Against the $700B bailout

Over the past week, our beloved Congress and President have attempted to pass a $700B bailout package under the guise of saving the country from sure economic ruin.

I don't buy it.

First, over 40% of Democrats and over 60% of Republicans voted against the bill. Not surprisingly, Democrats who did vote for the bailout bill have received 51 percent more in campaign contributions from sources in the finance, insurance and real estate industries over their congressional careers than Democrats who opposed the legislation.

Second, big Government is not the solution. Government intervention in the free market got us into this mess in the first place. In 1999, a New York Times journalist wrote "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In moving, even tentatively, into this new area of lending, Fannie Mae is taking on signficantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

Fannie and Freddie had an incentive to issue risky loans because the government backed the loans. In other words, the Government's meddling in the market produced a housing bubble, which in turn has led us to where we are today. Now, the same individuals who caused the mess are demanding $700B to "fix" the situation. When is the last time Government actually fixed something? Our Government sent our troops into Iraq with insufficient armor, raided the Social Security "lockbox", and couldn't get aid to Louisiana in an efficient manner after Katrina. And some say more Government is the solution?

Before voting on the Financial Crisis bill on Monday, Nancy Pelosi praised Rep. Barney Frank (D-MA) for his extraordinary leadership during these troubling times. This is the same Barney Frank who two years ago, when the Bush administration attempted to impose stricter regulations on the ability of Freddie and Fannie to purchase subprime loans, said, "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." (http://www.usnews.com/blogs/sam-dealey/2008/9/10/barney-franks-fannie-and-freddie-muddle.html)

The bottomline: Government intervention is not the solution, but rather the problem.