Posts Tagged: Options

Dec 10

CBO on Fannie, Freddie and Mortgage Finance Options

By Mark A. Calabria

Just in time for the holidays, the Congressional Budget Office has released its analysis of the costs and benefits of various alternatives to our current system of mortgage finance, particularly the role of Fannie Mae and Freddie Mac.

The report examines three possibilities:

  1. A hybrid public/private model in which the government provides explicit guarantees on privately issued mortgages or MBSs;
  2. A fully public model in which a wholly federal entity would guarantee qualifying mortgages or MBSs; or
  3. A fully private model in which there would be no special federal backing for the secondary mortgage market.

The report doesn’t really push one option over another, but simply lays out the advantages and disadvantages of each.  Some highlights worth keeping in mind as the debate continues into the new year:

“Relying on explicit government guarantees…would also have some disadvantages…If competition remained muted, with only a few…firms participating in the secondary market, limiting risk to the overall financial system and avoiding regulatory capture could be difficult…federal guarantees would reduce creditors’ incentive to monitor risk. Experience with other federal insurance and credit programs suggests that the government would have trouble setting risk-sensitive prices and would most likely end up imposing some cost and risk on taxpayers. In addition, a hybrid approach might not eliminate the frictions that arise between private and public missions.”

“Privatization might provide the strongest incentive for prudent behavior on the part of financial intermediaries by removing the moral hazard that federal guarantees create.  By increasing competition in the secondary market, the privatization approach would reduce the market’s reliance on the viability of any one firm. Private markets may also be best positioned to allocate the credit risk and interest rate risk of mortgages efficiently, and they would probably be more innovative than a secondary market dominated by a fully federal agency. Further, privatization would eliminate the tension between public and private purposes inherent in the traditional GSE model.”

It is worth remembering that over the years, the CBO has actually been quite strong in warning against the dangers of the GSE model.  Sadly Congress simply chose to ignore those warnings.  Here’s hoping that the CBO has little more influence on this issue than they’ve had in the past.

CBO on Fannie, Freddie and Mortgage Finance Options is a post from Cato @ Liberty – Cato Institute Blog

Cato @ Liberty

Dec 10

Report: 49ers’ Singletary keeping QB options open vs. Rams – NFL News

Kansas City Star
Report: 49ers' Singletary keeping QB options open vs. Rams
NFL News
By Wire Reports Singletary declined to name a starter for the team's Week 16 game against the St. Louis Rams. "Once again, I want to get back and look at the film. It wasn't just Alex," Singletary told The Bee. "I think our offensive line has
49ers considering quarterback switch again?
49ers Vs. Chargers: Justin Smith Ejected As San Francisco Is Blown OutSB Nation
Singletary wanted to avoid “horrific” quarterback changeProFootballTalk
Los Angeles Times –ESPN (blog) –San Francisco Chronicle
all 1,578 news articles »

Sports – Google News

Dec 10

Viewer’s guide: 2 NFL games Monday, but TV options limited – USA Today
Viewer's guide: 2 NFL games Monday, but TV options limited
USA Today
The NFL will have a rare doubleheader of football on Monday night. But not a doubleheader of Monday Night Football. The difference may sound small, but it's an important distinction that means most fans will not have access to a live broadcast of both
Fans line up in bitter cold at Ford Field for free NFL ticketsThe Detroit News
Smith: Conspiracies abound as Brett gets more restNew York Daily News
Metrodome collapse — before and afterBoston Globe
ABC News –Bloomberg –CNN International
all 3,976 news articles »

Sports – Google News

Dec 10

Two options on the Bush tax cuts

It’s worth taking a step back from the current politics of the tax cut deal and just thinking about which of the two basic options are actually preferable.

Option 1: Let the tax cuts for the rich expire. We keep the tax cuts for income under $ 250,000. The extensions of unemployment insurance are pared back somewhat, and what’s left is paid for by spending cuts elsewhere. There’s no payroll tax cut, and the extra funds the stimulus gave to the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit expire. Perhaps some form of the tax credit for business investment passes during the next Congress.

This means hundreds of billions of dollar less in deficit spending, but also hundreds of billions of dollars less in stimulus. Some families relying on unemployment benefits are cut off, and many more see their checks reduced. Families relying on the tax credits the stimulus expended also find themselves with less money in their pocket. The payroll tax cut is worth about $ 1,000 to a worker making $ 50,000, and because they don’t get that in their paychecks, that money doesn’t make its way into the economy.

Option 2: Extend the tax cuts for the rich and add tax cuts for everyone else. This is the deal we’re looking at. The tax cuts for the rich get extended, and the estate tax is lower than its 2009 level (though higher than it’s 2010 level). The cost of extending them is about twice as much in progressive tax cuts and unemployment insurance that have a much larger stimulative effect (if you look at the old Mark Zandi estimates, payroll tax cuts and unemployment benefits are among the most stimulative options). The Center for American Progress estimates that this package will create 2.2 million jobs over the next two years.

If you’d offered me these two options three months ago, I’d have taken No. 2. I said then, and I believe now, that the short-term need is more stimulus, not deficit reduction. If the cost of stimulus is tax cuts for the rich, well, that’s not ideal, but the stimulus is more important. But No. 2 wasn’t on the table.

The Obama White House, in a move I and others lamented, stopped pushing for more stimulus. They didn’t say that if the Republicans were going to insist on more tax cuts for the wealthy, the cost would be more help for those who are hurting. They defined success on the Bush tax cuts in terms of the Bush tax cuts, not in terms of economic recovery or other items on their agenda. And now they’re not getting a victory on the Bush tax cuts, so they’re losing, and by their own definition.

The way this should have gone is that Democrats should have proposed turning the Bush tax cuts into a two-year payroll holiday, and adding some other relief measures besides. But they didn’t. And so this outcome, in being completely different than the one they said they were going for, is being understood as a loss, and even a capitulation. But they’re losing their way into a better deal, and one that looks more like the deal they should’ve been looking for in the first place.

Ezra Klein

Dec 10

Democrats have few options on the tax cuts — but that’s their fault

David Leonhardt makes the case that given their initial bungling on the tax cuts, Democrats have little choice but to extend them now. In part, he’s right. Legislative chicken is a game of credibility: If the other side doesn’t believe that you’re willing to do what you’re threatening to do, you’re stuck.

No sane observer would believe Democrats have any intention of coalescing around a strategy to merely extend the vast majority of the tax cuts while holding firm against the breaks for the richest Americans. At this point, various Democrats have proposed letting the cuts for the rich lapse, letting the cuts for income over $ 1,000,000 lapse, extending all the cuts temporarily, and creating a bipartisan working group to negotiate a compromise with Republicans. Democrats can’t switch course to a veto-based strategy because the Republicans don’t believe they’ll stick to it. And that means the Republicans will let the cuts expire, and Democrats don’t believe they can win — or hold strong — amid the resulting stand-off.

But though this is the case you’re hearing from various Democratic officials, it really boils down to “we’re extremely bad at this and don’t expect to get any better, and so legislative strategies that require high levels of political coordination, public communication and tactical confidence need to take into account our deficiencies in those areas.” That may be true, but it really raises more questions than it answers.

Ezra Klein

Dec 10

Jon Gruden won’t commit to Miami Hurricanes, keeps NFL options open –
Jon Gruden won't commit to Miami Hurricanes, keeps NFL options open
It appears Jon Gruden isn't as interested in the University of Miami as the school's fans and boosters are in him. UM athletic director Kirby Hocutt met with Gruden in Tampa early Wednesday morning.
ESPN's Norby Williamson expected Jon Gruden to stayESPN
ESPN executive expects Jon Gruden won't coachWashington Post
Source: Gruden won't take Miami
Yahoo! Sports –Orlando Sentinel –
all 272 news articles »

Sports – Google News

Nov 10

Lindsey Graham Says All Options on the Table re Iran and Nukes

(Kenneth Anderson)

Tod Lindberg, editor of the Hoover Institution’s Policy Review, reports in the Weekly Standard on a blunt message delivered by Senator Lindsey Graham (R-NC) at a discussion meeting of senior transatlantic policy makers, the Halifax International Security Forum. It’s not a forum that would attract a lot of attention, but the attendees are very senior in transatlantic relations and NATO. Quoting from Graham:

Nobody would like to see the sanctions work any more than I would because I’m still in the military [Graham is a colonel in the Air Force reserves who has served active duty during Senate breaks in Iraq and Afghanistan] and I get to meet these young men and women on a regular basis, and I know what it’s been like for the last nine years. So the last thing America needs is another military conflict. But the last thing the world needs is a nuclear-armed Iran. And if you use military force, if sanctions are not going to work and a year from now it’s pretty clear they’re not going to work, what do our friends in Israel do? So I would like the president to make it abundantly clear that all options are on the table. And we all know what that means.

Tod LIndberg’s report adds that Graham was just winding up:

And if that day ever came, my advice to the president, in open session here, if you take military action against Iran as the last effort to stop their nuclear ambitions, you do open up Pandora’s box. But if you let them acquire nuclear weapons, you’ll empty Pandora’s box. So my view of military force would be not to just neutralize their nuclear program, which are probably dispersed and hardened, but to sink their navy, destroy their air force, and deliver a decisive blow to the Revolutionary Guard. In other words, neuter that regime. Destroy their ability to fight back and hope that people .  .  . inside Iran would have a chance to take back their government and be good neighbors to the world in the future. So that’s what I mean by being tough, sir, that everything is on the table and that we need to start talking more openly about that because time is not on our side.

From the standpoint of international law, I’d note this as being in the long tradition of state practice and opinio juris on what the use of force under the UN Charter at Articles 2(4) actually means. Some of the diplomats and officials in the Halifax meeting might have been shocked and disturbed at the prospect that the US might decide to attack Iran and seek to end its ability to acquire nuclear weapons. That some international lawyers might regard it as per se illegal under the Charter does not seem to have been the source of their dismay.

In other words, one can continue to argue the literal words of the Charter and express concern about violations of them, but it seems to me that one has to do it taking serious account of state practice and declarations that are plainly not about defending against an attack that has taken place across one’s borders.  One can go that way, and somehow account for the obviously different and extensive state practice.  One can go with the Justice Sima route (in a famous concurrence in an opinion of the International Court of Justice) and note that state practice suggests that literal reading is not plausible any longer, and so “de-fang” the literal language of the Charter while not throwing that particular clause out as irrelevant. Or one can go full-on “desuetude” as Michael Glennon does, and say that this particular clause of the Charter has fallen into “desuetude” over time and is no longer the actual rule of international law.

What I don’t think works is simply to ignore the record of state practice and recite the formula of the Charter, with a sort of magnificent disdain for what states actually do and say — and states that actually engage in uses of force or are in the “international security” business, not Luxembourg or Belize.  I accept the Glennon view, while others might sharply disagree, but in any case, it seems to me not possible now, if it ever was possible, not to address the facts of how states behave and how they account for their behavior in this of all matters.

The Volokh Conspiracy

Nov 10

Fast Food Advertising to Kids: Healthy Options Hard To Find

A report [pdf] out today from Yale’s Rudd Center for Food Policy and Obesity looks at fast food marketing targeting kids. Among the findings, of 12 fast food restaurant chains offering more than 3,000 kids meal combinations only 12 meet the nutritional guidelines for preschool-aged kids. CNN:

“The worst meal was at Dairy Queen,” said Jennifer Harris, director of marketing initiatives at the Yale center, and the lead study author. “It was a cheeseburger, french fries, a sugar sweetened soft drink and a chocolate Dilly Bar, which totaled 973 calories.”

The No. 2 culprit: KFC’s popcorn chicken kids meal, served with a biscuit, soda and a side of string cheese – totaling 840 calories.

Of the 12 meals that made the grade, Harris said it was Subway’s “Veggie Delite,” paired with apple slices and 100-percent juice that took the award for healthiest kids meal at 285 calories. Burger King’s macaroni and cheese meal with apple slices and fat-free milk came in at 285 calories as well.

It’s surprising to see Burger King has a healthy offering. The apple helps. Applying a bit of behavioral economics, why not switch the default on all kids offerings to apples over french fries?

David Just and Brian Wansink of the Cornell Center for Behavioral Economics in Child Nutrition Programs recently proposed some behavioral economics-inspired changes to the school lunchroom:

[T]he ideal lunchroom—the smartest lunchroom—would be the one that led children to make healthy choices in the face of some more tempting options. Restaurant owners know that subtle changes in how food is presented can have a large impact on food choice. These same tools can be applied within the school lunch context with surprising results. One school in upstate New York was able to increase consumption of salads by close to 300 percent by simply moving their salad bar six feet from the wall and placing it near a natural bottleneck in the check-out line. Another school increased fruit sales by 105 percent by moving the apples and oranges from stainless steel bins into a well-lit and attractive basket.

These low-cost/no-cost solutions leverage the natural psychology of choice that teenagers use when choosing their lunch. Such behavioral solutions deserve our attention for three reasons. First, they have dramatic results—many are three to five times more effective than more traditional policies. Second, these solutions are inexpensive. Many can be triggered by simply rearranging the food that is already in the line. There are no new recipes, no implementation costs, and no equipment that would cost more than $ 50.

Our food policies subsidize corn and other industrial agriculture crops so that fast food restaurants make far more money from french fries than from apples or healthier choices. Until that changes we won’t see these smart lunchroom innovations applied to your local fast food outlet.

The Rudd Center report finds that $ 4.2 billion was spent on fast food advertising last year; the average preschooler is seeing 21 percent more ads than in 2003. More on lunchrooms here and here.

The Moderate Voice

Nov 10

Federal Officials Offer New Options For High Risk Insurance Coverage In Effort To Boost Enrollment

The Department of Health and Human Services (HHS) announced new plan options and lower premiums in the 24 high risk insurance pools that are under federal control in an effort to bolster enrollment in the fledgling program. The so-called Pre-Existing Condition Insurance Plan (PCIP) functions as a bridge to the Affordable Care Act’s exchanges for people who can’t find affordable coverage in the individual market, but thus far, the program’s high premiums have kept many eligible individuals from enrolling. The program currently boasts just 8,011 beneficiaries.

Starting January 1, however, Americans enrolled in a federally-run PCIP program, will have two new coverage options: a plan with a $ 1,000 deductible and $ 250 deductible for prescriptions, a $ 2,000 deductible with $ 500 deductible for prescriptions and the exiting option of a combined medical and prescription drug deductible of $ 2,500, which will be paired with a federal health savings account.

“Adjustment in rates in existing and new premiums will be nearly 20 percent below what is currently being charged today, ” Richard Popper, Director for the Office of Insurance Programs in HHS’s Office of Consumer Information and Insurance Oversight, a said on a conference call attended by the Wonk Room. He suggested that PCIP enrollment levels are comparable to the early enrollment rates in CHIP and predicted that the program’s “enrollment continue to grow and with the change in premiums we see that trend escalate.”

In working towards that end, the government is also stepping up its outreach and enrollment efforts:

– Working with states in the federally-run pool programs to encourage their state insurance departments to require individual market insurance companies to notify those who may deny coverage about the availability of PCIP.

– Encouraging insurers to notify denied applicants about the PCIP option. A number of insurers have agreed to put notice in their denial letters about availability of PCIP.

– Working with the Social Security Administration to inform individuals under 65, who are not yet eligible for Medicare, about PCIP.

– AARP has sent out notices to their 24 million members about the availability of PCIP.

Some of the 27 states that are operating their own high risk health insurance pools are already offering similar options and all states will have “the opportunity to submit any changes they would like to make in their benefits or premiums for 2011.” “But we are not requiring the states to exactly adopt the changes that we are rolling out,” Popper said. “This program is largely build on state flexibility. With that flexibility and with the available products available we don’t feel the need to require them to copy what’s being done on the federal pool level.”

“We are doing everything we can do get as much enrollment and we’re doing as much outreach and we think premiums will help and hope that other states will follow suite,” Liz Fowler, Director for Policy in HHS’s Office of Consumer Information and Insurance Oversight said on the call.

Wonk Room

Oct 10

Three options for the mortgage mess

The news that the largest bond fund in the world, the largest money manager in the world and the New York Federal Reserve are demanding that Bank of America repurchase $ 47 billion in mortgage bonds is scary stuff. As Daniel Indiviglio says, “these investors aren’t exactly Moe, Larry, and Curly. This is serious.”

I’ve been interviewing a lot of different people about this, and opinions range from apocalyptic to sanguine. I’ve rarely encountered a major issue, actually, where there’s so little consensus. That the market seems basically unbothered, however, has led me to think that there are basically three possible outcomes here:

1. This isn’t a big deal. There are some lawsuits, maybe a few banks have to buy back a few bonds, but nothing much comes of this. It turns out to have been more smoke than fire.

2. It’s meaningful, but not huge. A fair amount of money changes hands in the courts, but not so much that the banks can’t handle it. The problems that are severe enough to litigate turn out to be rare enough that the mortgage market doesn’t face long-term disruption, much less collapse.

3. It’s a catastrophe, and the government steps in. If we’re really in a world where our system of property rights is in jeopardy, we’re in a world where the government is going to figure out a way to marry the electronic record-keeping with the legally binding records and force the mortgage market to see its way out of this and figure out a new system for the future. That’s ugly, but it’s a world in which the losses are managed.

So not-that-bad, sorta-bad, and bad-enough-that-we-won’t-let-it-happen. I’ve run this by some people and they seem to think this is about right. The market’s relative serenity reflects the fact that it thinks the likely outcome is between not-that-bad and sorta-bad, and they’d already priced a fair amount of risk into everything connected to the mortgage market. If things take a turn for the catastrophic, well, that’s a big problem, but it’s also a problem that the government is likely to solve, not a problem that the financial system is likely to eat.

Ezra Klein

Sep 10

Military control of civilian options

This seems a lot worse than anything McChrystal said in front of a Rolling Stone reporter:

In Woodward’s account, even after Obama decided to send 30,000 more troops, the Pentagon kept coming back with plans involving 40,000. Even after he decided not to pursue an all-out counterinsurgency campaign, the Pentagon kept coming back with plans involving just that.

Obama also kept asking his generals for more options to consider. They were playing the old trick of giving the president three pseudo-options — two that were clearly unacceptable (in this case, 80,000 more troops for full counterinsurgency and 10,000 troops just to train Afghan soldiers) and the one in the middle that they wanted (40,000 more troops). They never gave him another option. When Gen. James “Hoss” Cartwright, vice chairman of the Joint Chiefs of Staff, drew up a compromise plan involving 20,000 troops (believing the president had a right to see a wide span of options, even if the military didn’t agree with them), Mullen forbade him from taking it outside the Pentagon. Obama never saw it.

In the end, Woodward reveals, Obama devised his own alternative strategy and personally wrote out its terms in a six-page, single-spaced memo that he made his top civilian and military advisers read and sign on to. (Woodward reprints the memo in the back of the book.)

That’s from Fred Kaplan, who also sees signs that the Obama administration is beginning an endgame for the war in Afghanistan. And if you want more from Woodward, The Post has been printing excerpts from his book this week.

Barack ObamaPresidentUnited StatesAfghanistanWoodward
Ezra Klein

Sep 10

Irony: Dems trash economy; staffers out of K Street options

Maybe they should have paid more attention to small businesses instead of unions.  The six-figure jobs as K Street skanks seem to be in short supply for dem staffers at just the time they need a job.

I’m sad for them.  Kinda.  Not really.  Well, not at all.

Liberty Pundits Blog

Sep 10

Murkowski ‘reconsidering her options’

Alaska Sen. Lisa Murkowski is 'reconsidering her options.'

Alaska Sen. Lisa Murkowski is ‘reconsidering her options.’

(CNN) – Republican Sen. Lisa Murkowski is “reconsidering her options” in a reelection campaign once pronounced all but dead, and is now exploring a third party or write-in bid after receiving an “an outpouring of support” from Alaskans.

Last week, Murkowski conceded the Alaska GOP Senate primary to little-known Tea Party favorite Joe Miller, who outdistanced the incumbent Murkowski by a few thousand votes.

But according to Murkowski spokesman Steve Wackowski, the outpouring of support from around the state has given Murkowski a “moment of pause from her previous plans to wrap up her career as a senator.”

Wackowski said there has been a definite change in Murkowski’s views over the past several days, and that the reaction she’s received since conceding “caused her to reconsider.”

In the wake of her primary defeat, Murkowski did not endorse Miller, leaving the door open for a possible third-party run, with her most likely options being a run under the flag of the Libertarian Party or a long-shot write-in effort.

A Murkowski aide confirmed the senator met Tuesday with the Libertarian Party candidate, Dave Haase, who would have to step aside in order for Murkowski to run on the party’s ticket.

But the aide said that the meeting was arranged by friends without Murkowski’s encouragement, and that it was left “with the onus on the Libertarians on whether they wanted” a senator on their ticket.

But the meeting might not lead to a spot on the party’s ticket.

Two weeks ago, the Libertarian Party board in Alaska rejected the idea of putting her on the ballot, citing “philosophical differences” with her positions.

Libertarian Party chairman Scott Kohlhaas confirmed to CNN Tuesday night that Haase had met with Murkowski. But when asked if anything had changed that would allow Murkowski to run on the party’s ticket, Kohlhaas said, “No. It ain’t happening.”

Kohlhaas said Murkowski’s discussion with Haase was “fruitful and constructive” and that another meeting could happen Friday. But he said “she’s not going to budge on any issues. We’ll meet some more. But there’s no room for agreement.”

Kohlhaas added that it was “not a meeting of the minds,” and that his party was “not going to do a flip-flop” that would be the “biggest in the history of Alaska politics.”

“She says she’s not going to change her political stripes,” he said. “The issues haven’t changed.”

As for the next best option, Wackowski said that Murkowski is in a good financial position.

“We’re in uncharted waters,” he said, but noted that Murkowski has $ 1 million on hand, which he said is a good amount for an Alaskan race. “She’s got time to talk to more of her supporters and see what her decision will be.”

CNN Political Ticker

Sep 10

30 options for reforming Social Security — and how much they’ll save

As I’ve said, my preference is to make Social Security more, rather than less, generous. There are a lot of areas in which the federal government should be spending a lot less — but I don’t think Social Security is one of them. Still, Social Security reform is likely to be a big issue in the fall, and so it’s worth getting a sense of the wide range of potential changes available. This chart comes from the Congressional Budget Office’s report on ‘Policy Options in Social Security,’ and it shows both what people think they are, and how much they’ll save. Click for a larger version.


Straightforward options like raising the retirement age and applying payroll taxes to all income get the most attention, as people can actually understand them. But for that exact reason, I’d guess that more opaque changes, such as “progressive price indexing,” which ties benefits to prices rather than earnings, are more likely.

Social SecurityUnited StatesPoliticsCongressional Budget OfficeGovernment
Ezra Klein

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