…Her stance is backed by solid research evidence. Summing up the best studies, Martin West, of the Harvard Graduate School of Education, told a congressional committee in January that NCLB “worked to generate modest improvements in student learning, concentrated in math and among the lowest-performing students — precisely those on whom the law was focused.” In L.A. after the law was implemented, student performance improved between 2003 and 2014 by well over a year’s worth of learning in fourth- and eighth-grade reading and math…Testing also remains popular with the public. In 2012, the journal Education Next asked a cross section of the American public whether “the federal government [should] … require that all students be tested in math and reading each year in grades 3-8 and once in high school.” More than 80% of those surveyed responded favorably. In 2014, Education Next asked the public whether it supported “standards for reading and math that are the same across the states [and] will be used to hold public schools accountable for their performance.” Only 16% opposed the idea….In Washington, however, interest-group pressure may matter more than public opinion. Despite strong evidence to the contrary, teachers unions deny that testing benefits disadvantaged students….” Paul E. Peterson, “No Child Left Behind and testing help hold schools accountable”, Los Angeles Times Paul E. Peterson is a professor at Harvard University, where he directs its Program on Education Policy and Governance. He is also a senior fellow at the Hoover Institution at Stanford University.

Op-Ed

No Child Left Behind and testing help hold schools accountable

Yamarko Brown, 12, works on math problems as part of a trial run of a new state assessment test at Annapolis Middle School in Md. (Patrick Semansky / Associated Press)

By Paul E. Peterson

The controversial education law known as No Child Left Behind is up for reauthorization, and amid the nuances under debate one question stands out: Will pressures from the left and right force the federal government to abandon its annual, statewide testing requirements?

When enacted into law in 2002, NCLB had widespread, bipartisan backing including support from President George W. Bush and Sen. Edward “Ted” Kennedy . Nonetheless, it had numerous creaky provisions, not least of which were the testing provisions that held schools accountable for student achievement.

Its measure of whether a school was failing was too bizarre for most people to understand and placed schools with the most challenged students at a disadvantage. Other mandates were equally meaningless. Giving students at failing schools a choice among other schools in their district simply shuffled children around the city. Requiring after-school programs did nothing to improve the school day itself.

All such provisions were potentially up for revision in 2007, but Congress couldn’t agree on how to bring the law up to date. As a fix, Obama’s education secretary, Arne Duncan, waived for most states the law’s most onerous provisions. Still, the administration continues to support testing every student in math and reading in grades three through eight and again in high school.

Now, the new Republican Congress is making another effort to revise NCLB, and tests are in the crosshairs. Unions, including United Teachers Los Angeles, oppose them for fear the data will be used to evaluate teachers. Conservatives fear tests will be used to impose “progressive” Common Core standards, which are backed by the White House and designed to set the same broad expectations for all U.S. students.

Civil rights groups, on the other hand, are fighting to keep testing in place. “Now is not the time to make a U-turn in holding states and school districts accountable for providing a quality education to all children,” declared Nancy Zirkin, executive director of the influential Leadership Conference on Civil and Human Rights, a coalition of more than 20 organizations.

Her stance is backed by solid research evidence. Summing up the best studies, Martin West, of the Harvard Graduate School of Education, told a congressional committee in January that NCLB “worked to generate modest improvements in student learning, concentrated in math and among the lowest-performing students — precisely those on whom the law was focused.” In L.A. after the law was implemented, student performance improved between 2003 and 2014 by well over a year’s worth of learning in fourth- and eighth-grade reading and math.

Testing also remains popular with the public. In 2012, the journal Education Next asked a cross section of the American public whether “the federal government [should] … require that all students be tested in math and reading each year in grades 3-8 and once in high school.” More than 80% of those surveyed responded favorably. In 2014, Education Next asked the public whether it supported “standards for reading and math that are the same across the states [and] will be used to hold public schools accountable for their performance.” Only 16% opposed the idea.

In Washington, however, interest-group pressure may matter more than public opinion. Despite strong evidence to the contrary, teachers unions deny that testing benefits disadvantaged students. No Child Left Behind, “in emphasizing testing, pulled us away from the focus on kids, especially those who are poor,” writes Randi Weingarten, president of the American Federation of Teachers.

Weingarten says we should be “supporting, not sanctioning, kids, teachers and schools.” One suspects that “teachers” is the key word in the phrase. They resist the use of student scores to measure job performance because, they say, scores fluctuate for many reasons. But most evaluations of teachers are based on performance over several years. And when former Washington, D.C., school superintendent Michelle Rhee put into place a performance-based pay plan that dismissed the weakest teachers and paid the best ones six-digit salaries, test scores soared.

As a compromise, unions propose testing students just once in elementary school, once in middle school and once in high school. But if you don’t test students every year, you cannot detect the progress they are making under each teacher. Without that information, performance pay and tenure based on merit fly out the window.

Testing critics also want Congress to let each school district come up with its own tests and its own criteria for evaluating student performance. But without a consistent program it becomes impossible to determine which schools are getting it right — and which are not.

Union opposition is undermining Democratic support for testing. But that wouldn’t mean much in a GOP-controlled Congress were it not for tea party fears of federal school control in the form of the Common Core. Trying to kill Common Core, tea party activists have added an anti-testing plank to their agenda, presumably because testing would only solidify the power of national standards they dislike.

Together the left-right alliance is so powerful, the middle is struggling to hold its own. Already, California has placed a one-year moratorium on systematic testing, claiming schools need a break while the state develops Common Core tests.

Annual, statewide testing should be saved, and it can be if moderates in both parties fight off special interests. But perhaps the most likely outcome is a decision to kick the can down the road two more years, leaving No Child Left Behind and testing to be tackled by the next president.

That is unfortunate. There are many elements of law that deserve tweaking, but even if the NCLB bathwater needs changing, our kids are not likely to learn more if schools and teachers are not held accountable.

Paul E. Peterson is a professor at Harvard University, where he directs its Program on Education Policy and Governance. He is also a senior fellow at the Hoover Institution at Stanford University.

………Mr. Wallison gives taxpayers the inside story of how housing policy was like a siphon hidden inside their wallets—and why it hurt so much.”, Casey B. Mulligan, “Capital Hill Pickpockets”, Wall Street Journal (Mr. Mulligan, an economics professor at the University of Chicago, is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”)

Bookshelf

Capitol Hill Pickpockets

Risky loans made by Fannie and Freddie were the biggest factor that led to the financial crisis—and the direct result of federal policy.

By Casey B. Mulligan

How much did the federal government contribute to the financial crisis? The question is quantitative, and the answer requires the kind of number crunching and careful thinking than cannot fit into an op-ed or television interview. Peter J. Wallison ’s “Hidden in Plain Sight,” is the book that answers the question most meticulously of any written since 2008.

At this point, seven years on, most readers of this newspaper will recognize that the federal government’s role has been to force American taxpayers to subsidize trillions of dollars of risky lending. But each reader of Mr. Wallison’s book will come away a bit embarrassed at having neglected or forgot about one or more of Washington’s many contributions to the financial crisis.

Subsidies for risky lending had subtle, off-budget beginnings. Taxpayers were implicitly guaranteeing banks and financial institutions, especially Fannie Mae and Freddie Mac, but with few explicit charges against the U.S. Treasury between the savings-and-loan crisis of the 1980s and ’90s and the peak of the more recent housing cycle. Middle- and upper-income households were also implicitly paying extra for, or receiving less value from, their bank products and services because banks were tasked by the federal government to pursue goals like lending to low-income households with poor credit, rather than creating value in the marketplace. These extra costs were absent from the federal budget, too.

Mr. Wallison, backed with calculations made by former Fannie Mae chief credit officer Edward Pinto, primarily points to risky lending by the two government-sponsored entities (GSEs). Moreover, he argues that the risky loans were the single biggest factor that led to the crisis and were the direct result of federal policy.

As part of its regulation of Fannie and Freddie, the Department of Housing and Urban Development created increasingly ambitious affordable-housing goals that could only be achieved with lax underwriting criteria for the GSEs. (The criteria also set a new low standard for the rest of the mortgage industry, Mr. Wallison says.) To illustrate this policy, Mr. Wallison cites numerous documents from Fannie and Freddie in which officials state that they must acquire more nonprime loans (or buy them bundled as mortgage-backed securities) in order to meet HUD’s requirements. To name one: During a 2004 staff presentation, Fannie’s chief financial officer said, “We project extreme difficulty meeting our minority goals in 2005 [and beyond]. . . . There is only one place to change the market and acquire the business in sufficient size—subprime.”

Hidden in Plain Sight

By Peter J. Wallison
Encounter, 411 pages, $27.99

From an economic point of view, a weakness of the book is the degree to which Mr. Wallison relies on such documents rather than demonstrating how incentives fit together with actions. For example, in making the case that GSE regulation was the single biggest factor behind the financial crisis, Mr. Wallison might have measured how taxpayer funds that ultimately went to Fannie and Freddie compared with funds for other bailouts. To show how GSE executives were reacting to HUD’s goals, he might have presented simulations of how sticking to prime loans—and thus failing to meet affordable-housing targets—might have affected the compensation of the key GSE executives and the costs that would eventually be absorbed by taxpayers.

The author, a former general counsel for the Reagan Treasury Department and a dissenting member of the Financial Crisis Inquiry Commission, does use economics to show why we should doubt the commission’s claim that nonprime loans acquired in 2004-07 primarily served the purposes of maximizing GSE profits and market share. By 2006, if not earlier, GSE officials saw nonprime loans as negative-cash-flow deals, not to mention the losses they would generate in future years as a consequence of the loans’ high default rates. Moreover, the GSEs did little to “fight for market share” in 2004-06. Instead, they increased the guarantee fees (measured in basis points) that are part of what determines the fraction of mortgages that a GSE can acquire, thereby deliberately reducing GSE market share.

Another factor that contributed to risky lending and thereby the crisis, Mr. Wallison argues, was the Community Reinvestment Act as amended in 1989. The act requires depository institutions to make a sufficient number and amount of loans to low-income borrowers in their area. Large banks were particularly deferential to the Community Reinvestment Act because conspicuous support for the law’s objectives was critical for getting mergers and new products approved by regulators.

But Mr. Wallison is too subtle when he tries to explain how the Community Reinvestment Act helped lead to financial-institution insolvency. Here the credit-default swaps are key. As banks sold off their nonprime loans—motivated in part by the Community Reinvestment Act—the swaps were vehicles for concentrating the risky part of the portfolio in a few institutions, like Bear Stearns and AIG, where federal officials felt compelled to inject federal dollars.

Fannie and Freddie were ultimately absorbed by the federal government, and the Congressional Budget Office estimates that their mortgage activities (on the books in 2009 as a result of transactions in that year and the several years prior) cost federal taxpayers about $300 billion. The Troubled Asset Relief Program of 2008 was a $700 billion federal program. Taxpayers had to support the insurer AIG with $180 billion when no one else in the world wanted to. Billions more were spent bailing out Bear Stearns and other financial institutions. Taxpayers would have tolerated few if any of these actions if there had been no financial crisis or a closely imminent threat of one.

In my opinion, a financial crisis is not only a likely consequence of implicit subsidies for risky lending but a necessary one because that is when implicit guarantees ultimately become real-life bailouts and trigger the taxpayer payments necessary to fund Washington’s longstanding lending goals. Mr. Wallison gives taxpayers the inside story of how housing policy was like a siphon hidden inside their wallets—and why it hurt so much.

Mr. Mulligan, an economics professor at the University of Chicago, is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

…From 2007 to 2010, leverage was a terrible weapon that hurt the middle class much more severely than the top 1 percent. In that period, Mr. Wolff has found, after inflation, without counting the effects of debt, the total portfolios of the top 1 percent declined 6.37 percent annually. The comparable decline for the middle 60 percent of the population was 7.06 percent. When you add debt (mortgages) to the calculation, the picture is far worse for the middle 60 percent. The real net worth of these households dropped 10.55 percent annually versus a drop of 6.52 percent for the top 1 percent. Those are the most severe losses in many decades.

The rich could have done even better if they had used more leverage, Mr. Wolff noted. “It’s surprising, when you look at the numbers, that rich people don’t take on more debt,” Mr. Wolff said. “They can withstand the downturns — and the debt would increase their returns and make them richer over the long run.” For everyone else, debt raises much trickier questions. Should public policy encourage people to take on more debt, or should we follow Mr. Micawber’s advice and try to avoid it? Should poorer people be encouraged to take on debt in order to gain a foothold on the road to wealth? These are complex issues, and I expect to return to them.”, Jeff Sommer, “Debt’s Two Sides: Riches and Misery”, New York Times

“And these are average figures; even for the middle 60 percent of Americans, total mortgage debt was just 50% of  total homes’ value. That’s 1:1 leverage (debt-to-equity), that’s not much leverage and essentially is not the reality of the current marketplace for most homes and mortgages. Most people buy homes with under 20% down (20% down is 4:1 leverage, 10% down is 9:1 leverage, and 3% down is a whopping 32:1 leverage). Think about the extreme positive and negative returns (on invested capital) experienced by those Americans who bought homes with low-to-no down payment mortgages during this period (2001 to 2010). That’s at the root of this crisis and hasn’t really been addressed, because of the blame game (it’s the greedy and reckless bankers, etc.). At the root of the crisis is that as a matter of U.S. housing policy, our government provides Americans (many of whom have little-to-no net worth) with highly-leveraged, risky mortgage loans. These mortgage loans ONLY work, if the homebuyer can afford to stay in their home a handful of years and housing prices rise in value!!! That’s the  real issue that the “blame game” has prevented from being addressed. In fact the government is back to 32:1 leverage mortgages for consumers!!! Maybe we don’t change a thing. But then we all understand, these mortgages will fail if nominal home prices don’t rise and/or if homeowner is forced to sell (for whatever reason) before home prices rise enough to cover the costs of sale. By the way, over the past almost 25 years, according to FHFA home prices in my Los Angeles MSA have declined in just under half of the years. That’s a HUGE risk with 32:1 leverage isn’t it? (This issue is at the heart of a new Home Buyers application I am building.)”, Mike Perry, former Chairman and CEO, IndyMac Bank

Business Day 

Debt’s Two Sides: Riches and Misery

The character Wilkins Micawber, played by W.C. Fields in a 1935 movie version of Charles Dickens’s “David Copperfield,” warned that debt was a recipe for unhappiness. Credit MGM

By JEFF SOMMER

Debt is a double-edged sword. Charles Dickens’s character Wilkins Micawber warned eloquently of debt’s downside: “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”

He was certainly right: Debt can blight your life. But what Mr. Micawber didn’t say is that debt can make you much wealthier. Then it’s called leverage, and it can supercharge your investment returns if you use it wisely.

To a startling degree, the two sides of debt — its destructive and its beneficial powers — have been responsible for the shifting fortunes of vast numbers of Americans since the turn of the century. Data collected by the Federal Reserve and analyzed in a recent paper by Edward N. Wolff, an economics professor at New York University, makes it clear that many American households of moderate means got much richer, on paper, anyway, from 2001 to 2007, largely because of rising home prices combined with mortgage debt.

The data also shows that when the housing market soured, that debt intensified an extraordinarily sharp decline in the household wealth of most Americans from 2007 to 2010. The effects of that shocking decline on the wealth of American households since then — and the proper role of debt in the future — are much less obvious. But important and sometimes counterintuitive lessons about the use and abuse of debt are already emerging from the data.

First, consider that while debt is inherently dangerous, when it’s handled carefully and appropriately it may be a very good thing. It’s easy, after the ravages of the last recession, to forget that during the exhilarating period from 2001 to 2007, many middle-class American homeowners had good reasons to be happy about their mortgage debt. It helped give the middle 60 percent of American households better overall investment returns than people who were much better off — those in the top 1 percent. “That differential in the rate of return is pretty remarkable,” Mr. Wolff said in an interview. “It shows you that debt, in that period, had a very positive wealth effect. It’s why people in the middle had higher returns — when you include debt — than people at the very top.”

Here’s the reason: While people in the top 1 percent tend to carry very little debt as a proportion of their overall assets, people in less exalted financial strata typically need to carry mortgage debt to finance a house, which is usually their most important asset. In the most basic terms, the beneficial effect of leverage works like this: If you invest $100,000 and it grows to $103,000 in one year, after inflation, then your real annual rate of return is 3 percent. If you’ve borrowed half the money, or $50,000, and pay 2 percent interest, or $1,000, on the loan, your net return is $2,000. But because your investment was only $50,000, that’s a better rate of return — of 4 percent.

In other words, by borrowing, you increased your rate of return. That’s what happens for homeowners when they hold a mortgage and the value of their house rises. What’s more, as a matter of longstanding public policy in the United States, additional benefits are bestowed on homeowners with mortgages, who can reduce their income taxes by taking a mortgage interest deduction. And as I’ve written, government and quasi-government entities have been actively supporting the housing and mortgage markets for years, adding to the benefits of homeownership.

From 2001 to 2007, in one sense, the mortgage advantage outweighed the considerable benefits enjoyed by households in the top 1 percent, whose wealth gives them access to the most rarefied opportunities in the stock, bond and commodities markets — and in just about any other area they want to pursue. And, if you leave debt out of it and look at assets alone, much as you might expect, the overall portfolios of households in the top 1 percent were better. They had real annual rates of return of 3.86 percent from 2001 to 2007, compared with only 2.95 percent for people in the middle 60 percent, according to data derived by Mr. Wolff from the Federal Reserve’s 2013 Survey of Consumer Finances. It appears in his paper, “Household Wealth Trends in the United States, 1962-2013: What Happened Over the Great Recession?”

Add debt to the mix, however, and you turbocharge the returns. Thanks to leverage, the net assets of the middle 60 percent of households, including the effect of debt, increased 5.95 percent in those years, far better than the 4.03 percent gain for households in the top 1 percent.

Wealthier people shared in the benefits of homeownership too — as they do now — but they have so much other wealth and so little debt as a proportion of their total assets that homeownership isn’t as crucial to their net worth. Mr. Wolff has found that in 2013, for example, mortgage debt for the top 1 percent was only 16.5 percent of the value of their homes; for households in the middle 60 percent of the population, mortgage debt accounted for almost 50 percent of home values. And home equity — the value of your home after loans are subtracted — accounted for only 7.3 percent of the total assets of the top 1 percent. The comparable number for the middle 60 percent was 31.4 percent.

That’s why the net worth of the households in the middle took such a savage beating after housing prices began to fall in 2007. From 2007 to 2010, leverage was a terrible weapon that hurt the middle class much more severely than the top 1 percent. In that period, Mr. Wolff has found, after inflation, without counting the effects of debt, the total portfolios of the top 1 percent declined 6.37 percent annually. The comparable decline for the middle 60 percent of the population was 7.06 percent.

When you add debt to the calculation, the picture is far worse for the middle 60 percent. The real net worth of these households dropped 10.55 percent annually versus a drop of 6.52 percent for the top 1 percent. Those are the most severe losses in many decades.

From the standpoint of wealth, poorer people endured vastly more punishing blows than both the very wealthy and those of more moderate incomes, the data shows. The poorest 20 percent of the population was in bad shape to start with. In 2001, these households were already locked in the Micawber nightmare, unable to pay their bills and spiraling downward. They had an average negative net worth of $10,800, and while the rest of the country was getting richer they were falling further behind. By 2007 they had an average net worth of negative $15,200 — and by 2010 they plunged further into a negative net worth, on average, of $25,500. Few of these people owned homes, but when the mortgage crisis hit, they suffered acutely.

The big picture, of course, is that carnage in the American housing and mortgage markets led to a global financial crisis and contributed to a worldwide recession. Those shocks led to foreclosures, a drop in the rate of homeownership, a reduction in mortgage debt — and the still transitional asset markets with which we are grappling today.

While the most recent figures available from the Federal Reserve show that both the median and mean incomes of American households had not yet recovered by the end of 2013, it’s a different situation for wealth. Mean, or average, household wealth has reached a new high. Federal Reserve statistics on wealth show that from June to September (the third quarter) of last year, average wealth was 9.4 percent higher than in the first quarter of 2008, its previous peak. Asset prices have been rising, especially in the stock market, and wealthier households, which own far more stock, have benefited disproportionately.

The rich could have done even better if they had used more leverage, Mr. Wolff noted. “It’s surprising, when you look at the numbers, that rich people don’t take on more debt,” Mr. Wolff said. “They can withstand the downturns — and the debt would increase their returns and make them richer over the long run.”

For everyone else, debt raises much trickier questions. Should public policy encourage people to take on more debt, or should we follow Mr. Micawber’s advice and try to avoid it? Should poorer people be encouraged to take on debt in order to gain a foothold on the road to wealth? These are complex issues, and I expect to return to them.

A version of this article appears in print on February 22, 2015, on page BU6 of the New York edition with the headline: Debt’s Two Sides: Riches and Misery.

Americas

Amid a Slump, a Crackdown for Venezuela

By SIMON ROMERO and GIRISH GUPTA

A sample bank note with the face of President Nicolás Maduro of Venezuela and the word “devaluated.” Credit Jorge Silva/Reuters

CARACAS, Venezuela — For a glimpse into Venezuela’s economic disarray, slip into a travel agency here and book a round-trip flight to Maracaibo, on the other side of the country, for just $16. Need a book to read on the plane? For those with hard currency, a new copy of “50 Shades of Grey” goes for $2.50. Forget your toothpaste? A tube of Colgate costs 7 cents.

Quite the bargain, right?

But for the majority of Venezuelans who lack easy access to dollars, such surreal prices reflect a tremendous currency devaluation and a crumbling economy expected to contract 7 percent this year as oil income plunges and price controls produce acute shortages of items including milk, detergent and condoms.

“I’ve seen people die on the operating table because we didn’t have the basic tools for surgeries,” said Valentina Herrera, 35, a pediatrician at a public hospital in Maracay, a city near Caracas. She said she planned to look for other work because making ends meet on her salary of 5,622 bolívars a month — $33 at a new exchange rate unveiled recently — was impossible.

The wife of Mayor Antonio Ledezma of Caracas, Mitzy. Mr. Ledezma was arrested last week on charges of plotting an American-backed coup. Credit Miguel Gutierrez/European Pressphoto Agency

Faced with tumbling approval ratings as Venezuelans reel from the economic shock, President Nicolás Maduro is intensifying a crackdown on his opponents, reflected in last week’s arrest of Antonio Ledezma, the mayor of Caracas, and his indictment on charges of conspiracy and plotting an American-backed coup.

Mr. Maduro, a protégé of President Hugo Chávez, who died in 2013, has adopted an increasingly shrill tone against critics of Venezuela’s so-called Bolivarian Revolution. As evidence against Mr. Ledezma, Mr. Maduro pointed to an open letter this month calling for “a national agreement for a transition” that was signed by Mr. Ledezma; Leopoldo López, another opposition figure who has been imprisoned for the past year; and María Corina Machado, an opposition politician charged in December with plotting to assassinate Mr. Maduro.

“In Venezuela we are thwarting a coup supported and promoted from the north,” Mr. Maduro said over the weekend on Twitter. “The aggression of power from the United States is total and on a daily basis.”

Mr. Maduro is taking a page from Mr. Chávez, who was briefly ousted in a 2002 coup with the Bush administration’s tacit approval, then made attacking Washington and locking up people suspected of being putschists a fixture of his government. But the State Department has disputed Mr. Maduro’s claims, saying the United States is not promoting unrest in Venezuela.

At the same time, the move by Mr. Maduro points to a hardening in how opposition figures here are treated. Thirty-three of the 50 opposition mayors in the country are now facing legal action in connection with antigovernment protests last year that left 43 people dead, according to Gerardo Blyde, the mayor of Baruta, a Caracas municipality.

One prominent opposition mayor, Daniel Ceballos of the city of San Cristóbal, has been in jail for the past year, while another, Enzo Scarano of the industrial town of San Diego in Carabobo State, was transferred from jail to house arrest last month because of deteriorating health.

The arrest of Mr. Ledezma, 59, who was democratically elected but had much of his authority stripped away in 2009, has even some pro-Chávez analysts questioning the wisdom of Mr. Maduro’s move. While Mr. Ledezma joined a hardline faction of the opposition last year called “the Exit,” he was not viewed as especially prominent or influential.

“Fueling suspicion is a distraction tactic from the huge currency devaluation we’ve had to withstand,” said Nicmer Evans, a pro-Chávez political consultant who is among those on the left here now openly criticizing Mr. Maduro. “What’s not clear is the proof of wrongdoing in this case.”

With inflation soaring to a rate of 68 percent, the Venezuelan authorities are seeking to manage the economic crisis with a complex web of three official exchange rates. For instance, some basic goods are imported at rates of 6.3 and 12 bolívars to the dollar, but a new floating rate of about 171 was introduced last week, effectively reflecting a devaluation of nearly 70 percent.

On the black market, which some Venezuelans already use to carry out basic transactions, the rate is even higher.

Even for some Chávez loyalists, Mr. Maduro seems to be in over his head in dealing with the scramble for hard currency. Jorge Giordani, one of the late president’s top economic advisers, said this month that Venezuela was emerging as Latin America’s “laughingstock,” citing corruption and labyrinthine bureaucracy as factors accentuating the economic quagmire.

“We need to acknowledge the crisis, comrades,” said Mr. Giordani, whom the president ousted last year as finance and planning minister.

Antonio Ledezma Credit Carlos Garcia Rawlins/Reuters

Indeed, some economists say that the government’s hesitance to overhaul its perplexing currency controls could intensify Venezuela’s economic problems.

“The system is going haywire,” said Francisco Rodríguez, chief Andean economist at Bank of America Merrill Lynch, emphasizing that galloping price increases could soon enter the realm of hyperinflation, accelerating to triple digits this year and to more than 1,000 percent in 2016 if policies are maintained.

Mr. Maduro seems to recognize that some profound economic changes are needed in Venezuela, which commands the world’s largest oil reserves, creating the illusion of inexhaustible wealth. He supports raising the price of gasoline, which costs less than 10 cents a gallon at the strongest official exchange rate; there is considerable resistance to such a shift even though the fuel subsidy costs the government more than $12 billion a year.

But ahead of congressional elections this year in which Mr. Maduro’s supporters seem vulnerable, the president is also seeking to shore up his base.

Mr. Ledezma’s wife, Mitzy, told Reuters on Sunday that the president was showing his dictatorial tendencies. “He knows that every day there are more opponents,” she said.

Despite the widespread complaints about hardship and high levels of violent crime, some here remain loyal to Mr. Maduro out of gratitude for a vast array of social welfare programs.

“I’ll vote for Maduro until I die,” said Marco Miraval, 77, who sells coconuts in 23 de Enero, a sprawling housing complex that is a bastion for pro-Chávez groups, pointing to Mr. Maduro’s support of subsidized university education and health care. He said Venezuela’s economic problems were a result of Washington’s pressure on the government. “It’s because they’re being sabotaged by this economic war,” he said.

Still, while Venezuela’s opposition remains divided and hampered by the arrests of some leading figures, Mr. Maduro lacks the oratorical skill of Mr. Chávez, who skewered his opponents in what often seemed like a stream-of-consciousness approach to governing that kept many Venezuelans on the edge of their seats.

“Maduro is trying to consolidate his leadership without having the charisma to do so,” said Margarita López Maya, a historian who studies protest movements, describing his latest moves as amounting to “an excess of authoritarianism.”

In the meantime, bizarre prices persist for many basic services, punishing those who earn and save in bolívars while benefiting an elite with access to hard currency in bank accounts abroad. For instance, monthly broadband service from the state telecommunications company costs less than the equivalent of $1. The monthly electricity bill for a huge luxury apartment, with air-conditioning on at all hours, comes to less than $2.

Even that absurdly cheap flight to Maracaibo is more complicated than it appears since some airlines have trouble obtaining the dollars they need to maintain their planes.

“You’ll see things you’ll never believe: half a dozen aircraft from just one airline just waiting on the ground because they don’t have parts,” said Nicolás Veloz, a pilot based in Caracas.

For some Venezuelans who are struggling to get by, the economic disorder they see explains the president’s targeting of his opponents. “Maduro is terrified, and so he’s using more totalitarian methods, putting politicians in prison with so many police,” said Eduardo de Sousa, 28, a pharmaceutical lab assistant. “They know that the revolution is over, and they’re scared.”

María Eugenia Díaz contributed reporting.

A version of this article appears in print on February 23, 2015, on page A1 of the New York edition with the headline: Amid a Slump, A Crackdown for Venezuela.

…First, last fall, experts on the committee that develops the country’s dietary guidelines acknowledged that they had ditched the low-fat diet. On Thursday, that committee’s report was released, with an even bigger change: It lifted the longstanding caps on dietary cholesterol, saying there was “no appreciable relationship” between dietary cholesterol and blood cholesterol. Americans, it seems, had needlessly been avoiding egg yolks, liver and shellfish for decades…How did experts get it so wrong?…..the primary problem is that nutrition policy has long relied on a very weak kind of science: epidemiological, or “observational,” studies in which researchers follow large groups of people over many years. But even the most rigorous epidemiological studies suffer from a fundamental limitation. At best they can show only association, not causation. Epidemiological data can be used to suggest hypotheses but not to prove them.

Instead of accepting that this evidence was inadequate to give sound advice, strong-willed scientists overstated the significance of their studies.

Much of the epidemiological data underpinning the government’s dietary advice comes from studies run by Harvard’s school of public health. In 2011, directors of the National Institute of Statistical Sciences analyzed many of Harvard’s most important findings and found that they could not be reproduced in clinical trials. It’s no surprise that longstanding nutritional guidelines are now being challenged.”, Nina Teicholz, “The Government’s Bad Diet Advice”, New York Times

“A real American doesn’t just accept what our government and the mainstream media tells them. That’s what happens in totalitarian societies like Venezuela or Russia. Real Americans are skeptical, study the facts, listen to a wide variety of views and then decide for themselves what to believe or not (and if they later find out other facts, they humbly admit they erred and change their view). Just like the government’s bad diet advice (which distorted for decades our views of what was healthy and what wasn’t), the public’s views about the 2008 financial crisis (influenced by the current administration, some Democrats in Congress, and most of the mainstream media) are mostly wrong. This blog is dedicated to the facts and truth about the 2008 financial crisis.”, Mike Perry, former Chairman and CEO, IndyMac Bank

The Opinion Pages

The Government’s Bad Diet Advice

By NINA TEICHOLZ

Credit Mark Pernice

FOR two generations, Americans ate fewer eggs and other animal products because policy makers told them that fat and cholesterol were bad for their health. Now both dogmas have been debunked in quick succession.

First, last fall, experts on the committee that develops the country’s dietary guidelines acknowledged that they had ditched the low-fat diet. On Thursday, that committee’s report was released, with an even bigger change: It lifted the longstanding caps on dietary cholesterol, saying there was “no appreciable relationship” between dietary cholesterol and blood cholesterol. Americans, it seems, had needlessly been avoiding egg yolks, liver and shellfish for decades. The new guidelines, the first to be issued in five years, will influence everything from school lunches to doctors’ dieting advice.

How did experts get it so wrong? Certainly, the food industry has muddied the waters through its lobbying. But the primary problem is that nutrition policy has long relied on a very weak kind of science: epidemiological, or “observational,” studies in which researchers follow large groups of people over many years. But even the most rigorous epidemiological studies suffer from a fundamental limitation. At best they can show only association, not causation. Epidemiological data can be used to suggest hypotheses but not to prove them.

Instead of accepting that this evidence was inadequate to give sound advice, strong-willed scientists overstated the significance of their studies.

Much of the epidemiological data underpinning the government’s dietary advice comes from studies run by Harvard’s school of public health. In 2011, directors of the National Institute of Statistical Sciences analyzed many of Harvard’s most important findings and found that they could not be reproduced in clinical trials.

It’s no surprise that longstanding nutritional guidelines are now being challenged.

In 2013, government advice to reduce salt intake (which remains in the current report) was contradicted by an authoritative Institute of Medicine study. And several recent meta-analyses have cast serious doubt on whether saturated fats are linked to heart disease, as the dietary guidelines continue to assert.

Uncertain science should no longer guide our nutrition policy. Indeed, cutting fat and cholesterol, as Americans have conscientiously done, may have even worsened our health. In clearing our plates of meat, eggs and cheese (fat and protein), we ate more grains, pasta and starchy vegetables (carbohydrates). Over the past 50 years, we cut fat intake by 25 percent and increased carbohydrates by more than 30 percent, according to a new analysis of government data. Yet recent science has increasingly shown that a high-carb diet rich in sugar and refined grains increases the risk of obesity, diabetes and heart disease — much more so than a diet high in fat and cholesterol.

It’s not that health authorities weren’t warned. “They are not acting on the basis of scientific evidence, but on the basis of a plausible but untested idea,” Dr. Edward H. Ahrens Jr., a top specialist at Rockefeller University and prominent critic of the growing doctrine on dietary fats and cholesterol, cautioned back in the ’80s. In the face of urgent pressure to offer a solution to the rising tide of heart disease, however, he turned out to be the Cassandra of his day.

Today, we are poised to make the same mistakes. The committee’s new report also advised eliminating “lean meat” from the list of recommended healthy foods, as well as cutting back on red and processed meats. Fewer protein choices will likely encourage Americans to eat even more carbs. It will also have policy implications: Meat could be limited in school lunches and other federal food programs.

It’s possible that a mostly meatless diet could be healthy for all Americans — but then again, it might not be. We simply do not know. There are no rigorous clinical trials on such a diet, and although epidemiological data exists for adult vegetarians, there is none for children.

Since the very first nutritional guidelines to restrict saturated fat and cholesterol were released by the American Heart Association in 1961, Americans have been the subjects of a vast, uncontrolled diet experiment with disastrous consequences. We have to start looking more skeptically at epidemiological studies and rethinking nutrition policy from the ground up.

Until then, we would be wise to return to what worked better for previous generations: a diet that included fewer grains, less sugar and more animal foods like meat, full-fat dairy and eggs. That would be a decent start.

Nina Teicholz is the author of “The Big Fat Surprise: Why Butter, Meat and Cheese Belong in a Healthy Diet.”

A version of this op-ed appears in print on February 21, 2015, on page A19 of the New York edition with the headline: The Government’s Bad Diet Advice.

“After the 2008 financial crisis the media and even some economists wondered aloud, “How could Americans rationally think home prices would always continue to rise?” The answer is simple. The Federal Reserve’s long-standing policy is not stable prices (one of their two mandates under the law), but modest inflation in prices. I don’t think many Americans understand that the Fed, for decades, has deliberately and unilaterally re-interpreted their Congressional “stable prices mandate” to mean that they should foster monetary inflation of around 2% a year. Why modest monetary inflation and not modest monetary deflation, or neither? Because monetary inflation encourages consumers and business to spend (and borrow) today, rather than wait, because prices will be higher in the future as a result of Fed-created monetary inflation. This also encourages our federal, state, and local governments to do the same; spend and borrow. Why does the Fed believe this is good? Because it stimulates economic activity in the short-run (I am not an economist, so not so sure about the long-run effect.). However, the Fed’s distortive monetary policy (always inflation) can and does distort economic activity. It encourages more spending, borrowing, and speculation than would otherwise be the case. It creates a rational expectation that prices for goods and services will rise about 22% every 10 years (the compounding of 2% annual monetary inflation) and that the nominal price of homes will rise 82% over the life of a 30-year mortgage. The Fed’s monetary inflation policy combined with other government housing and mortgage policies and normal economic issues (like restricted supply due to land or zoning constraints, vibrant regional economies, etc.) to create the rational expectation in individual Americans, Realtors, home builders, their lenders, their insurers, the bond rating agencies, mortgage investors, economists, (Fannie, Freddie, HUD, FHA, and VA), banking regulators and governments at all levels in the United States, that nationally, nominal home prices would always rise. In fact, in the mid-2000’s, then Chairman of the Federal Reserve Alan Greenspan told Americans that nationally, nominal home prices had never fallen (even one year) since The Great Depression and he made clear that the Fed and other renowned economists (including Nobel Laureate and monetary expert Milton Friedman and future Fed Chairman Ben Bernanke) had extensively studied this historic event and as a result, the Fed believed it could prevent another Great Depression from occurring. That’s why pre-crisis nearly everyone developed the rational expectation that nationally, nominal home prices (which reflect the economy generally) would not decline and acted accordingly, in their economic activities. (By way of example, the government’s FHA assumed nominal home price appreciation of 4% a year in perpetuity in it reverse mortgage product.) Now that we have endured the 2008 financial crisis, we know the Fed was wrong (about national, nominal home prices) and we now understand the distortive effect of the Fed’s monetary inflation policy and wise investors will act accordingly and cast a very skeptical eye towards the Fed, and its policies and pronouncements”, Mike Perry, former Chairman and CEO, IndyMac Bank 

Heard on the Street

The Age-Old Inflation Issue

By Justin Lahart

The Federal Reserve has come to view inflation expectations as playing an important role in what happens to prices. Maybe who is doing the expecting matters as well.

One reason the Fed hasn’t seemed particularly alarmed by the cooling in inflation that lower gasoline prices and the higher dollar have brought on is that inflation expectations haven’t moved. Indeed, the Federal Reserve Bank of New York on Monday said its January survey of consumers showed people expect inflation of about 3% over the next three years. That is just a fraction less than the 3.05% they expected a year ago. (People consistently guess high on where inflation is heading.)

The Fed survey also shows how much age matters for inflation expectations. People over 60 expect inflation to come in at 3.4%, while people under 40 expect it to be 2.8%. This represents a shift from the 1970s and 1980s when University of Michigan data show it was the older cohort who expected less inflation.

Expectations are supposed to work their way into actual inflation in part because they affect the prices people are willing to pay. But the differing age-based expectations show why that might not always be so. Older Americans’ view tends to be colored by living through inflationary times. And, because they often live on fixed incomes, such people are sensitive to the prospect of inflation eroding their purchasing power. But the result is that older Americans who expect higher inflation may be inclined to purchase less. That would be because they feel the need to conserve capital.

Since this would have a deflationary effect, the Fed might want to pay more attention to what is, or isn’t, worrying the younger set.

—Justin Lahart

…Today’s “nationalized” mortgage industry (versus the pre-crisis one) has much higher loan origination costs (thousands of dollars per loan) due to the myriad of new government regulations and lender fears of arbitrary government fines and class-action lawsuits, all of which is passed directly on to American mortgage borrowers. And today’s “nationalized” mortgage industry has substantially reduced competition; which has resulted in historically fat lender profit margins (and they are mainly just packaging mortgages for the government!), poor service, and no accountability. Bottom line, average American mortgage borrowers are paying over $5,000 more today for their mortgage than they were pre-crisis (and that’s a low-ball guesstimate on my part) today than they were pre-crisis, because of increased regulation and reduced competition. And what real, tangible benefit can anyone point to, that justifies this? I don’t see it.”, Mike Perry, former Chairman and CEO, IndyMac Bank

Excerpt from February 2015 Mortgage Industry Newsletter:

Anonymous Mortgage Loan Officer #1:

“Over the past several years my biggest frustration and concern has been with the wholesale and retail lenders I use not caring about or paying attention to the purchase contract deadlines or even lock expirations. Consider that I, as the loan officer, have no authority over anyone other than myself and an employee if I have one, but I am on the hook in the eyes of my borrower, their realtor, and the selling agent to meet all the contract dates in the purchase contract pertaining to the loan. I take these dates very serious, and I commit with every loan transaction to meet them or beat them to protect my borrower and keep them from falling out of contract.  But the second my processor turns the loan in for underwriting I am at the mercy of the company I’ve selected to do the same.  Unfortunately for me and everyone else, I find that these companies care more about their internal processes and policies and protecting the feelings of their underwriters and other internal team members than they do the contract, their clients, the borrowers, the realtors, or anyone else on the hook to deliver. I understand that they have to have policies and processes, and that LOs have to turn files in quickly. But time and time again, even with ample time to complete, these lenders are still missing appraisal deadlines, title deadlines, loan condition deadlines, closing deadlines and funding deadlines. They cause the parties to have to repeatedly execute extensions. They cause extreme stress, and in some cases they can cause borrowers to lose thousands of dollars in earnest funds and the property they wanted (that’s not happened to me thankfully) if the seller refuses to extend because they have a stronger offer in line. That’s becoming common in our hot markets.”

Anonymous Mortgage Loan Officer #2:

“The industry has been restructured so everyone can go after the loan officer for liability, however no one is talking about any liability falling on the lender who has some control over whether that purchase agreement’s deadlines are met or missed. They can take their sweet time sending out an appraiser, approving the loan, signing off on conditions, title docs and the appraisal report, and they can drag their feet on sending over figures, docs and finally the funds. I’ve seen it take 3 business days to sign off on one single document and voila!  The HUD just expired.  Or we’re expecting a CTC any minute and instead we get ‘sorry, your bank statement expires tomorrow’ even though they’ve had that statement for 2 months.  What!?!  Or our favorite: ‘I don’t see that document in the file’, even though you’ve uploaded it 3 times. No matter how much I protest, complain, push, demand or otherwise pressure the lender to consider the damage done by missing these dates, they may act like they care, but they still don’t speed up their delivery. They give lip service that they are working hard to get things done, but they still come up with last minute requests that should have been included in the first round of conditions (sloppy), and then they are late to clear the loan to close and everyone is scrambling to figure out how to keep the borrower in contract.  It’s not just one or two lenders, it’s a lot of them, and it seems to be more common with lenders that centralize everything so they have to handle files on an ‘as received’ basis. A more decentralized unit could be capable of paying closer attention to which loans need to close first and prioritizing them so they don’t become a crises (like in the good old days). I understand there are a lot of lenders that are really fast, or they say they are.  But there is really no accountability required of them.  I can get in a lot of hot water as an LO for a lot of reasons, but what about lenders that take unreasonable amounts of time to finish up a CTC or to release figures or to order the wire? I am tired of taking the beating for their delays, and losing repeat and future business for something I can’t control, but the lender can. Whether everyone’s reaction to this by taking it out on me is reasonable or not, it’s still a beating.”

“Again, the truth is emerging. Personal hardships, like death, job loss, and divorce; that prevent people from making their mortgage payments clearly were not caused by mortgage lenders. The truth is these many billions in funds which were extracted (in coerced settlements) from mortgage lenders (banks and Wall Street) by the federal government and various state governments, were supposed to be for “victims of mortgage abuse.” Yet the various governments completely abandoned their independent audit of mortgage loans to prove abuse. And now we see that California, the state with most alleged abuses (given the size of the real estate and mortgage market), not only never intended to disburse these funds to “victims of mortgage abuse”, but have even abandoned requiring homeowners to prove they suffered a personal hardship (a hardship that the mortgage lender is not responsible for). Think about it….these billions in funds were coerced from mortgage lenders for alleged “victims of mortgage abuse” and instead they are being used for any Californian who was unlucky enough to have bought a home with a mortgage (with little to no down payment) during the housing bubble and can show that they have 20% or more negative equity. Think about, if you put little or nothing down, you haven’t lost anything, but you are eligible for this program. Yet, if you prudently put 20% down and your mortgage is 10% underwater as a result, even though you have lost all of your own equity, you don’t qualify for this program. That’s not right. Finally, quite ironically, given all the criticism of “reduced documentation mortgages”, isn’t this California program in fact a “no documentation mortgage program?””, Mike Perry, former Chairman and CEO, IndyMac Bank

Funding for California victims of housing crash trickles down

Most banks, along with Freddie Mac and Fannie Mae, whose headquarters are shown above, refused to accept California’s program to help victims of the housing crash until the state agreed to shoulder the entire cost. (J. David Ake / Associated Press)

By E. Scott Reckard

California has delivered less than half of $2 billion in federal aid to help victims of the housing crash.

The fund, announced five years ago by the federal government, aimed to help homeowners in areas where home prices collapsed and unemployment soared. The Hardest Hit Fund, as the Treasury Department program is called, provided a total of $7.6 billion to 18 states and the District of Columbia, enabling them to customize relief for troubled communities.

“This program will allow housing finance agencies in the places hardest hit by the housing crisis to find innovative ways to help homeowners stay afloat,” President Obama said in announcing the program.

The state’s version, called Keep Your Home California, was announced with fanfare a year later. Its relief programs included an ambitious effort to help banks finance debt forgiveness by reducing mortgage principal.

It also made payments for the unemployed, helped delinquent owners catch up on payments and provided assistance in finding affordable housing to borrowers who lost homes in short sales.

“Our goal is to get the very most out of these federal dollars to assist California families,” said Steven Spears, then executive director of the California Housing Finance Agency, which oversees the program. “With families struggling through a number of financial hardships and the disruption in the real estate market, these programs will help those in need while stabilizing neighborhoods and communities severely impacted by foreclosures.”

But the state, after spending $100 million on administrative costs for Keep Your Home California, still has nearly $1 billion left to hand out.

The $920 million in relief that California has delivered is by far the most of any state. But that was expected, because California was granted nearly twice as much in federal funds as the runner-up, Florida, which was authorized to deliver about $1 billion.

California had delivered or committed 44.2% of its available funds as of Sept. 30, according to the Treasury Department’s last survey of results. That put it in a tie with Mississippi for 12th place, out of the program’s 19 participants, in the percentage of funds delivered. Oregon and Rhode Island, by contrast, had already delivered or committed more than 90% of the federal funds they were given. The slow pace of distributions has become a common complaint among advocates for people who have lost jobs or watched their home values plunge. Many still owe more on their mortgage than the home is worth.

A federal relief effort that set aside nearly $2 billion in housing aid for troubled Californians is being expanded to help older homeowners avert foreclosures on their reverse mortgages. ( E. Scott Reckard )

The states have encountered problems working with banks and mortgage servicers, which have found it hard to coordinate with so many state programs. Each state has its own rules for who gets the money and how it gets distributed.

An audit of the program in 2012 by a special inspector general criticized the Treasury Department for rolling out the Hardest Hit Fund without advance notice in February 2010 — then taking seven months before meeting with the states, banks and mortgage giants Freddie Mac and Fannie Mae.

The Treasury Department said any delay was caused by the states’ needs to hire housing counselors and staff to review applications. Setting up online programs also took time. The federal aid is nonetheless “creating long-lasting foreclosure prevention capabilities,” the letter said.

Officials have attributed California’s shortcomings to a number of problems, including the early emphasis on mortgage principal reduction. Most banks, along with Fannie Mae and Freddie Mac, declined to accept the program until the state agreed to shoulder its entire cost.

California had initially pushed the banks to pay for half of the cost of debt forgiveness. The goal of the program was to reduce homeowners’ debt to match the reduced value of their homes.

Even so, in the third quarter of 2014, the number of homeowners approved for principal reduction amounted to just 15% of those assisted by Keep Your Home California. That compared with 25% who were aided in catching up on missed payments and 58% for whom the state made mortgage payments while they were collecting unemployment benefits.

A Keep Your Home spokesman, Steve Gallagher, said the program was initially hampered by a lack of participation from loan servicers. But now nearly 200 of them have signed on.

Mortgage rates edged higher for a second week, with Freddie Mac’s weekly survey showing that lenders were offering conventional 30-year loans at an average 3.76%, up from 3.69% last week. ( E. Scott Reckard )

Caps on the amounts of assistance for individual homeowners have been raised, he said, and the pace of principal reduction has been picking up lately.

He said the agency expects to distribute all the federal funds by the end of 2017, when the program expires.

“The economy is getting better,” Gallagher said. “But there are still a lot of people in real trouble, and in some areas of the state there are still quite a few underwater homeowners.”

Another cause of delays was requirements that homeowners prove the factors causing their hardships — deaths, job losses, divorces. But last year, Keep Your Home California changed the rules to require only that homeowners show that their mortgage balance was at least 20% more than their home value.

Diane Richardson, legislative director for the housing agency, said she is satisfied the programs had achieved their goal of maintaining homeownership, since more than 90% of those helped are still in their homes after two years.

“I know people wish it would have gone faster, but this wasn’t a race,” Richardson said. “We had to make sure we were providing the tax dollars to people who really needed it … and left them in a position to go forward with housing they can afford.”

Richardson said Keep Your Home is planning to roll out a series of additional programs, starting with an effort announced this week to assist seniors with reverse mortgages who have fallen behind on their property tax and insurance payments.

The efforts to improve the program are welcome, but its performance so far has been disappointing, said Kevin Stein, associate director at the California Reinvestment Coalition in San Francisco.

“Whether this is due to servicer intransigence and unwillingness to participate in the program or bureaucratic challenges, the results for California families have been the same — too little, too late,” he said.

Notable & Quotable

Notable & Quotable

Increasingly, schools are being required to institutionalize prevention.

Harvard Law Prof. Janet Halley writing in the Harvard Law Review Forum, Feb. 18:

Increasingly, schools are being required to institutionalize prevention, to control the risk of harm, and to take regulatory action to protect the environment. Academic administrators are welcoming these incentives, which harmonize with their risk-averse, compliance-driven, and rights-indifferent worldviews and justify large expansions of the powers and size of the administration generally.

I recently assisted a young man who was subjected by administrators at his small liberal arts university in Oregon to a month-long investigation into all his campus relationships, seeking information about his possible sexual misconduct in them (an immense invasion of his and his friends’ privacy), and who was ordered to stay away from a fellow student (cutting him off from his housing, his campus job, and educational opportunity)—all because he reminded her of the man who had raped her months before and thousands of miles away. He was found to be completely innocent of any sexual misconduct and was informed of the basis of the complaint against him only by accident and off-hand. But the stay-away order remained in place, and was so broadly drawn up that he was at constant risk of violating it and coming under discipline for that.

When the duty to prevent a “sexually hostile environment” is interpreted this expansively, it is affirmatively indifferent to the restrained person’s complete and total innocence of any misconduct whatsoever.

“Maybe many average Americans have unfortunately become “subprime” (mostly due to economic circumstances beyond their control like stagnant middle class wages and job insecurity) and that’s why, even post-crisis, so many subprime consumer loans are still being made and our government is leading efforts to weaken mortgage lending standards once again? The typical middle class family has 21 days of their income saved in cash reserves, if they lose their job? If this is right, how in the world can anyone think these families can responsibly take on the burden of a home and a mortgage? Some economists have referred to this as our government’s policy being, “let them eat credit.”” Mike Perry, former Chairman and CEO, IndyMac Bank