It's Good to Be Ranking

As I had mentioned when he got the nod, our Representative Scott Garrett is likely to get more opportunities to talk about the financial crisis now that he is Ranking Member of the committee which oversees the capital markets, as well as Fannie Mae and Freddie Mac. Well, as derided as it is at times, there is no more widely read newspaper than USA Today.

Today, they published an Op-Ed from Garrett about his opposition to further bailouts of the banks. Once again, he showcases his sarcastic/snarky side. Who knew?

Here's the Op-Ed:

President Obama's address to Congress on Tuesday night foreshadowed the next development in the Troubled Asset Relief Program (TARP) blockbuster series — TARP II: Bigger and Badder.

Unfortunately, as tends to be the case with most sequels, this one promises to be worse than the original. The lead characters might have been replaced with different actors (Barack Obama is now playing the role of the president, and his dutiful Treasury secretary sidekick is Timothy Geithner, who played a supporting role in the first feature), but the plot and outcome, like most sequels, has the potential to be even worse than the first.

Supporters of further government intervention shout cries of "government responsibility." They claim it's the government's "responsibility" to use as much money as needed to correct the ills of the marketplace.

Well, so far, we've had a government bailout of Bear Stearns, Fannie Mae and Freddie Mac, American International Group, the automakers and banks in general — through TARP. We've also spent about a trillion dollars in various "stimulus" packages over the past year. At the signing of the stimulus package last week, the president hinted that this spending might not be enough, leading to the rise in speculation about stimulus II.

If the first three or four trillion dollars didn't do the trick, what makes us think the next trillion will fix things?

Japan spent an entire decade in the 1990s chasing that level of "enough" spending. The Japanese accumulated a massive level of debt, but it never was quite "enough" to reach the magic level to trigger an immediate economic turnaround. If more money were simply the answer, we'd already be out of this mess.

Additional government intervention does nothing to strengthen our financial markets or encourage private investment. By sending mixed signals to Wall Street, Washington is causing capital to remain on the sidelines. We don't need, nor can we afford, continued ad hoc government interference.

Until investors are clear about the government's intention with regard to future market interference, including ceasing the selection of winners and losers in the market, confidence will not be restored to the financial sector. Government should unleash the potential of private capital by getting out of the way.