Elkhorn Creek Lodge

An Open Letter to the Senate GOP

Posted in democratic party, economics, gop, politics by Eugene Podrazik on October 1, 2008

Dear Senators:

 

The Senate will be taking up the matter of the financial meltdown that has so gripped our nation for the last ten days or so.  However, the Dow is up by almost 500 points today.  Since the sun still rises and the sky hasn’t fallen it becomes apparent that the Democratic Party is prolonging this crisis for partisan advantage.

 

In approaching any solution, it must be made very clear that this is not a failing of the private sector or of free-market economics.  Rather, it is a failing of good governance.  It is a purposeful lack of oversight of Fannie Mae and Freddie Mac, by the Democratic Party, for the purposes of protection of these organizations to provide favors to favored constituencies, such as ACORN, and to cultivate sources of campaign cash.  In short, this financial crisis is the direct result of rampant corruption.

 

This corruption must be fully exposed; and exposed immediately.

 

Further, any “rescue” must include an abolition of the Community Reinvestment Act and the abolition and complete liquidation of the respective assets of Fannie Mae and Freddie Mac.  These vehicles of corruption must be eliminated.  Or, at the very least votes must be forced on the abolition of these entities to force each Senator to make a stand.

 

Additionally, only what is necessary to allow credit markets to function is to be undertaken.  No other tax dollars are to be used for any planned “rescue.”

 

Unlike the House, the GOP holds the votes insure that their concerns will be fully heard and incorporated into any “rescue” plan.  This is no time for “reaching across the aisle.”  This is a time to stand up for this country by exposing the corruption that lead to this mess.

 

 

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3 Responses

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  1. huxbux said, on October 1, 2008 at 6:20 am

    The CRA has seemingly become an equally partisan tool in this debate. It only accounted for about $600B in subprime home loans, a 20% share of total subprime lending. 20% of subprime mortgages doesn’t account for what the other 80% of non-CRA regulated lending institutions were doing.

    Concerning the stock market, almost always see a next day bump in prices following a severe decline. It happened in 1929 and 1987. It took 55 days after the first drop in 1929 for the market to bottom out. 54 days in 1987 for the market to reach bottom. A market crash isn’t encapsulated in a day or a week. It’s a spiral downwards interrupted occassionally by minor bumps. A single day 500 point gain is not an indication of economic health. It goes down, comes up, then goes back down some more.

  2. mountainmusings said, on October 1, 2008 at 12:09 pm

    Fannie Mae and Freddie Mac aren’t the entire problem. But, they are the source. They created the market for sub-prime loans backed by the Federal government. And, in some cases, thanks to groups like ACORN, the market (private banks) were forced to make such loans.

  3. huxbux said, on October 1, 2008 at 4:47 pm

    There was a failure on the part of Washington on both sides of the party lines. Part of the problem is that, for the last 40 years, the government has implicitly guaranteed the holdings of Freddie Mac and Fannie Mae creating a false sense of security in the market and fundamentally altering risk management assessments. Another part of the problem lies in the Gramm-Leach-Bliliey Act that repealed the Glass-Steagal Act allowing banks to merge with investment institutions that spurred the proliferation of mortgage backed securities.

    Washington deserves blame, no doubt. But there’s enough blame to toss around for both parties, and turning this issue into another partisan battle ends up causing a cherry picking in where to push the blame.


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