Who will bailout the taxpayers?
One trillion dollars and counting - about $3,300 in new debt for every person in America - this is the price of bailing out Wall Street, we are told by our leaders.
I’m not buying it. Since when was it my responsibility to clean up someone else’s financial mistakes? Is it now my job, as a taxpayer, to assume risk in all situations, whether it’s to rebuild coastal cities in hurricane-prone areas, pay farmers for crop damage, or help someone stay in a house they cannot afford that they bought with a risky loan that should not have been made backed up by my tax dollars?
America was built on the free market with its attendant risk and reward. Our leaders appear intent on replacing the risk portion of that formula with regulation, debt, and taxation. Instead of “risk and reward” we’ll have “reward failure” and America will be the poorer for it - much poorer.
That this current mess started with government-created and taxpayer-backed mortgage giants Fannie Mae and Freddie Mac is telling. Even more telling is that Fannie Mae’s former CEO, Franklin Delano Raines (”FDR,” how appropriate), settled civil charges for $25 million that he illegally overstated Fannie Mae’s earnings by more than $7 billion resulting in his getting multi-million dollar bonuses. Not surprising that FDR served Bill Clinton as White House budget director from 1996 to 1998. Also not surprising is that the Washington Post reported in July that FDR was advising Barack Obama on “mortgage and housing policy matters.”
It’s not like we didn’t see this crisis coming. The Securities and Exchange Commission (SEC) accused Fannie Mae of overstating earnings almost four years ago now, then initiated a civil complaint more than two years ago - showing the world that SEC Chairman Chris Cox was doing his job long before Washington, D.C. took serious notice.
The problem in this current crisis is not a lack of regulation. Rather, it is that our government encouraged bad loans backed up with our tax money. The whole subprime fiasco had its roots in leftwing complaints about the mortgage industry’s so-called “redlining.” Banks refusal to lend to people with bad credit, a poor employment history, and low earnings looked to liberals an awful lot like banks refusing to lend to minorities. Hence, the subprime market was born - then, when financial institutions saw how much money they could make on these risky loans, they went wild - pushing the housing market into overdrive as homeownership rates hit all-time highs. In the end, millions of people who, with a real assessment of risk, would have remained renters, qualified for loans.
Now the bidding war has commenced in Washington, with Democrats insisting that any bailout of mortgage tycoons and financial bosses get larded up with billions more for homeowners in over their heads.
Heck, with our politicians wanting to assume all risk I think I should buy a 15-bedroom mansion sitting on a 500-acre sugar plantation outside of New Orleans. Then when a hurricane hits I can get federal relief for my ruined crop, my damaged house, and my defaulting loan. After all, why should I take the hit on a risky failure when my fellow taxpayers are there to help me?
Tags: bailout, subprime mortgages, Wall Street
September 22nd, 2008 at 5:11 pm
Add the fact that when reforms to Fannie, etc were proposed, the Dems blocked them. Then Freddie & Fannie made substantial contributions to Dodd, the O man, etc. In fact, Barry, altho in Senate only 3 years, now 2nd on the list for receiving contributions. And they have the nerve to blame W & his administration!
September 22nd, 2008 at 5:16 pm
I agree Chuck whole heartedly. I am trying to get a small loan with more than half down & because of the failure of the past system, I am having to show documentation from 2004 thru today…can you believe it. What a mess!!!
September 22nd, 2008 at 6:42 pm
Mr. Devore,
I distinctly recall photos of Gray Davis taking contributions of Eli Broad during his gubernatorial campaigns. Broad was part of Kaufman and Broad, which sold these inflated houses in our district. But enough about the money that infested the political system from liberal interests in the 1990’s, let’s talk real numbers today.
According to the US Mint website:(http://www.usmint.gov/about_the_mint/fun_facts/index.cfm?flash=yes&action=fun_facts13)
The United States Bullion Depository at Fort Knox, Kentucky has $147.3 million ounces of gold.
Today’s spot price of Gold at close at around $900.00 per ounce.
$900 x $147.3 million ounces = $132,570,000,000.
Even rounding up, that is only $140 BILLION dollars of gold.
What is backing this “Bail Out Legislation” other than the back breaking work of honest American companies and citizens?
There are roughly 100,000,000 Americans of working age. Of these, half are people who are not in the work force.
Therefore, assume the total cost of this bill at the end of the day is 1.4 trillion dollars over the backs of 50,000,000 citizens.
How will our generation of younger Americans be able to carry the load of this?
Why should we?
We’re the not the ones who owed the debt. We can’t even afford our rent!
We’re not the people who had the mortgages because it was the Baby Boomers who got those loans.
While we were out paying our college loans and trying to get a $15.00 an hour job, these liars were working through Washington Mutual and Countrywide Home Loans by misrepresenting the truth and lying about their qualifications.
When will someone from FBI walk over to Bank of America and ask them to open up the Countrywide files?
The entire chain of command in those sub-prime and alt-A loan sales offices were corrupted by utter greed.
Start with the loan officers who lied on the banking forms and work your way to the top until we get every damn dime accounted for.
That irresponsible, pot-smoking, hippie generation decides to LIE on the mortgage forms, default on their contracts, and then has the audacity to force me to pay their medical bills, their housing bills, and their retirement!
What the heck is that????
This thing translates to $ 1,400,000,000,000.00 divided amongst 50,000,000 citizens.
I say that all these executives and boards should be held for felony obstruction of justice until EVERY FBI and IRS investigator gets EVERY document needed to enforce the law.
That includes full disclosure to SEC investigators and with expedited federal district court trial!
This comes to $28,000.00 per working person. If this thing takes 10 years to remove, it will cost each of our families $3000.00 of new taxes per year!
I could buy me a new car or pay for my own housing for that money!
Say good bye to our military because who’s going to finance our national defense when this bill passes?
Say good bye to our scientific and technology investment base, because those are discretionary programs compared the blank check being written to the Fed Reserve.
Say good bye to our Medicare programs and Social Security, because they’re going broke already and we have no backup for the Baby Boomer hippies who smoked dope, blew out their brains on LSD, and then complain that our generation has to care for them in their incompetent state. Add to that disgrace the fact that they are laying in wait in their Joe Lieberman loving Connecticut mansions in the Hamptons or Hillary Clinton donating Manhattan burrough while my family is scrapping for a gallon of gas and can’t pay the rent???
This thing is a back breaker of a law and must be stopped!
The future of our nation is at risk.
Any GOP politician who backs this federal bill will NOT be sent back to elected office.
And why should we vote for a Congressman who doesn’t have the sense to vote NO when they are supporting a bill that is 14 times larger in cost than ALL the GOLD in the USA’s own gold depository in Fort Knox?
PS Thank you for not jumping on former Congressman Cox.
Chris Cox was a terrific congressman for us and I miss him.
September 22nd, 2008 at 7:20 pm
I am the CEO of a technology manufacturing company and we generate jobs, exports, and taxable profits. If I didn’t manage the company’s risks prudently, we would—and should—unceremoniously fail. I don’t understand why we prudent taxpayers should bailout the reckless speculators whose risky bets went awry.
September 22nd, 2008 at 8:23 pm
Chuck you hit it on the head. Notice the govt will give the multi millionaires money when they bottom out… hmmm i guess maybe thier “donations “(buying thier polititians) is comming back to them so they can “donate” next year too.. why doesent the govt just have the loans reset and give the people a second chance at the same loan with a fixed mortgage rate? makes better sense to at least try to save every ones butt rather than just the rich.
September 22nd, 2008 at 8:48 pm
Go to Washington!!!! WHY do people go to Washington and become currupt power/money greedy slimeballs with no reguard for consiquence?!?! Promise if you get elected to Washington (and I HOPE YOU DO) you won’t go for the power and money!! WE NEED OPEN HONEST EYES there!…. I’m praying for that every day…… open honest eyes
September 23rd, 2008 at 7:58 am
Chuck,
I could not agree more with your opinion. Newt Gingrich is saying the same.
The government bailout is wrong on so many levels.
Please tell us how we can prevent our government from ‘grabbing and growing’ at the expense of responsible citizens, business owners, families and taxpayers? I am tired of footing the bill for others mistakes crimes of greed. What happened to welfare reform?
Kim
September 23rd, 2008 at 10:35 am
Another great piece, Chuck. Whether its nuclear power, taxes, or financial bailouts, please keep telling it like it is. Sooner or later someone will start to listen. Just look at what happened to John Moorlach.
September 23rd, 2008 at 4:37 pm
John McCain should be demanding a full investigation on this scandal
and expose Chris Dodd, Andrew Cuomo, Barnie Franks, Chuck Schumer,
Acorn Corp. and all the others that benefited from this scheme!!
Pres. Bush and John McCain both tried to get legislation to control
Freddie Mac and Fannie Mae and Congressional records should show
who voted against it and if they had something to gain from not passing
legislation!!!
We cannot afford to have any more cover ups when there is wrong doing
that damages the voters and taxpayers! We must speak up loud and clear
about this. Enough is enough!!
September 24th, 2008 at 10:39 am
Me too ! I agree. The CEO’s of these companies should be held accountable and criminally liable. If it was you or I, we would be !!
September 28th, 2008 at 10:01 pm
What is the problem with buying property assets that can later be sold at a profit? This is a win/win for the government (the American taxpayer). Property assets long term are one of the most secure investments.
October 1st, 2008 at 7:21 am
O.K., now tell us what you really think! Thank you so much giving your perspective on this mess; I could’nt agree with you more.
If there is something close by, we’ll renovate a a plantation around ya’ll. And once were settled in y’all can come over for some crawfish, alligator pie & we’ll finish the evening singing the ‘blues’.