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  • Morning Bell: Market Rescue Dos and Don'ts

    Leaders of the liberal majorities in the House and Senate yesterday  tried to claim they had completed a deal with the White House to address the Wall Street crisis. From the beginning, leaders on the left have both demanded the White House deliver conservative votes for any deal and then refused to include any conservatives in the negotiations. After yesterday, the leadership on the left now knows it will have to work with conservatives to get a compromise done.

    If the left is serious about preventing a credit lockdown that threatens to cripple our economy, it must adhere to sound conservative principles when crafting any compromise. At a bare minimum, any financial rescue legislation must:

    1. Provide sufficient market liquidity to comprehensively resolve the financial situation.
    2. Focus on a systemic approach that attacks the entire problem, instead of bailing out specific companies.
    3. Allow the Treasury Department to liquidate the investments in an orderly way.
    4. Return all proceeds from the sale of assets to the treasury.
    5. Specify the types of markets where Treasury can act.
    6. Use objective criteria for how Treasury should price assets for purchase and sale.
    7. Provide for meaningful judicial review.
    8. Sunset all regulatory authority.
    9. Establish an oversight board.

    In addition, as The Washington Post editorialized yesterday, what’s needed is a clean bill that contains only items essential to the immediate liquidity crisis.  Any financial rescue legislation must not:

    1. Give the Treasury Department unbridled discretion to intervene in the economy.
    2. Turn the government into the nation’s largest landlord.
    3. Give the government the power to rewrite contracts.
    4. Make government an equity owner of Wall Street.
    5. Divert revenues from taxpayers to other purposes, especially to housing slush funds.
    6. Dictate the terms of employment for private sector businesses.
    7. Impose new regulations on the financial industry.
    8. Require firms to raise capital.
    9. Ease capital standards.

    Heritage’s Bill Beach, director of the Center for Data Analysis, told The New York Times yesterday, “We are in a very serious place. There is risk of contagion to the entire economy.” As a general principle, the federal government should not intervene in markets. But in rare situations, government institutions have a critical role in helping to assure the integrity of the market’s infrastructure. The above guidelines will help to reconcile these two principles in light of the current crisis.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    15 Responses to Morning Bell: Market Rescue Dos and Don'ts

    1. Ken Jarvis - Las Veg says:

      Warren Buffett invested $5 Billion in Goldman

      "perpetual" preferred Shares of Goldman.

      These are not convertible into equity

      but pay a fat 10% dividend.

      HOW DO I GET SOME OF THAT?

      What % of YOUR investments would you make

      to a deal that paid

      10% interest and was guaranteed by Uncle Sugar?

    2. Ken Jarvis - Las Veg says:

      We should start ALL Over with Direct Representation

      where the PEOPLE VOTE ON ALL ISSUES.

      The Reps no longer Rep up.

    3. Dwight says:

      If government at ALL LEVELS would quit REWARDING departments that spend every penny in their allotted budgets with an even larger one, it would go a LONG way towards solving some of our fiscal woes.

      To put it on a personal level, would you save any of your paycheck if you we guaranteed a larger one every pay period?

    4. Bill Morey - Niantic says:

      We don't need a Chris Dodd, Barney Frank, Chuck Schumer resolution to the Financial Crisis cause by these people initially, and never corrected the many times the warning bells sounded.

      The truth IS coming out. The Democrats who crafted the devious and corrupt rules in the 90’s were warned several times during the Bush Administration period, by a number of people including Greenspan, Snow, Bush, and McCain, how new regulation were needed so it wouldn’t become a major financial crisis like we are facing today. I watched his, Barney Frank, 2003 testimony last night. He said he saw no problems with the way Freddie Mac and Fannie Mae were being operated, (by fellow Democrats) and with his comrades, the Democrats, Schumer, Dodd, Obama, Kerry, blocked any and all attempts to tighten up the regulations. Wonder why, maybe because of nice benefits coming their way. Now many of these “Honorable” CEOs are advisors to you know who, that’s right, Barack Hussein Obama.

      Remember Maxim Waters slipping with her Party agenda of Nationalizing the Oil Industry? Well, Barney Frank also let the Party agenda slip with his statement about letting the Government be the “LandLord” for all those people his party allowed to get mortgages that they knew who couldn’t and can’t afford.

      Once Obama gets in, and the “PARTY” has control of all three branches, Executive, House , and Senate, they will proceed with their Party plan to Nationalize everything in your life. If you don’t “Co-Operate” with the Party line, you go to the back of the line.

      Get ready.

      The truth is out there, you just won’t find it in the controlled “Party” Press.

    5. Mary, TX says:

      Are they crazy? Do I Mrs. America have stupid written on my forehead.No I don't we do not need to do this. Wall Street needs to do some major housecleaning of it's own.

      Don't come looking for mainstreet to bail you out. Not after you stared down your lofty nose at us.You are totally unrepentant. Whats to stop this from being a re-accuring thing? Make them foot the bill.They made it ,let them pay it

    6. Everett Royer says:

      Here here to Bill & Dwight. Bureaucracies continue to expand because they have to use all of their funding or they lose it, so they create ways to spend all of it, even if it is spent on employees or programs that are not necessary to operate the government.

      Barney, Chuck and their ilk need to have the bright lights of publicity shine on their past attempts to kill regulation of freddie mac and fannie mae so that housing in America would become socialized. Their ideas, "the hell with whether people could afford their mortgage payments, lets give them all houses" was an economic disaster waiting to happen, and boy did it happen! If some republicans get caught in the spotlight, so be it. Someone has got to thouroughly and objectively report on how congress and wall street got us into this mess and honestly report it to the American people. No cover ups, no partisan politics as usual. No liberal revisionist history. Just good old fashioned honest objective reporting. The American people are smart enough to look at the evidence and decide what happened.

    7. Michael J O'Bri says:

      Great stuff! The liberals have an agenda make no mistake about it. Socialism is here, and Wall Street as we know it is history. Market forces are stronger than anyone in Washington realizes, and there are doubts that even with $700bn in cash banks will still be reluctant to lend to anyone with less than stellar credit. Sub prime does not mean poor, it means people with poor credit, a history of not paying back money. The market will dictate who obtains a loan and under what conditions. Folks with poor credit will be left out of the market.

      As for the purchase of the MBS and CDOs, if the government is the owner of all illiguid assets, where is the market? There is no market for this junk. Some alternatives should be explored….perhaps banks funding a private company, then unwinding these tranches and repackaging the best tranches and writing down the junk junk. But one thing for certain, the Franks, Dodds, Pelosi's, and Reids must stay out of this since it is they that have the socialist agenda, and want to redistribute income.Fannie and Freddie largely created this mess with the blessning of democrats. Keep then away.

    8. Jasper says:

      There are no clean hands in this mess.

      President Bush himself in 2002 and 2003 forcefully pushed for an expanded GSE role in expanding home ownership for minorities and first time home buyers, including a $400+ Billion initiative by Fannie/Freddie. And a sea of money and low rates produced by Greenspan provided the fuel.

      Point is there is no point in blaming the democrats OR the republicans for the mess. Nobody had any serious objection to rising home prices, easy credit of all kinds, and lots of money being made on Wall Street until it all collapsed.

    9. Larry Sayler, Yosemi says:

      We, me-you need to be more responsible. While it is easy to make remarks and I am guilty of it as well, we need to remove our constituents ala Nancy Pelosi, Barny Franks, Chris Dodd?, Barbara Boxer, Waxman and others from conservative party that have gotten away from basic conservative beliefs.

      "No, No , No bailout with taxpayers money"

      This has to be resolved within the financial community. Otherwise they (Government) will not be forced to investigate the crimes involved in this meltdown.

      This message comes to you "under God".

      ================================================

      Don't make me come down there.

      GOD

    10. Larry Sayler, Yosemi says:

      Have to agree with Ken and others, we must have direct representation.These people in Congress "must" be responsible to constituents.If not removed……..

    11. Pingback: Work Out, not Bail Out - Practically Speaking

    12. Victoe Baldo Rochest says:

      The dummycrats are not so dumb, they got us again. God bless us all

    13. r.mcleish sr. orl says:

      Obama is haughty, arrogant, supercilious and mean-spirited. I couldn't tolerate his snickering sneer. I hope others can see through his egotism.

    14. Thomas M. Nigro Sr. says:

      Why not a repeat of FDR's HOLC. Let's not make this any harder than it has to be.

    15. Lonnie O'Sulliv says:

      The feeding frenzy has started my sisters bankruptcy attorney contacted her saying that the bank that holds her loan is saying that she has not made payments (which she has proof to the contrary)to try to force her into foreclosure the attorney has told her that they have received from the lenders attorney's motions to the bankrupcy courts to relieve the automatic stay on the loan granted by the court. This is not an isolated incident according to the person she talked to it has all started in ernest since the bail-out has been in the news I can only see this as the same banks that are asking for us to bail them out are aggressivly trying to defraud not only the federal government and the tax payers, but do not care what they do to the people who are already in dire straits concerning the homes they are trying to keep. It being the week-end I have not been able to reach anyone in Washington to try to make them aware of this situation. If anyone else has become aware of simular situations it is very important to make them known.

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