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Money and the Congressional Campaign
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Course
Tutor
Date
Money and the Congressional Campaign
It is apparent that most money spent during congressional campaigns do not buy much in terms of victory. There is no relationship between the heavy spending and the probability of emerging victorious and by looking closely at the past data, this kind of narrative can be explained in a number of ways. This is indeed unrealistic but there are a number of speculations that may be used to analyze the narrative because there is no statistically observable linkage between spending and the likelihood of victory (Dubner Web). Candidates spending had much smaller effect in winning the elections than expected. This essay tends to ascertain the reasons behind the relationship between huge spending and likelihood of victory for the congressional candidates.
According to Dubner the 2012 elections saw huge campaign expenditure achieving very little because it did not have discernable effect on the outcome of most races (Dubner Web). Historically, in the congressional elections, 90% of the incumbents seeking always win with more than 60% of the vote regardless of the challengers’ positions. Nevertheless, senators seeking re-election usually win with narrow margin compared to the house representatives due to the diversity of the states. Reelection always exposes the incumbents to vulnerability because of big expenditure in campaigns such as advertising, travelling more to their states and large staffing (Narayanswamy Web).
Congressional candidates have been spending enormous sums on campaigns to win the elections particularly when the competition is very stiff and there is no incumbent running for re-election. There is always a belief when an incumbent is running for a reelection then any candidate from any party is likely to win and this greatly stiffens competition. In that case, there is a notion that a candidate who spends the most in the vacated seats especially in the House has a bigger chance of winning.
Huge sum of money for congressional campaigns come from individuals pocket while 30% come from Political Action Committees that seek access to policymakers. PACs usually sponsor incumbents because they are likely to win since critics argue that the main objective of PAC is not to elect but to influence. Interestingly, high-volume does not guarantee victory regardless of the belief that money buys challengers’ recognition and an opportunity to be heard (Lessig Web).
Dubner explains that group of billionaires and privately owned corporations contributed more than $1billion on super PACs accompanied by wave of attacks through unrivaled ads yet the big spenders did not win (Web). Failure to return the senate to the GOP control by the Republicans was an evidence of a heavy spending with little achievement. It was unfortunate that the Republicans lost ground in the senate after pouring a lot of money in the campaigns including the House contest where the Democratic candidates won even after the Republican candidates outspent them in the final months. Interestingly, there were some cases where the Republicans were outspent but they won the elections (Narayanswamy Web).
Senate contest in Virginia that involved Kaine and George Allen who spent almost $50 million from independent group but Kaine won comfortably and another failure of the big spending Linda McMahon in Connecticut after pouring more than $90 million. There are many other examples such as in the House where Re, Robert Dold of Illinois was outshined by Democrat brad Schneider after spending $1.9 million (Dubner Web). It was later clear that most of the targeted candidates failed and they blamed the super-Pac money for their disappointment. They lamented that most of their time in the race was spent on seeking money and focusing on defense instead of discussing issues (Lessig Web).
It was unfortunate to see huger spending Republicans losing in the House elections while Democrats winning with little spending. Could it be a momentum from Obama or just another force that favored the Democrats and disapproved the heavy spending? It can be argued that outside spending led to a backlash because the spending was used negatively hence turning voters off. By carrying out the damaging advertisements a big effect of backlash was felt because maybe the voters felt like punishing excessive outside spending (Dubner Web).
Moreover, it may be argued that since money has a diminishing marginal return, voters must have stopped concentrating on the endless stream of ads, and that the money could not have any impact on the late game outside money. Additionally, the voters could have perceived the outside spending as an offensive move since the big spenders had realized that they had less opportunity of winning (Narayanswamy Web). Voters must have thought that after the heavy spending candidates realized that they did not have a better chance of winning, they sought some outside spending to make a difference.
Narayanswamy asserts that focusing so much on money oriented campaign and worrying about what an opponent can raise is more of a gaming legislation due to skewed legislative priorities (Web). Struggling to level the playing field by raising a lot of money is like riding on the imperceptible legislative choices. Nevertheless, money is still significant in campaigns because in close races, it can actually make a difference. The level of outside spending should however be reduced because of the public perception (Lessig Web). Most of the outside spending benefits some groups who do not disclose their donors yet voters are at times, interested in the soundness of the organization behind spending. Disclosure of the organizations may further provide both the media and public regarding the offers given by Congress members to vast spenders. The disclosures may greatly help in identifying the abusers of the political system and a case should be pressed to instigate political campaign reforms.
Elections should be based on ideas but not spending, as it has been because what remains vital is hearing the voters’ voice. The reforms should ensure restoration of confidence in the American democracy since the framers of the Constitution gave a representative democracy. It is unfortunate that the Congressional candidates value dependency upon funders rather than voters by spending most of their time raising campaign money. Elections are costly, they will always need money, therefore the congress will always depend on their funders, and the best thing to do is to change the voters to be the funders. This will definitely shrink amount of money spent in elections and a candidate will not send any doubt to the voters.
Works Cited
Dubner, Stephen. How Much Does Campaign Spending Influence the Election? aFreakonomics Quorum. Freakonomics, 17 Jan. 2012. Web. 3 Dec. 2013. <http://freakonomics.com/2012/01/17/how-much-does-campaign-spending-influence-the-election-a-freakonomics-quorum/>.
Lessig, Lawrence. Big Campaign Spending: Government by the 1%. The Atlantic, 10 Jul. 2012. Web. 4 Dec. 2013. <http://www.theatlantic.com/politics/archive/2012/07/big-campaign-spending-government-by-the-1/259599/>.
Narayanswamy, Anupama. Congressional Ad Campaigns Poised for Big Fall Blitz. Sunlight Foundation, 2 Jul. 2013. Web. 4 Dec. 2013. <http://reporting.sunlightfoundation.com/2012/primary-spending/>.
Mortgaging and the Financial Crisis
Mortgaging and the Financial Crisis
Name
Institution
Question 1
The intervention by the government in 1932 was indeed a desirable step, as it had the important net effect of increasing home ownership within the country, by availing more funds against which mortgages could be allowed. The intervention of creating the FHLB and an insurance fund through the NHA against which lenders previously unqualified for loans, could take up mortgages. Further, the intervention by the government served to eliminate the previously existing situation in which loans were being defaulted to, due to their short term nature, the fact that the loan-to-value ratios were very small, as well as the fact that most were non amortizing, making affordability an issue. The creation of Fannie Mae in 1938, further served to improve the situation of homeownership, as it served as a facilitator for market mortgages that were secondary, as well as allowed private lenders to lend more, especially within the secondary market, providing a basis for more high risk loans previously shunned by financial institutions. The rise of Ginnie Mae came about due to the move by the government to change FHA mortgages previously insured by the government to a corporation that is wholly government owned. The guarantees provided by Ginnie Mae, essentially allowed mortgage lenders to not only get better prices for loans they issued, but also to use any proceeds they make to further avail new mortgages to customers. The rise of Freddie Mac allowed the government to infuse yet more funds into the mortgage industry. The net effect of the three organizations was that mortgaging became more risky, as mortgaging institutions engaged in riskier lending against the backdrop of funds from the government. The cost of mortgaging was however reduced, and lending became more widespread.
Question 2
The Community Reinvestment Act was passed in order to compel banks to engage in lending even to neighborhoods that had low income earners. The Mortgage Disclosure Act was on the other hand, aimed at establishing to the public, whether or not the financial institutions were serving the interests of communities to which they belonged, by compelling these institutions to provide loan data on their lending patterns to the public. The Depository Institution Deregulation and Monetary Control Act, was essentially meant to gradually eliminate existing limitations on payable interests hence authorizing interest bearing accounts. The final Act; Housing and Community Development Act, served to amend section 8 of the housing act, allowing the government to assist low income households in paying their rents. These acts served to expand homeownership by making it easier to become a homeowner. They attempted to provide greater means through which to become a homeowner.
Question 3
The subprime mortgage loans did contribute to the housing bubble, with the bubble bursting as a result of a lack of sufficient financial cushion to support the massive defaults in payments, as well as losses that came as a result of these defaults. The rise in foreclosures and subprime mortgage delinquencies, coupled with a decline in the securities that were used to back up these mortgages and loans, effectively eliminating the necessary cushions for defaulters, and the rise of the 2008 financial crisis. Borrowers therefore, lost their houses, as the lenders no longer had securities against which to fall back on in the case of defaulters. For loan originators, the loss of value that resulted from the crisis, led to losses that were essentially uninsured, with no existing cushion. The mortgage crisis, as already mentioned, led to massive value losses for mortgage backed securities (MBS), as their value was essentially hinged on housing prices and mortgage payments, making the decline in the former, and significant defaults in the latter a huge blow to MBSs.
Question 4
Federal legislation and the establishment of bodies such as Ginnie Mae, Fannie Mae, and Freddie Mac, encouraged CFC to adopt a more robust high risk strategy that would have otherwise not been adopted. The government’s encouragement of subprime mortgages did have a significant impact on the company’s loan originations, as the more attractive but riskier terms attracted more borrowers, and mortgage undertakings. The housing boom, further served to encourage more and more Americans to take up mortgages, serving to further drive up the prices of housing, essentially multiplying the risk associated with the undertakings the CFC engaged in.
Question 5
Housing boom and the growth in origination of subprime mortgages brought huge success for Countywide Financial Corporation’s. The company attracted huge numbers of clients who felt that the idea of home loans was attractive. Most customers that arose after the introduction of the housing boom were those that could not access traditional loans because of they had less than stellar credit history. The company placed high interests due to the risk of the loans they offered and these marked the high growth rate during the initial company years. From the financial ratios attained the company had a consistent growth rate between the years 1982 and 2003. To the extent that in the investors gained a 23,000 return. However, after the year 2003 the company started to face challenges marketing most of their products such as the “House America”. In the year 2007 the company recorded a depreciation of $20 billion and a loss of over $1 million. This continued to worsen since delinquency rate by the end of 2007 was at 2.33% which was way above the industry average. Though Countrywide had recorded huge boom in the initial years due to the home loans that attracted many customers, it later faced huge challenges in its financial status mainly because it had started losing its public image in relation to ethics. The unethical financial instruments associated with the company were on the basis that it continued to issue loans to clients who could comfortably qualify for traditional loans. The company also retained loans intended for investment so that they would continue attracting huge interests in its favor and resulted to client loss and criticism.
Question 6
CFC initial intention was ethical and greatly assisted the American market in gaining housing loans. This resulted to the housing boom which assisted even the low income earners to gain access to home loans. Since the Countrywide granted loans with high risky levels on the lender their loans attracted higher interest rate to counter the risk. These loans were commonly known as Subprime loans since they did not follow the strict lending guidelines. Initially Countrywide products were a huge success and most people and institution thought it could mark the end of predatory lending. Instead it highly increased predatory lending and this was also the reason behind the downward trend of the company. Due to the high desire of the company to increase sales and number of credits, it allowed its sales agents to engage in lending’s which were too risk than what had been initially stated in the company lending guidelines. As a result even clients who could afford traditional lending facilities were awarded Subprime loans meant for the low income earners. The move was unethical in that the citizens that were supposed to benefit from subprime lending industry could not do so since the moderate and higher income earners flooded the industry. Further, the operations of Countrywide were unethical since it mainly concentrated on monitoring the high interest rate on loans even in situations where the risk levels on the lender were not too high.
Question 7
The first step that the Bank of America should do to improve the financial status of Countrywide as a lending company is to improve its public image though looking at ethical issues. Since Countrywide downfall was greatly related to unethical behavior of its employees’, the bank should fire or at least cut all associations with stakeholders who were considered to be unethical. Further, the Bank should revise and place strict guidelines on their lending conditions and terms. This will ensure that only those that are supposed to benefit from the Subprime lending and those that cannot access traditional loans benefit from the Countrywide company program.
Achieving A Perfect Research Is Not Possible
Achieving A Perfect Research Is Not Possible
Introduction
The word research means, looking for something that cannot be found or even, looking for additional things to add up to what others have already found. So, by going with these definitions I totally agree to, there is no hope of doing perfect research. I can say that the purpose of research is for the researcher to gain new knowledge. The purpose of this paper, therefore, is to investigate and analyze the idea of doing any research so as, to conclude whether it’s of importance or not.
Yes I agree to the statement, there is no hope of doing perfect research. If I go by the definitions, one can not be sure if, someone else somewhere has done the same research and found the results. Our ancestors could also have found the answers to the research questions. So, you can not say that you’re the first. Another reason, as to why am agreeing to the statement, is that, we human beings, are not perfect. Perfect means correct with no mistake in any way. This is hard to achieve since we humans are made to make errors in what we do. I will base my agreement on two studies; the research to find out if diabetes is caused by sugar. The second study is, whether eating fish reduces the possibility of heart diseases.
In the first study I discovered that there are two types of diabetes. Type 1, which is caused, if there is no insulin produced due to damaged cells in the pancreas. There is no prevention for type 1 diabetes and injections are used to cure the patients. The study also revealed type 2 diabetes that is caused due to lack of enough insulin in the body or where, the insulin is resistant. The cure of this type of diabetes is to eat a healthy balanced diet, physical exercises and checking one’s weight. The study also showed that, the patients of this type of diabetes could also relay on medication. Both research found out that sugar is not the cause. This means that doing research will help to increase ideas to existing findings and also, show the difference in the findings of different researchers’ .Hence, there is no hope of doing perfect research. Each research is affected by different conditions such as: location and state of mind of the researcher, and due to these different conditions, different results are expected (Diabetes UK Website).
In the second study, many researchers have found different findings, to as whether; eating fish reduces the possibility of heart diseases. According to Stone, in three prospective studies, men who ate fish at least in a week, had a lower coronary heart disease than those who did not eat (Kris-Etherton et al.106:2747-2757).However, another group find out that there was no correlation of eating fish with heart diseases. According to Ascherio et al, there is no correlation between the two variables (Katan 332:1024-1025).Still in this study, all the research done on the question show different findings to the same question.
From the cited studies and many other more it clearly shows that research will always show different findings with each researcher coming up with his/her own results. These results can never be perfect and we cannot say that they are the original results. Due to this, I agree with Griffiths that, there is no hope of doing perfect research.
Works cited
Katan B. Martijn. “Fish and Heart Disease.” The New England Journal of Medicine.332 (1995):1024-1025.
Kris-Etherton M.Penny, Harris S. William and Appel J. Lawrence. “Fish Consumption, Fish Oil, Omega-3, Fatty Acids, and Cardiovascular Disease.” American Heart Association, Inc. 106 (2002): 2747-2757.
What is diabetes, Guide to diabetes. Diabetes UK Website.