of 2010 and the Patient Protection and Affordable Care Act of 2010 (ObamaCare).   Don't you love the names they give these bills!

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