The Bail-Out is Still a Bad Deal

Congress worked furiously this weekend, in brazen contempt of the Constitution and the people’s wishes, to come up with a plan to bail out irresponsible banks and borrowers that’s almost as bad as the earlier proposal floated by President George W. Bush.

The new proposal, for example, redistributes the taxpayers’ money more slowly, subjects the actions of the Secretary of the Treasury to judicial review, and includes provisions, like prohibiting “golden parachutes”, that might discourage some firms from slurping up the taxpayers’ sweat.

But the proposal remains a massive, expensive, unwarranted, anti-Constitutional intervention in the economy that exacerbates the very conditions that fostered the current financial mess. It undermines the market economy, increases wealth redistribution, encourages both the state and the people to live beyond their means, nurtures the spirit of entitlement, and fuels the dangerous perception that the federal government can and should shield the people from all the harsh realities of life.

The House of Representatives is expected to vote on this outrage today. Please call your Representative’s office and urge him/her to vote against the bail-out. If you do not know how to reach your Representative, click here.

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5 thoughts on “The Bail-Out is Still a Bad Deal

  1. I agree it is a huge waste of taxpayer money, however we have no choice. If there is no bailout then there will be no credit, no value left in people’s 401-k account, no value in the stock market, no car dealerships, (it goes on and on). Whether we like it or not everything to do with our economy is related. When will people who oppose this bailout change their minds? Maybe when their company cannot meet its payroll and they are laid off. By that time it will be too late. Where are our political leaders? They seem to be much more interested in getting reelected than in making sure our economy stays solvent. In the end if this bailout measure is not passed those who voted against it will be help politically responsible for the demise of the American economy.

  2. The golden parachutes that are already lined up will remain in place, and who will sit on the oversight board, now that Congress has pressed for one? Cox, Paulson, Bernanke – the same folks who brought us this mess. This amended plan is smoke and mirrors and nothing more. It is robbery by the rich of the poor and middle class.
    Perhaps, if the government stopped dangling the carrot under the banks noses, they would recognize that they aren’t getting a free ride and go back to business. As it stands now, as long as they think they might get a free ride, they will continue to sit on their collective hands (assets) and freeze up the markets.

    I highly recommend that everyone email and call their representatives and ask them to vote “NO” and get back to work on a deal that is, at the very least, sane. If they won’t do that, throw ’em out in November.

  3. My biggest question is whether the bailout is fixing the right problem. We need to stop foreclosures to restore market confidence, reduce home inventory, and stabilize values.

    I have not read anything of the mechanics of how the rescue will produce modifications of notes to keep people in their homes. I have heard that the government plans to modify loans, but not how they will do so.

    I am not sure that the rescue dollars are actually necessary to work the modifications, but it it is I would like to hear how it fits in with necessary program to rewrite the upside down loans.

  4. The bailout is absolutely needed. Like you, I’m philosophically opposed to it, but we need it.

    A friend told me”

    “Somehow we delude ourselves into thinking that the goal is to punish the wrongdoers or assure that it will never happen again, as if somehow the crisis is past and we didn’t just lose Washington Mutual (WM) or Wachovia (WB) and are about to lose other obvious ones that I don’t even have to name anymore. The notion that somehow we can punish while we are still trying to fix this situation is just ridiculous.

    So, here’s an optimal outcome: Most of the banks quickly collapse in the country. We devolve quickly to a Fortress Four: Bank of America (BAC) , JPMorgan (JPM) , Wells Fargo (WFC) and U.S. Bancorp (USB) , plus perhaps Citigroup (C) after this Wachovia debacle. All the others are allowed to fail. We then make it so that deposits are insured up to $2 million, and beyond that a fee scale gets put in to insure large corporate depositors.

    Then we shut everything else down and start over with transparency.

    We handle the job losses as best as we can, try to contain them to 15% to 20% of the economy; credit will be virtually nonexistent, because other than the banks above, few people willing to put their money in Treasuries.

    And all the bad actors will be punished! Along with all of the good actors, of course!

    Now there’s some justice!”

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