Posting opinions, letters and correspondence from far and wide. Even some to/from my elected representatives.
Thursday, September 25, 2008
No Bail Out for the Banks!
The underlying problem with the American economy was caused by Congress and the President by not turning off the granting of loans to sub prime borrowers in 2005/6 despite no less than Alan Greenspan and others warning of a meltdown occurring if they did not do so. Democrats voted against shutting down the granting of such sub prime loans out of Fannie Mae. Since early 2007 the affected Banks have been lobbying Congress and the President to bail them out. What they have should have been doing was spending their time working through the debtors to determine new rates and conditions for those who could afford to pay and foreclosing and selling the rest. Instead, they have waited on the sidelines because they did not and do not want to accept the losses. Well, we tax payers should not and cannot allow this bail out to proceed. First and foremost, those bad borrowers are not going to disappear. Second, no bureaucrat is going to foreclose on anyone, even the most irresponsible and responsible bad debtors will get to keep their house. Even though such families ought to be living in rented accommodations. Third, many of these bad loans were just plain fraudulent - prosecute first. Fourth, there are billions of cash dollars locked up in private equity firms such as Blackstone, Hathaway etc. We need LESS regulation - the total repeal of Sarbanes Oxley for example - so that private equity firms are more likely to buy and invest in the banks. Do you ever wonder why London is now the financial capital of the world? Over regulation of Wall St - that's why. And also, while Wall St was trying to comply with all these regulations, were these regulations able to predict the housing problem? Gee, those regulations really worked didn't they.
Do the math - 70 billion divided by 120 million tax payers comes out to about 6,000 dollars each. I can't afford that, nor do I want or need to take the risk of being on the hook for it! Congress had better not do it because there will be a revolt. Enough about the sky is falling. We live in a capitalist free market economy, not a socialist central command and control economy - for better or for worse. Do we?
Posted by Michael at 12:33 PM