Madam Speaker, I would like to quote Financial Services Chairman Barney Frank, author of this bailout bill, ``The free market failed, it's up to government to fix the problem.'' It is important that we understand the how we got here in…
Madam Speaker, I would like to quote Financial Services Chairman Barney Frank, author of this bailout bill, ``The free market failed, it's up to government to fix the problem.''
It is important that we understand the how we got here in order to address a solution to the problem. Who and what caused the subprime bubbles and the current economic crisis?
Treasury Secretary Alan Greenspan in 2005 said:
If Fannie Mae and Freddie Mac ``continue to grow . . . they
potentially create ever-growing potential systemic risk down
the road . . . we are placing the total financial system of
the future at substantial risk.''
During a Financial Services Committee legislative markup on May 24, 2005, the Hensarling/Feeney Amendment was offered to protect taxpayers from crushing bailouts of Fannie Mae and Freddie Mac.
The Hensarling/Feeney Amendment established a new regulator to:
(1) repeal the Congressional charters of Fannie Mae and Freddie Mac
(2) create a bank-like secondary mortgage market, and
(3) establish new charters for limited purpose mortgage securitization entities that could be auctioned off competitively.
I voted YES but the Democrats unanimously voted NO and killed reform and taxpayer protection.
Why?
Leading Democrat Barney Frank said in 2003:
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.''
After billions in accounting scandals at both Fannie Mac and Freddie Mac, Barney Frank said in 2004:
I don't see anything in your report that raises safety and
soundness problems.
I have seen nothing in here that suggests the safety and
soundness are an issue. And, I think it serves us badly to
raise safety and soundness as kind of a general [inaudible]
when it does not seem to be an issue.
Democratic leader Maxine Waters said:
Through nearly a dozen hearings that we were, frankly,
trying to fix something that wasn't broke. Mr. Chairman we do
not have a crisis at Freddie Mac, and in particular Fannie
Mae under the outstanding leadership of Mr. Frank Rains.
I also voted in 2005 to cut off a $2 billion line of credit from U.S. taxpayers to Fannie Mae and Freddie Mac.
Today, the same people who protected the corrupt and out-of-control Fannie Mae and Freddie Mac are proposing a $700 billion bailout of Wall Street speculators.
Barney Frank and other Democratic leaders revised the Community Reinvestment Act in 1995, forcing Fannie Mae and Freddie Mac, and all American lenders to make risky loans to people in poor communities. Loans were given regardless of the borrower's ability to pay!
And, ACORN, a corrupt left wing ``community group'' engaged in extensive voter registration fraud across this country, was given taxpayer money to extort banks and lenders into making more bad loans.
Taxpayer money was used to browbeat lenders to make non-creditworthy loans.
Since the economic credit crisis began, we were told by Secretary Paulson and Barney Frank that:
1. The $152 billion ``stimulus'' package would resolve the American economic problem. (I predicted it is a silly ``rain dance,'' having no long term stimulus)
2. The Bear Stearns taxpayer bailout would resolve the credit crisis.
3. The Fannie/Freddie bailout in July would totally resolve the financial crisis and the U.S. Treasury would not have to take over Fannie Mae and Freddie Mac. (I voted no and predict bigger problems for America)
4. The federal government takeover of AIG, the largest insurer in America, would end this global crisis.
The current $700 billion bailout, touted by Treasury Secretary Paulson and Chairman Barney Frank, fixes none of the fundamental structural problems the federal government is responsible for.
Buying troubled assets on Wall Street balance sheets does NOT stimulate American banks on Main Street in Central Florida to increase lending and credit.
It adds short term money, which banks will HOARD, as they are required to increase reserves and make fewer loans to healthy consumers and businesses.
It does NOT privatize Fannie Mae and Freddie Mac.
It does not repeal the community Reinvestment Act.
It creates a huge new bureaucracy which may control lending in America and become the largest leap toward socialism in my lifetime.
What we must do (now or later) to save American freedom and our economy.
1. Stop naked short selling of bank stocks--Predatory investors, including foreigners, sell stocks they don't own to drive down the price of the stock, which they can later buy cheaper and profit.
This kills bank equity and forces banks to stop making loans in order to meet material reserve requirements.
2. Guarantee bank deposits in excess of $100,000 and bank creditors-- This will bolster bank share prices and lead to more immediate lending to families and small businesses.
3. Issue guaranteed network certificates in exchange for bank promissory notes--This will get banks to save lending restrictions and give them time to work through the real estate mess.
4. End ``mark to market'' accounting rules--Banks and institutions that hold packages of securitized mortgages cannot sell those packages because in this environment there are NO buyers. But those mortgages are secured by real estate worth some value, even if it is not 100 percent of the loan value.
These mortgages are not worth zero, just because there is no market to buy them during this crisis. Banks have to count such mortgage holdings as ZERO asset reserves. Every dollar a bank counts as reserves would result in $10 in lending ability today.
Mark these assets at ``fair market value.''
5. Jump start private purchase of mortgage securities--Don't buy $700 billion in troubled mortgage securities with taxpayer money. have an auction for private investors using private money to make such purchasers. To start buyer activity, grant buyers a zero percent capital gains tax--not the 28 percent tax Senator Obama proposes, but 0 percent.
Most mortgages will be purchased without any taxpayer exposure.
6. Establish a privately funded insurance model for mortgage backed securities--Holders of these securities would pay risk-based premiums to fully fund a guarantee of asset values, without taxpayer exposure.
7. Unleash the American Economy--Immediately pass comprehensive energy policy that will put hundreds of billions of dollars into the American economy overnight.
Congress should pass free trade legislation including agreements with Columbia, Panama, and South Korea to help American exporters.
Without delay, Congress should kill the built-in Democrat tax increases which are scheduled to raise taxes on Florida families by $3,040 a year.
Finally, the Paulson/Frank bailout bill raises the Federal Government's debt to $11.3 trillion--a 26 percent increase. In the less than two years Democrats have controlled Congress, the national debt has jumped over $8,000 for every man, woman, and child in America. Can we afford two more years of that behavior?
