This is Representative Scott Garrett's statement on the bailout of Fannie Mae and Freddie Mac:
"While hindsight is 20/20, as we make plans to move forward, it's important to recognize the system under which these GSEs failed. The Congress has long provided ambiguous and conflicting direction to the GSEs and the investing public. On one hand, the GSEs were expected to support affordable home ownership for low-to-moderate-income Americans. On the other hand, it was their fiduciary duty to maximize shareholder return. Without a doubt, these conflicting obligations helped to createthe mess taxpayers are currently facing.
"Since my election to Congress, I have consistently fought to reduce theexposure to GSE failure and believe we must take aggressive steps to prevent additional government bailouts in the future. Going forward, we must implement major changes to limit the size and scope of the GSEs and ensure that free markets are given the opportunity to work on behalf of all Americans.
"In addition, Congress must provide leadership in this time of economic crisis. Several of my colleagues and I called for hearings on the Bear Stearns bailout in March. These hearings did not take place until July of this year. As the Fannie and Freddie bailout proceeds, vigorous oversight is needed so that American taxpayers understand how their government is spending their tax dollars."
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Upon first analysis, it would seem sensible to provide capital and oversight assistance to major corporations whose economic failures would ultimately mean recession or a new depression. Makes sense right?
Not really.
The stock market is the backbone of the US economy, i'm sure we can all agree on that fact. The Dow Jones Industrial Average is how we judge the financial health of our great country. Let's take a quick look back:
84,000 jobs lost in Aug 08. 172,000 lost within the last three months. Why?
The spike in oil caused consumer spending and confidence to decrease rapidly. Goods and services became more expensive to manufacture and transport. This caused higher retail prices across the board which led to the law of attrition. Jobs were cut, unemployment rose which ultimately led to severely lessened investor confidence. Companies like AIG and WaMu as well as every other financial institution in America invest their capital in stocks and bonds. BYE BYE money!
The US housing market burst. Predatory lending institutions and so called third world banks gave high interest third and fourth party ARM loans to Americans who were financially unstable, foreclosures spiked furthuring the market failure. Increases in welfare and food stamp benefits are already burdening the American taxpayer
Now it's time to come to the rescue of the bad decision makers and risk-takers at Freddie Mac and Fannie Mae and other billion dollar corporations? NO WAY.
This administration has been spending billions and billions of dollars that don't exist, our national deficit is at 9.7 trillion, by far the worst in the nations history. How on earth can the US treasury afford to spend 700 billion when essentially we're broke? We can't. Hasn't the future been mortgaged enough? Yes. Haven't we been catering to the nations wealthiest for too long already? Absolutely.
This government has already created an ever-fattening albatross that will be the burden of future generations, this bailout proposal will be nothing more than a finger in the dyke preventing it from failure. But anyone with even a minimal degree of intelligence has to know that when that kid finally removes his finger and walks away, the ensuing flood may be more than this nation can take. The economy is cyclical and needs to run its natural course, recessions are expected and natural. Let the chips fall where they may. The word 'risk' is used often in investor lingo, let's not forget the meaning of it.
Social programs such as Welfare and Medicaid have long been chastised and ridiculed by the ruling elite, that the American standard should be to 'pull ourselves up by the bootstraps'. Now let them practice what they preach.
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