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
That is the problem from everyone I have read.....
We have to keep CREDIT open and ongoing or business will come to a screeching halt. Nobody pays as you go...or as you grow.
That’s what I understand this crisis is about.
I just want to know the facts of what is being proposed and can it be implemented in the least socialistic way possible with these corps we are bailling out coming back in as real entities later on and standing on their own two feet again?
I know the Dems would rather we Nationalize all corporations....at least until they could get their filthy hands on all of their boards like the Chicoms and make their millions there - as they did at FMac and FMae.
My question is just can we do the bailout then get back to the usual way of carrying on business in this country - or not.
God, how I wish he were still around - may he rest in peace. I hope some like Palin perhaps can take up where he left off - we REALLY need it right now...
You and I know that (and probably the majority here on FR do, too), but as we can tell by how well Obama has worked his “Hope & Change” mantra among his clueless followers who is really going to believe the “new blood” will be the same or worse than the old ones. And, in 2 or 4 years we might have REAL problems (versus the sensationalized Obama myths - i.e. “Bush is a terrorist”, and other BDS charges) to deal with.
I hope Mike makes his case.
I’d hoped he’d be in the VP running.... he wasn’t, why?
Hopefully the Republicans will get a back bone and back up Mike Pence.
Here here!
MIKE PENCE IS MY HERO!
PALIN / PENCE 2012
“According to the ‘bad forecasts’ if this ‘bailout’ does not happen - EVERYTHING WILL CRASH - ECONOMICALLY. I just want to know if that is true....or not.”
The answer is yes. Without the bailout, we’ll have a global economic crash and a depression, probably in only a few weeks.
The problem is that the free market is run by humans. The humans lending the money and investing are too afraid to do so, because of the instability of the global financial system.
Since banks are too afraid to loan and investors are too afraid to invest, the entire world’s financial markets are in danger of freezing up.
Today we saw oil shoot up $25, which is the largest single-day increase ever. The Dow dropped almost 400 points.
This is due to the fear that the bailout won’t work, because Congress is screwing with it, and people are starting to demand that we sit down and talk about it for a few weeks.
We have two choices: bailout or depression. That’s reality.
Don’t take my word for it; watch what happens to the price of oil, the dollar, and the stock market.
This isn’t socialism, any more than Lincoln arresting treasonous congressmen was fascism. This is a real emergency.
Most of the people demanding that we not have a bailout are already wealthy. Michelle Malkin can afford to stand on principle.
I can’t. I don’t want to end up on the soup line at age 46.
This bailout will stabilize the markets, and then we can reform them by electing McCain and Palin, who both support the bailout, although reluctantly, like me. We’re not bailing out private companies; we’re saving the whole economy.
Just don’t kid yourself. Pence says we can pay for this with cuts in spending.
Do you really think we can cut the federal budget by a trillion dollars, especially if the Dems still control both houses of Congress?
It’s time to be brutally realistic. We’re up Crap Creek without a paddle. There’s no real alternative to the bailout.
That is why we desperately need a depression.
There are a majority of 3 generations that actually live that way and need to be taught how to manage money and a depression is the only way they will learn.
Hee is an article with Newt Gingrich’s take on this:
http://corner.nationalreview.com/post/?q=ZGE5MmE0YmRiODA3YTRiNzFlN2FmNDU5N2I0ZDc3YTE=
Note to self: take stockpiled $100 bills and break them down everyday buying a Slurpee on the way to work.
Is this really real? Do I need to be in not just cash, but small cash?
Crazy.
if this baliout gets politicized then I’d say let it sink too
the very folks who created the sub prime mess and forced a lot of this on the lenders are now going to manage the resurrection
doesn’t make sense
Since there seems to be a run on the banks (easier today in the computer age), I agree that the tourniquet needs to be applied immediately. I think the market dropped again today...no I know it did.
Sort it out later.
I look at it this way. The sub-prime lending was public knowledge. Some in the government tried to stop. It didn't work. Others profited. (I would like their heads on a platter..but it probably won't happen.)
As badly as I hate this solution..the alternate is worse.
Now..that being said..I'm pretty cranky over the politicizing of this event. But maybe bailing out the individuals, to stabilize the housing market is o.k. It irks the heck out of me..but if I lived in a neighborhood with a lot of foreclosed homes, it would crater my property value.
Pick the poison you want to drink, I guess.
It’s simply beautifully, Darwinian......I love the smell of free markets in the morning....
I was thinking more along the line of something real. Like given some land for the pain we are suffering. It seems as if we only keep helping destitute people over and over again. Our nation continues to take and give to the poor and the poor only get poorer.
save
In another statement I’ve seen from Pence he proposes raising capital by reducing our capital gains tax — thereby encouraging investment.
Reality is...what's going to make a Dem dominated Congress DO these things?
These are pie-in-the-sky right now.
My views - we need a workout not a bailout:
http://travismonitor.blogspot.com/2008/09/some-ideas-to-fix-credit-crisis.html
We need a solution that doesn’t bilk the taxpayer but gets the credit system working - a workout, not a bailout:
1. Assist banks with better pricing on illiquid assets with one rule change:
Suspend the mark-to-market rule for illiquid assets like CDOs.
2. Make the $700 billion bailout mostly SELF-FINANCING WORKOUT that provides liquidity but not a subsidy for the holders of these marked down assets. Solvent companies have crappy suspect assets. The value of these assets is not clearly known, nor is the liabilities involved. But the firms can offload these into the Govt Asset Management organization (RTC-II), that takes these assets and holds on to them while the crisis passes. Here is how:
Govt purchases of distressed assets from currently solvent firms will be based on a ‘consignment basis’. The Govt will pay for 40% of assumed market value, and the remainer of the payment held in reserve (or Govt gets senior notes for remainder). When the product is later sold, the original holder is given the sold value if it was anywhere from 40-100% of assessed fair market value. Above that, ie if govt sells at a profit above original assessed value, the Govt and private firms share the gains 50/50. If the Govt sells it for less than 40% of originally assessed value, Govt eats the cost partly, and partly takes up debt from the selling company. Since there is time cost of money, there can be simple rules regarding how much the Govt owes in interest on gains, and/or that can be viewed as a transaction cost.
These rules would add clarity and taxpayer protection. Right now there is no clarity as to the taxpayer liability. Rules regarding how resale gains and losses are are to be assessed is required. The 40% rule enables one trillion in assets to be purchased with only $400 billion in credit, and it can then be ‘worked out’ over a number of years. The cost is less and the taxpayer protection is much greater. BANKS ARE ABLE TO OFFLOAD ASSETS AT 40% LEVEL AND THEN GET A POSSIBLE “UPSIDE” RETURN LATER IF VALUE BOUNCES BACK. If that 40% level is too small to encourage participation, then it could be raised so long as there is an assurance that taxpayers won’t be picking up assets at inflated prices.
3. level 3 assets for all financial reporting institutions must be transparent and reported.
4. NO regulations on financial compensation, and NO equity stakes. The Govt should not takeover these companies. If there is any debt of collateral, it is senior debt. Regulation reform needs to come: Unify the regulation of the financial sector. But that should be in a separate bill, not this bill.
5. Dont muck this bill up with housing and foreclosure stuff. The Dems already did a $200 billion housing bailout, we dont need another right now, save it for the next Congress.
6. McCain wanted in 2005 to regulate Fannie Mae. Democrats killed that plan, as linked to above. It’s past time to pass that bill.
The we need a twin bill, An Economic stimulus bill:
1. MAKE THE BUSH TAX CUTS PERMANENT. The cost of this is less than the bailout and the benefit will be HUGE.
2. Then cut the corporate tax rate.
3. Repeal Sarbanes-Oxley (which has killed IPOs).
4. Open up all offshore drilling. No limits.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.