Posted on 09/22/2008 8:02:05 PM PDT by Reagan Man
“Nationalizing Every Bad Mortgage in America Is Not the Answer”
Washington, Sep 22 -
U.S. Congressman Mike Pence is circulating the following “Dear Colleague” letter among his fellow House Republicans today:
Republicans Should Oppose the Bailout Plan
“Nationalizing Every Bad Mortgage in America Is Not the Answer”
Dear Republican Colleague:
Our financial markets are in turmoil and the Administration was right to call for decisive action to prevent further harm to our economy, but nationalizing every bad mortgage in America is not the answer.
As Bill Kristol wrote in “A Fine Mess” in today's New York Times:
And I acknowledge that there are serious people who think the situation too urgent and the day too late to allow for a real public and Congressional debate on what should be done. But — based on conversations with economists, Wall Street types, businessmen and public officials — I’m doubtful that the only thing standing between us and a financial panic is for Congress to sign this week, on behalf of the American taxpayer, a $700 billion check over to the Treasury.
The Administration's request amounts to the largest corporate bailout in American history. Congress should act, but should act in a way that protects the integrity of our free market and protects the American taxpayer from more debt and higher taxes. Congress must not hastily embrace a cure that may do more harm to our economy than the disease of bad debt.
And the stakes for our free market could not be higher.
As George Will observed on ABC's This Week with George Stephanopoulos program yesterday,
When the British Labour Party was socialist, it defined socialism as government control of the commanding heights of the economy. And in Britain, at that time, it was coal, steel, and railroads. The commanding heights of the American economy are financial services, and they are now controlled by the government.
To avoid a slide into socialism for our financial sector, Congress must consider all available options to put our nation's economy back on its feet. There are no easy answers but there are alternatives to massive government spending.
As was observed in an editorial titled “A Bad Bank Rescue” by Sebastian Mallaby published in The Washington Post on Sunday, September 21, 2008:
Within hours of the Treasury announcement Friday, economists had proposed preferable alternatives. Their core insight is that it is better to boost the banking system by increasing its capital than by reducing its loans. Given a fatter capital cushion, banks would have time to dispose of the bad loans in an orderly fashion. Taxpayers would be spared the experience of wandering into a bad-loan bazaar and being ripped off by every merchant.
Alternatives to a massive federal bailout must be fully considered and debated before Congress acts.
Finally, any new expenditure of taxpayer dollars should be paid for with fiscal discipline and reform. If Congress decides to spend nearly 1 trillion dollars on a corporate bailout, it must find budget savings to prevent that cost from being passed along to the American people.
As our distinguished former Republican Speaker of the House, Newt Gingrich, wrote in a post titled “Before D.C. Gets Our Money, It Owes Us Some Answers” on The Corner on National Review Online yesterday and prominently displayed today on the homepage under the headline “Newt: Wait One Minute”:
Congress has an obligation to protect the taxpayer. Congress has an obligation to limit the executive branch to the rule of law. Congress has an obligation to perform oversight. Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess.
I urge you to join me and other conservative voices in opposing the bailout plan. Republicans should demand that Congress take time in deliberating the merits of any legislation until the facts and competing solutions can be fully debated. We should demand consideration of free market alternatives to massive government spending and we should fight to pay for the solution through budget cuts and reform instead of more debt or taxes.
Sincerely,
Mike Pence Member of Congress
Although that served to boost the real value of the dollar (it takes less of them to buy a house these days empowering millions of young people to buy a house years before they'd planned to do so), it damaged the value of existing family "nest eggs".
Given the way debt is packaged and purchased, this single event served to destabilize the entire financial system of the country.
The theory here is that if a new surety for that 20% drop in wealth that backs up the debt can be created (the $700,000,000,000 pledge of credit), the rest of the system should stabilize and all will be good.
It's probably a phoney-baloney theory of course.
Another way to handle it would be for Congress to use its power to prohibit usury to set a 4% limit on all mortgages and an 8% limit on credit cards and other consumer credit.
You will see such action on a cold day in Hell of course. Congress fears interest caps.
Unless the country has been taken over by Socialists, how can the government operate outside the confines of the Constitution, to which every one in Congress swore swear to uphold?
Perhaps Pence can inspire enough of his true Republican colleagues to amass a large part of the country to do something about this.
Ok - thanks for the further info.
My question, then, is if a “bailout” is not instituted - rather quickly - I keep hearing “economists” say = the financial meltdown will happen - and fast = and I see this as a repeat of forcing an unneeded depression which will in effect throw every sitting Repub out of Congress because like it or not people will blame President Bush if this happens and all Repubs with him - even though we KNOW that is not what is going on.
He is not responsible for this meltdown.
So, I am asking, what is the solution? Let the bailout fail and the economy fail along with it?
I guess I’m having a senior moment, but if the Feds inject capital, how do we regain our investment at some time? It’s still our tax dollars whether it is capital investment or debt assumption in my mind.
Pence/Palin 2008 !!!!!
OK...it's great that Pence has an idea.
Anyone notice there's NO proposal for seeing this miraculous increase of capital take place?
People who are bashing shouldn't just bash but have a real idea!
yeah, and what do the taxpayers get who have to pick up the tab for this?
more politicians who live like royalty on our backs.
It’s pretty f***ing mornic that we’ve set up or allowed to be set up, a system where a 20% drop in home prices collapses the whole works. Why the heck is our economy rigged to require ever-increasing home prices?
What's most interesting here is that not all variable rate mortgages are infinitely variable ~ a significant percentage of them have a "cap" ~ usually 2%, where the change in any one year cannot exceed that amount.
This Fall those rates are DECLINING. I don't think anyone has tallied up the difference this makes but it could be hundreds of billions of dollars.
One of the problems in dealing with this problem is that the "best minds" are working for companies/banks that are under such severe pressure that they may go out of business. That's just the sort of thing to put those "best minds" in a state of panic ~ since they face loss of their retirement, their personal fortunes (to the extent that sort of thing is tied up in the products they manage), and their current income.
I'd suggest we might get better work out of the CPAs and rate analysts at the Postal Service ~ in fact, I know we'd get better work out of them since they'll still have jobs no matter what happens.
Wouldn't be the first time government agencies "borrowed" those guys.
So which is better.
Rushing head first into the unknown?
I think House members should take the advice of Mike Pence and not rush head first into handing out hundreds of billions of dollars without first debating the issues. Pence is right. The choices are between massive government intervention or free market alternatives.
Newt Gingrich suggested that Bush get all the best people from the Reagan era, have them sit around a table to throw out ideas that could actually solve this problem. Sounds like a good start to me. Much better than throwing money at the problem. That is what liberals have been doing for the last 40 years, without success.
a revision of FASB 157 “mark to market” rules which most banks adopted about a year ago, would allow institutions to hold illiquid assets, at value, instead of having to write them down.
At least SOMEONE is paying attention in Washington! Even though I don’t understand all the details of this plan, I know that ON ITS FACE - it’s absolutely unconstitutional (not to mention just plain unfair to those who have had no mortgage problems, and to those of us who lost our homes to criminal brokers and such).
I really fear that - as was said by one of the talking heads on my local news tonight - that our economy, and indeed our COUNTRY will NEVER be the same if this goes through. We might as well just hand things over to the Socialists/Communists if this is how even some “Republicans” (like Bush) think this is how you “fix” problems.
Sounds crazy to some perhaps, but I say we let these banks and CEOs eat it... Let them go into foreclosure in their OWN houses, and sell their yachts, etc... etc... They got themselves into this mess, and it’s NOT the responsibility of the tax payer to get these people out of it!
I honestly don’t care how hard things get economically — I’d rather be DIRT POOR and (mostly) FREE, than live in a Socialist Country (where everyone except the leaders are dirt poor anyway!). At least we’ll have a chance to get back on our feet as a country when these institutions fail - with government TAKEOVER (it’s NOT a “bailout”)_we’ve started down a path that truly signals the END of America, and our Capitalist society.
The liberals may be salivating over this power grab, and it’s scary because most Republicans seems to have fallen for the socialist myths, too!
OK, that’s my second rant today on this subject. I know I’m not the only one who feels this way - far from it. If this goes through - maybe not THIS November - but mark my words in 2 years, and 4 years - everyone in Washington will get BOOTED on their BUTTS!
It’s possible that taxpayers will make some money on this. Is it really true that those loans are worth 22 cents on the dollar if you hold until maturity? Or is the 22 cents an artifact of mark to market accounting? I am for rapid enactment of something this week. In my judgment, some plan immediately is better than an arguably “better” plan in three weeks. The markets are anxious and need reassurance. After the emergency legislation, let’s study the problem thoroughly and hash out what really happened and who and what are to blame.
It is not organized very well to deal with deflation, loss of profits, or price drops in major investments.
Just the way it's always been in America ~ it's a land of opportunity.
No one expected homes to become 20% less costly to purchase in a short period of time.
I suspect that lower labor costs in new construction, plus the lumber cost advantages NAFTA has given us, combined to undermine home prices.
BTW, those lower labor costs were a direct result of the importation by business of millions of Mexicans and other Latin Americans to do such work.
Add to that some well run "mob" scams and you have the whole equation.
We must control our borders to protect us from predatory pricing.
"In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price."
The Nazi Bit@h, in the House, is in favor of enslaving us to the Middle East and China!! The $700 BILLION per year would go a long way toward paying off the debt. I doubt it will make any difference to Nan from Fran, however.
Agree that President Bush needs to pull in the BEST MINDS from companies which are working right, have profits, as well as some small business owners, and 1 or 2 Congressmen per party, and then 1 or 2 economists - but not many of those.
Get people in there who KNOW and UNDERSTAND finances but who also understand BUSINESS - real business.
And, yes, we need a drill for our oil energy policy to start immediately - that would help our economy as much or more than any other action.
The President could call a state of emergency and declare the need for our financial security to require the drilling - since the Dems are NOT going to allow it otherwise.
He could also then issue executive orders that demand this or that measure to stop the financial bleeding....and stop waiting for the corrupt Congress to “act”.
I know that sets a bad precedent but I can guarantee Bubba would not sit around while everything around him was out of control. the Clintons are ALL about CONTROL.
I don’t want their kind of control - but I do want the executive branch to take some control since the legislative branch is fiddling whle Rome burns!
If so, they will be replaced by the same type of politician.
I just feel we (Americans) are trying to spend, grow, expand, and all the hurdles (gas, commodities, credit crunches) are going to be plowed out of the way - but by who?
Who is waiting to supply us liquidity?
I seem to remember a lot of us saying these same things after 9/11 with the airline bailouts. The problem is that these politicians - since they got away with THAT - seem to think that Americans are CLUELESS when it comes to the Constitution...
Unfortunately, especially among Democrats, they are right. A recent Rasmussen Poll stated that 71% of Obama’s supporters did NOT believe the Supreme Court should base their rulings on the written Constitution, but instead on some “sense of fairness”.
It is this same ideology that has gotten into this mess - thinking that the Constitution doesn’t mean what it says. It’s a little more than annoying. And, it’s VERY sad that our President (who is SUPPOSED to be a CAPITALIST CONSERVATIVE) is using the bully pulpit to advocate something so completely against our Constitution!
Just imagine what would happen if Congress gives the treasury these controls? Are they going to stop with the banks? What will prevent a liberal Congress, and a President Obama from nationalizing Oil Companies, or any other corporation that they feel isn’t being “fair”.
I don’t think we’ll even have to wait to see what would happen under a Marxist Obama presidency to our country - it could be dead by the end of this week!
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