UPDATE: Jim McDermott voted against the Senate’s bailout package.
I am not afraid of being poor, but I am afraid of losing my freedom. We can always rebuild our wealth, but giving an ex-CEO of Goldman Sachs unlimited authority as Treasury Secretary to use public funds is a bad idea.
Paulson’s stated aim of using public funds to protect the private interests of companies like Goldman Sachs is a clear conflict of interest. The bailout bill makes a mockery of our constitutional republic and representative democracy.
Jim McDermott voted against Seattle on Monday, September 29th in supporting this bill. Instead he elected to support the corrupt desires of the Bush administration and House majority and minority leadership.
I am ashamed that he claims to represent me and my interests in Congress.
Vote him out of office this November.
Here is what economist Nouriel Roubini has to say about the bailout:
the Treasury plan does not formally provide senior preferred shares for the government in exchange for the government purchase of the toxic/illiquid assets of the financial institutions; so this rescue plan is a huge and massive bailout of the shareholders and the unsecured creditors of the firms; with $700 billion of taxpayer money the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money.
Moreover, the plan does not address the need to recapitalize badly undercapitalized financial institutions: this could have been achieved via public injections of preferred shares into these firms; needed matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; suspension of dividends payments; conversion of some of the unsecured debt into equity (a debt for equity swap).
The plan also does not explicitly include an HOLC-style program to reduce across the board the debt burden of the distressed household sector; without such a component the debt overhang of the household sector will continue to depress consumption spending and will exacerbate the current economic recession.
Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown.
Reason and morality failed to persuade Jim McDermott. Instead he listened to the special interests controlling the Bush administration, House majority leadership and House minority leadership who are in favor of the plan. McDermott issued the following statement:
McDermott Statement on the H.R. 3997 Vote
September 29, 2008
Speaker Nancy Pelosi and Rep. Barney Frank are two people I trust immeasurably; they tried as hard as they could to put together H.R. 3997 to protect the American people, and in so doing they earned my support.
This support was unwarranted. Nancy Pelosi and Barney Frank’s solution did nothing to protect the American people. It fails to solve the financial crisis. Fewer than 25% of people support Nancy Pelosi’s congress for a reason.
Steve Beren is the Republican challenger to McDermott and issued the following statement on the bailout:
September 29, 2008 – 7:42 am PDT
Statement by Steve Beren, Republican congressional candidate (WA – 7th CD)
I’m a strong opponent of the proposed $700 billion bailout, standing with Newt Gingrich, Congressman Mike Pence (R-Indiana), Senator Richard Shelby (R-Alabama), Senator Jim DeMint (R-South Carolina), George Will, Congressman Ron Paul (R-Texas), Michelle Malkin, and many others.
If this $700 billion bailout is such a good “investment,” it is not necessary – because in that case, letting the market work would eventually bring forth those investors. And if this $700 billion bailout is not a good “investment,” it won’t become a worthwhile investment just because the taxpayers are put on the hook.
Instead of dropping a $700 billion bill on the taxpayers, we should face the current economic challenges with long-term and fundamental solutions that promote economic growth and increased flow of capital investment.
[...]
And has Newt Gingrich says: “I don’t think the taxpayers should be socked for $700 billion for welfare for Wall Street. I think it’s fundamentally wrong, and I think that it is very likely to create a bureaucratic control of our financial system in a way that will cripple us for 20 years…. I think … they know that if they don’t rush it through, it has no hope, because as the American people learn the details, they’re just going to scream at their House and Senate members.” Source of Newt Gingrich quote: http://tinyurl.com/52295q
If you are more afraid of losing your freedom than a few loaves of bread, please send McDermott a message.
Vote for your favorite 3rd party candidate. Vote for Steve Beren. Just make sure your vote is against McDermott selling out Seattle to Wall street.