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News Link • States' Rights

To The States: Should We Talk About Secession?

• The Market Ticker

Got it?  It's a policy to screw the state and local governments.

Huh, you say?  It's simple, really: State and local governments rely on property tax revenues.  Yet defaulted mortgages don't pay property taxes.  Yes, there's a lien on the property but this doesn't help the municipal budget now.

And suffer they are:

Tax revenues used to pay teachers and fuel police cars continue to trail even the most pessimistic expectations, despite the cash from the economic stimulus plan pouring into state coffers.

"It's crazy. It's really just unbelievable," said Scott Pattison, executive director of the National Association of State Budget Officers, and called the states' revenue situations "close to unprecedented."

These shortfalls are a direct consequence of the intentional action of not only refusing to prosecute financial fraud and the making of unsound loans for years, but of continuing the game-playing even now as an official federal government policy.

 
This game goes back to the former Fannie accounting scandals, as a recently-discovered set of documents from a law firm that threatened a discrimination and whistleblower retaliation suit show:

"There is no explanation which I can see which justifies amortizing beyond 100% of an asset's value.  Having made those arguments with Janet and Dick and having lost, I have to hope their knowledge of the factor generation and cash flow modeling processes includes expertise which I do not have."  (Roger Barnes, internal email, October 2002.)

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