Thursday, September 25, 2008

Housing Bailout - The Time To Act Is Now

Last night Bush addressed the nation in an attempt to gain support for his $700,000,000,000 bailout plan.

The government’s top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.
More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet.
Foreclosures would rise dramatically.
And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.
I know that an economic rescue package will present a tough vote for many members of Congress. It is difficult to pass a bill that commits so much of the taxpayers” hard-earned money.
I also understand the frustration of responsible Americans who pay their mortgages on time, file their tax returns every April 15th, and are reluctant to pay the cost of excesses on Wall Street.
But given the situation we are facing, not passing a bill now would cost these Americans much more later.

Most of us have followed this debacle from the beginning. Here is what some of our clueless government ‘experts’ said a year ago.
Federal Reserve Board Chairman Ben Bernanke – June 2007
We will follow developments in the subprime market closely. However, fundamental factors including solid growth in incomes and relatively low mortgage rates should ultimately support the demand for housing. At this point the troubles in the subprime sector seem unlikely to spill over to the broader economy or the financial system.

U.S Treasury Secretary & former Goldman Sachs C.E.O. Henry Paulson – July 2007
I believe this is going to be largely contained; I don’t think this poses a serious risk to the overall economy because we have a diverse healthy economy. This is partly due to lax lending standards and excesses and they have a way of correcting themselves.

Still President George W. Bush – September 2007
I see the fundamentals of our nation’s economy are still strong. Inflation is down. Job markets are steady and strong. Corporate profits appear to be strong. Exports are up. There is no question that there is some unsettling times in the housing market and credits associated with the housing market. I’m optimistic about our economy.

Here is a video clip of the above quotes.

I’m skeptical of their professional capacity to say the least. The experts couldn’t predict the largest financial meltdown of our lifetime yet they know exactly how to fix it.

The passage of this bill represents a $2,000 burden on each man, woman, and child in our nation. The proposal contains no provisions for transparency, executive accountability and salaries, or recourse. Basically the tax payer is buying the bad mortgage loans “as is-no warranty’.

I encourage you to contact your representatives and express your concern for this proposal.

Here is the letter I sent my representatives:

Dear representative,

I am very concerned about the mortgage bailout the Bush Administration is proposing. The proposal has no provisions for:
Executive compensation limits – The CEOs that got us into this mess will continue to collect huge salaries despite their lack of ability to run a business without government intervention.
Claims to future earnings – If taxpayers are investing hundreds of billions of dollars into the banks then we must expect a rate of return in addition to the principle.
Transparency – If the taxpayer is buying troubled assets then the details of the purchase (and eventual sale) must be disclosed. Who is the bank? How much was purchased? What was the selling price of the asset?
I am very upset about this bailout because I am a responsible person who lives within their means and I do not want to subsidize the poor decision making skills of the financial industry. If you support this bailout I will not support you in your next election.

Thank you,


Here is a list of our federal representatives and their comments regarding the bailout.

Gordon Smith
From Forbes:

"The panic that swept Wall Street last week cannot not be underestimated. This economic turmoil has threatened not just Wall Street, but also millions of people on Main Street," Smith said. "With Americans' retirement plans, mortgages and financial security at risk, we must act now to bring order and stability to our markets."

Phone: (202) 224-3753
use form on website

Senator Ron Wyden
From Press Release:

Essentially, the Bush Administration's proposal socializes the costs and risk of the bailout and privatizes the return. I don't think that's the best deal we can get for the taxpayers, especially when compared to the AIG bailout just last week. In exchange for bailing out AIG, the Federal government and the taxpayers got 80 percent of the stock in return. So if AIG returns to profitability, taxpayers will get a fair share of the profits.
I will be looking at the AIG solution and other approaches to ensure that taxpayers get benefits and not just bills from any bailouts.”

Phone: (202) 224-5244
Email: use form on website

Conressman David Wu
From OPB:

The proposal isn’t perfect, but it’s better than doing nothing.

Phone: (202) 225-0855
Email: use form on website

Congressman Earl Blumenauer
From Press Release:

People are demanding accountability, and no golden parachutes. Instead of using tens of billions of taxpayer dollars to reward the Wall Street executives who drove us into this ditch, we should insist on ‘clawback provisions’ to ensure that the people who created this mess bear some of the financial burden as well. Congressional leaders are right to be skeptical of a $700 billion bailout, and should not rush to conclusions. People are insisting that Congress understand the depth of this problem and what might be on the horizon. Could the heavily leveraged, murky world of hedge funds become the next crisis?

Phone: (202) 225-4811
Email: use form on website

Congresswoman Darlene Hooley
From the StatesmanJournal:

While it is necessary for the government to step in, she said, Wall Street needs to be held responsible for the crisis. She said a plan should include independent oversight, assistance for borrowers at risk of losing their homes and limits on executives' compensation.

Phone: (202) 225-5711
Email: use form on website

Congressman Greg Walden
I didn't find a quote from this guy. He must be really busy passing pork. (read his website)
Phone: (202) 225-6730
Email: use form on website

Congressman Peter DeFazio
From Forbes:
"If we pass this bill as they proposed it, we'll do an incredible disservice to the American people," DeFazio said in a fiery speech on the House floor. "What if it doesn't work? You have the execs come out whole and they scoot the money offshore. What's the next step?"
"We shouldn't be rushed into this. If it takes a week, two weeks, three weeks, a month, the world will wait," DeFazio said. "They'll wait for a thoughtful plan that cures the disease in addition to getting us beyond this initial problem. That's the job of this Congress. We should not be rolled by our Wall Street exec who is masquerading as secretary of the Treasury."

Phone: (202) 225-6416
Email: use form on website

Please take a moment and let your voice be heard. If you do send a letter please post it in the comments so everybody can read it.