 |
Correspondence on the Bailout
By Diana Hsieh @ 12:31 AM   
Objectivist historian John Lewis recently sent his representative a terse note against the bailout. His representative responded with the pro-bailout crap. And Dr. Lewis wrote a lengthy, informative, and very pointed reply. He has given me permission to reproduce the whole correspondence, but you might just want to skip down to his reply. Then you might want to forward it to your representatives in Washington.
Here's the first letter:
From: John Lewis
Dear Speaker Pelosi and all US Representatives:
I oppose all bailouts of financial institutions by the US government.
Government regulation and meddling is solidly to blame for this crisis.
We must reduce government involvement in the economy now.
Sincerely;
Dr. John David Lewis
Visiting Associate Professor of Political Science, Duke University
Senior Reasearch Scholar, Social Philosophy and Policy Center Here's the reply from Representative David Price of North Carolina:
Date: September 29, 2008
From: Congressman David Price
To: Dr. John David Lewis
Subject: Reply from Congressman David Price
Dr. John Lewis
Durham, NC 27705
Dear Dr. Lewis:
Thank you for contacting me about our country's financial crisis and the proposed recovery legislation. Today the House defeated this legislation, the Emergency Economic Stabilization Act, by a vote of 205 to 228, despite my support.
Like you, I do not have any interest in "bailing out" Wall Street firms and business leaders who have speculated recklessly, endangered our country's consumers and homebuyers, and resisted regulation that would protect the public interest. My concern is for Main Street - for the people depending on a sound economy and the availability of credit to buy a house or car, to run their business and meet payroll, and to save for college and retirement.
Like it or not, we are all in this together, and the entire economy is threatened as we teeter on the edge of a 1929-style meltdown. Today Wachovia Bank, a North Carolina mainstay, collapsed. But this goes much deeper than bank failures. Last week, the City of Raleigh could not find a buyer for a $300 million bond, and Wake County cancelled its planned $472 million bond issue for school construction, Wake Tech, libraries, and open space acquisition. Both have AAA bond ratings.
Although President Bush lacks the credibility to be of much help, I take the dire warnings of economic analysts very seriously, particularly in light of everything that has happened in the last few weeks. But I could not support Secretary Paulson's request for a blank check for $700 billion to purchase mortgage-backed securities and stabilize the markets.
I thus became part of the intensive discussions over the last ten days to rewrite the Treasury plan in several critical respects. The legislation which came before us today would:
o Provide strict independent oversight and accountability for all activities undertaken by the US Treasury
o Release the $700 billion in installments, with multiple reviews along the way
o Make certain that the entire $700 billion is recaptured by the Treasury and thus by the American taxpayer, by requiring that taxpayers share in any profits resulting from the government's help and providing for assessment of the financial industry for any remaining losses
o Forbid "golden parachutes" and limit other compensation for executives of participating financial institutions.
o Require the government to work with participating institutions and loan servicers to help deserving homeowners negotiate reasonable repayment terms and stay in their homes
The defeat of the bill prolongs and perhaps deepens the crisis. Coordinating with the Senate, the House will need to return within days to try again. Perhaps the economic situation will then lead some members to reconsider. Perhaps the bill can be changed in ways that attract a majority; I certainly have a list of improvements I would like to see. But considering the members who voted "no," I will want to scrutinize carefully any changes designed to attract them.
I am committed over the next few days to continue working to avert financial collapse and get the best possible deal for America 's taxpayers and homeowners. I welcome and share your concern about this situation and will be glad to hear from you at any time.
Sincerely,
DAVID PRICE
Member of Congress Here's Dr. Lewis' stellar response:
Date: Monday, September 29, 2008
From: John Lewis
To: Congressman David Price of North Carolina
Subject: Reply from Congressman David Price
Dear Congressman Price;
Thank you for your frank and fast response. I should be clear. I am opposed to bailing out these firms. But what I am more opposed to is the entire political culture of regulation--including manipulation of interest rates, Sarbanes-Oxley, changes in accounting rules, the Community Reinvestment Act, and a scad of others--that has fostered this mess. Two weeks ago no politician in Washington knew this was coming. Suddenly, after several all-nighters, they have enough knowledge to grant a quarter of a trillion dollars to a government bureaucrat, to dole out as he sees fit--and to promise another half-trillion, should his actions make it worse.
Meanwhile, the country focuses on the allegedly evil CEOs, "speculators" (read "investors"), and loan initiators who were earlier damned for NOT making loan money available to high-risk borrowers. I remind you that the Community Reinvestment Act penalizes firms for not making such risky loans. Now, suddenly, those firms are villified for following the law. Well, that's government--it faces no penalties, except a periodic popularity contest, and can contradict itself with impunity.
Most of all, I resent the politicians and punditrs who are claiming, contrary to evidence, that it is now "impossible to get a loan" on Main Street. It is impossible to borrow millions on Wall Street, but regional banks that made prudent investors are not in danger--unless the government further coerces them.
The government is not saving Main Street--it is nationalizing it. Is it not true that, with the takeover of Fannie Mae and Freddie Mac, the government now holds paper on tens of millions of American mortgages? What does granting American citizens "equity positions" and "profits" in companies seized by the government mean, except communism? Don't we condemn Hugo Chavez for nationalizing oil companies?
I will also recall, as a student of economics, that the Great Depression was caused by a string of obnoxious legislation, and was then cruelly extended by massive government interference. Contrary to prevailing, but long-discredited, opinion, the government did not save us from that mess. It created, and prolonged, it. Twenty years earlier, JP Morgan ended the panic of 1908 in a few weeks--bankers in 1929 could not so act. Today, Morgan would have been jailed for the private pooling of assets he arranged. Is it not true that AIG was told by the Attorney General of New York that it would not be allowed to sell sound assets in order to save the holding company? Who is to blame for the collapse of a huge, and largely sound company, excpet those who forbhid its executives from acting?
You will forgive me if I have no respect for the likes of Senator Schumer, who started a run on a bank with his irresponsible statements and then claimed virtue for them, or Senator McCain, up to his neck in the Keating scandal, or Senator Dodd, whose reputation was on the rocks until this crisis saved him, or Senator Obama, who had not a clue at a White House meeting last week, and then went on-script before the press to cover his ignorance. You will please forgive me if promises of "oversight" by these PR men do not instill confidence.
I much more respect the CEOs who have spent their years in the business, and who face actual consequences for their errors. They do not have access to hundreds of billions of dollars of other people's money--and they do not expect their stockholders to approve busines plans that cannot foretell whether they will lose three-quarters of a trillion dollars, or get some of it back in five or twenty years. They do not have their hands in the pocket of every person who produces in this country.
The truly brave politicians are those who recognize that the government is largely to blame for this mess, and should start emergency repeal of regulations now. Only this can allow responsible CEOs to start making decisions based on sound economics, rather than fear of breaking a law.
Sincerely;
John Lewis
Dr. John David Lewis
Visiting Associate Professor of Political Science, Duke University Thank you, John!Labels: Economics, Finance, Politics
|
