Tuesday, September 23, 2008

America the Financial Junkie

Excerpts from STATEMENT OF SENATOR RICHARD C. SHELBY Ranking Member (R-AL) at Senate Banking Committee Hearings on September 23, 2008.

"As early as July of 2003, I asked Chairman Greenspan whether he was concerned about the growing number of loans to borrowers with weak credit histories and the number of homeowners who spent more than fifty percent of their income on housing. I also asked if he was concerned whether an economic down turn could lead to increasing delinquencies and foreclosures. He assured us that increasing home prices provided an equity cushion for mortgagors and that lending to such borrowers would pose a ‘rather small’ risk to the mortgage market and the economy as a whole. As recently as March of this year, Vice Chairman Kohn assured us that the banking system was in ‘sound overall condition’ and that losses ‘should not threaten their viability.’ We now know that was not the case.”

“Of the five investment banks regulated at the beginning of the year by the SEC under its Consolidated Supervised Entities Program, two have failed, one was forced to merge with a bank, and the remaining two have now left the program to become bank holding companies. The recent demise of our investment banks lies in stark contrast to the vote of confidence we received from Chairman Cox in February of this year when he assured us that the CSE program was up to the task, and I quote: ‘The purpose of the CSE program is to monitor for, and act quickly in response to, financial or operational weakness in a CSE holding company . . . that might place regulated entities, or the broader financial system, at risk.’ ‘The Commission seeks to . . . ensure that the holding company has sufficient stand-alone liquidity and financial resources to meet its expected cash outflows in a stressed liquidity environment for a period of at least one year.’ "

“Unfortunately, the Treasury Department’s latest proposal continues its ad hoc approach, but on a much grander scale. The plan contemplates the purchase of up to $700 billion in troubled mortgage-related assets from financial institutions. Treasury expects, but is not required, to purchase most assets through a type of reverse auction process. There are very few details in this legislation. In fact, Treasury officials admit that they will have to figure out the mechanics as they go along. Rather than establishing a comprehensive workable plan for resolving this crisis, I believe this legislation merely codifies Treasury’s ad hoc approach.”

“My record is very clear on taxpayer funded bailouts. I have long opposed government bailouts for individuals and corporate America alike. As a Congressman, I voted against the loan guarantees for Chrysler in 1979. However, if the government is going to get into the bailout business, shouldn’t we also be focusing our resources on average Americans, rather than sophisticated and well-compensated bankers? The Treasury’s plan has little for those outside of the financial industry. It is aimed at rescuing the same financial institutions that created this crisis with their sloppy underwriting and reckless disregard for the risks they were creating, taking, or passing on to others. Wall Street bet that the government would rescue them if they got into trouble. It appears that bet may be the one that pays off.”
Excerpt from statement by U.S. Senator Jim Bunning regarding the Treasury Department’s bailout of Wall Street. September 19, 2008
"The American taxpayer has been mislead throughout this economic crisis. The government on all fronts has failed the American people miserably."

"My great grandchildren will be saddled with the estimated $1 trillion debt left in the wake of this proposal. We have gotten to this point because nobody has been minding the store. Both Secretary Paulson and Chairman Bernanke should be held accountable for their inaction – and now because of that inaction – the American taxpayer is left with the bill."
Excerpts from testimony by Secretary Henry M. Paulson, Jr. before the Senate Banking Committee, September 23, 2008
The market turmoil we are experiencing today poses great risk to US taxpayers. When the financial system doesn't work as it should, Americans' personal savings, and the ability of consumers and businesses to finance spending, investment and job creation are threatened.

The ultimate taxpayer protection will be the market stability provided as we remove the troubled assets from our financial system. I am convinced that this bold approach will cost American families far less than the alternative – a continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion.

Over these past days, it has become clear that there is bipartisan consensus for an urgent legislative solution. We need to build upon this spirit to enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don't have broad support. This troubled asset purchase program on its own is the single most effective thing we can do to help homeowners, the American people and stimulate our economy.
My comments, September 24, 2008
So Secretary Paulson would like us to believe that this incredibly massive bailout is being done to save the American People. Really? Since when do the Elite represented by Paulson give a rat's ass about the welfare of the American People? They just need us to be sufficiently healthy so they can continue to feed off of our labor, like some giant Vampire Bat sucking off of the blood of its victim.

These are the same Elite that ruthlessly plunder weaker corporations and then "downsize" them, sending thousands scurrying off to the unemployment line. They don't care that they are affecting real people's lives. That a Father or a Mother has to struggle to provide the basics like food and housing for their children. They don't care about the stresses this puts on a Family and the resulting divorces or the decline in performance in school by a worried child.

So don't tell me now that this bailout is being done for the benefit of the American People. This bailout is being done to Save the Billionaires. Now that it is their families that are being affected, Paulson wants the American People to step in and save their way of life.

Not only should we not bail out the Elite that are responsible for creating this economic disaster, we should be arresting them and bringing them to trial. They must be held accountable for their crimes. Stealing is a crime whether committed by a common thief or a Wall St. firm.

The assets of failed companies should be sold off by the bankruptcy courts. Let those financial institutions that did not engage in these nefarious practices reap the benefit. Let the chips fall where they may. If it comes down to a collapse of the financial system, then it is time to put into place a new financial system.

If Americans must feel the pain, then let us feel it now instead of handing it off to our grandchildren. Perhaps that pain will awaken the dormant Revolutionary Spirit of the American People. The current proposal is like a shot of Heroin for the addict. Has America been reduced to a junkie looking for its next economic fix?

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