October 24, 2008 Via Facsimile ONLY Sen. XXX Dear Senator XXX: I take this opportunity to write you regarding the current financial crisis and the Bush administration’s $700 billion proposal to buy bad debt from private companies. Moreover, I take this opportunity to urge you to REJECT the proposal in its current form for the reasons which follow. 1. The Current Proposal Gives the Bush Administration Yet Another “Blank Check” George Bush’s administration has taken lying to the American people - and to Congress - to new heights. Indeed, it has turned it into an art form. The administration has effectively used fear to manipulate foreign powers, allies, enemies, Congress and American citizens. It used fears and lies to garner support - from allies, Congress and Americans - for the 2002 invasion of Iraq. It seems with each passing month we learn of another White House “fact” that has been refuted. Most recently, we learned that, according to former senior Republican majority leader Richard Armey, Vice President Cheney, in a one-on-one meeting at the White House, told Armey that Iraq had the “ability to miniaturize weapons of mass destruction, particularly nuclear,” which had been “substantially refined since the first Gulf War,” and would soon result in “packages that could be moved even by ground personnel.” In addition, Cheney linked that threat to Saddam’s alleged personal ties to al Qaeda, explaining that “we now know they have the ability to develop these weapons in a very portable fashion, and they have a delivery system in their relationship with organizations such as al Qaeda.” Armey believes that the Vice President’s statements were lies. Armey credits this meeting with changing the sentiment of Congress from an anti-war position to a pro-war position.1 This is just the latest example of important misrepresentations made by the current administration. Six years later, the Bush administration continues to spew these lies to Americans in an effort to recoup support for the war and for exorbitant spending. Certainly, at a cost of $10 billion per month, the Bush administration has already received a “blank check” for the Iraq war. Likewise, with an increase in the federal deficit of 40% under the Bush administration2, he has failed to show any financial restraint. He has already received a foreign blank check. See, e.g., http://www.washingtonpost.com/wpdyn/content/article/2008/09/15/AR2008091503064_pf.html (accessed September 24, 2008). 2 See http://thinkprogress.org/wonkroom/2008/09/09/bush-mccain-deficit/ (accessed September 24, 2008). 1
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Do not let the Bush administration use fear again for another domestic blank check. It has not demonstrated the necessary restraint to warrant a spending grant without oversight or restrictions. 2. The Proposed Plan Puts Control of $700 Billion in the Hands of a Single Person As I understand the current plan, Treasury Secretary Paulson would control those funds. Secretary Paulson is not even an elected official. Secretary Paulson shares significant responsibility for the present state of the financial market. His failure to keep the system sound (through appropriate regulation and monitoring) should not be rewarded with $700 billion in taxpayer money to fix his own mistakes. His job was to prevent this. While one presumes that the Bush administration would exercise significant control over the spending of the money, the Bush administration, as already discussed, is no more deserving to remedy this problem than Secretary Paulson is individually. Worse, the administration wants $700 billion to buy bad debt. This is not a wise way to spend Americans’ hard-earned money. 3.
Continued Lax Practices Will Not Solve the Problem
It is clear that the failure of the federal government to enforce laws and regulations against these large financial and insurance companies has led to the current crisis. The federal government has already demonstrated a clear failure to enforce laws - not to mention the Bush administration’s own flagrant willingness to disregard federal law. If any administration requires oversight it is this one. It would be insane to give this administration $700 billion without any strings. This administration’s failure to exercise meaningful oversight over these financial institutions evidences that it is not sufficiently fiscally responsible to manage the $700 billion it is seeking to remedy the situation. Without any guarantee of proper management, this plan simply wastes nearly a trillion dollars in taxpayer money. 4.
The Proposal is Eminently Unfair
These failing financial institutions - and their officers and directors - have profited from Americans. They have failed in their responsibilities to their customers. Likewise, AIG cannot seem to remain solvent despite the notorious profits made by insurance carriers at the expense of their insureds. Despite resisting valid claims for reimbursement, insurance companies like AIG cannot seem to manage their assets to remain solvent.
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These are the same companies who charge credit card customers $29.00 or more for a late credit card payment. These are the same companies who charge consumers over 21% to finance credit card balances. These are the same companies who will report a 30+ day late payment to credit reporting agencies without blinking an eye. Why should we have any compassion for them when they have none for their customers? Why should we treat them as anything more than a failed company when they treat their customers as numbers? These companies have profited from - one might even say ripped off Americans. Why should American taxpayer dollars be used to rescue the ailing companies? It is simply unfair. Taxpayers’ money is going to be used to revive these companies so they can continue to rip off Americans. 5.
When Did America Become a Socialist Country?
The proposed plan amounts to financial socialism. Marxism. Along with capitalism and profits comes responsibility. The proposed bailout rewards companies for failing. That is not capitalism. They should be allowed to fail so that new (hopefully better companies who learn from the past mistakes of their predecessors) can succeed where others have failed. These are the same companies who charge credit card customers $29.00 or more for a late credit card payment. These are the same companies who charge consumers over 21% to finance credit card balances. These are the same companies who will report a 30+ day late payment to credit reporting agencies without blinking an eye. Why should we have any compassion for them when they have none for their customers? Why should we treat them as anything more than a failed company when they treat their customers as numbers?3 To bail out these companies would be to become a socialist country for corporate America only. Let them fail. It is corporations who loathe regulation and government interference – unless, of course, they want to be bailed out. They believe that they are above individual Americans. Why should individual Americans save these companies? The answer: they should not. 6.
The Proposal Lacks Any Punishment
There must be some punishment for these companies. At the very least, they must be subject to new and better regulation. However, it is unfair for the American public to fork over nearly a trillion dollars when most Americans did nothing wrong. American taxpayers are being punished for 3
I know this point has been repeated. It warrants repetition.
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the malfeasance of corporate America. Does that not strike you as completely inappropriate? Backwards even?
7.
New Regulations
It is clear that more stringent rules are required in the financial services industry. It is further clear that much more active oversight is required. Such oversight must not come from a White House (or Congress) that is beholden to the industry. These large companies must abide by the rules - just like any other business. After a period of deregulation and permissiveness, new rules must be implemented. Strong rules. Rules without loopholes. Rules that will be enforced. Rules that permit individual Americans to litigate against these companies. Insurance companies - after being bailed out by American taxpayers - must, in exchange, submit to more stringent guidelines for claims payment. Valid claims must be paid upon initial submission. No more games. No more preexisting condition. Insurance is insurance. As one of the most profitable sectors in American business, they must be reformed. This is the opportunity to reform the insurance industry. Use it. Act. Congress must enact legislation that imposes a fiduciary relationship between insurance carriers and their insureds. Just as physicians have a duty to act in their patients’ best interests, so too should insurance companies. Like most European countries, insurance must primarily benefit the patients – not the pocketbooks of corporate officers. That is the point of insurance. Similarly, banks must reform their practices. Who in their right mind believed that offering mortgages at sub-prime interest rates was a good idea? Why didn’t the government prevent this? Now is the chance. 8.
Government Responsibility
The federal government must share - and admit - its responsibility for this failure. As recently as 12 days ago, President Bush was assuring Americans that the economy was good. Is he that delusional? Or was that just another lie (see No. 1, above)? Either way, that evidences the government’s responsibility.
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Likewise, after the announcement of a proposed bail-out, the SEC suspended short-selling. Is there a reason our government has become pathetically reactive? The government should be proactive? It hires experts; it hires purportedly intelligent people. Why does the government fail to act in time...every time? The government is always a day late and a dollar short. Being reactive costs more than being proactive. This administration and perhaps Congress waited for companies to collapse before taking action. At least some of your government experts (economists, financial advisors, someone?) must have anticipated this. Why did no one do anything until it was too late? American citizens are entitled to freedom. Corporations must be regulated. It is now abundantly clear: Enron, the S&L crisis, the current crisis and scores of others. It is clear that corporations cannot be responsible citizens. The Bush administration recently rejected Congressional budgets telling Congress it was not being fiscally conservative. Bush spends $10 billion per month in Iraq and seeks to essentially “give” $700 billion to the private corporate sector with no guarantee of success whatsoever. Talk about fiscally irresponsible! 9. The Current Administration Lacks the Credentials to Fix the Problem It is true that the federal government in recent history has operated with a deficit. The deficit has increased 40% during his administration. With such a dismal fiscal record, what makes the Bush administration believe it is in any better position to manage these companies (with a 70% stake in AIG, for example) than the people who currently ran them into the ground? This is an example of the blind leading the blind. This administration is simply not qualified to fix the problem. It does not deserve the chance to fix the problem; it should have prevented the problem. This administration – with Congress’ blessing – has squandered enough of American’s liquid resources. It is time to tell them to stop. *** For the foregoing reasons, I request that you without support for the asinine bailout that benefits no one but corporate America. If you feel you must support it, then you must ensure that this is not another Congressional blank check to the White House. The bailout must be attached to rules, conditions, milestones, investigations and punishment. Thank you for your consideration.
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Very truly yours,