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The American people are tired of the borrowing, spending and bailouts that have been advanced by the administrations of both political parties. It's time to end the era of bailouts and reaffirm our belief that the freedom to succeed must include the freedom to fail.
Unfortunately, under the guise of financial services reform, congressional Democrats are trying to pass a permanent bailout bill for the financial services industry, ensuring that American taxpayers would be on the hook to bail out reckless Wall Street firms well into the future. Despite claims to the contrary, even some Democrats admit that it would be a permanent bailout.
Don't just take my word for it. California Congressman Brad Sherman, a senior member of the House Financial Services Committee, told Politico recently that the financial reform bill proposed by Senate Democrat Chris Dodd "has unlimited executive bailout authority. . .. The bill contains permanent, bailout authority."
Specifically, the Senate bill provides for a $50 billion resolution fund, created with taxes on financial institutions. Consumers, including families, small businesses and family farms, would pay that $50 billion through higher costs for credit products. Then, regulators would be able to use this fund to pay off the creditors of those failing firms, similar to the backdoor bailout of Goldman Sachs with money the Fed gave to AIG.
That means families on Main Street would still be paying to bail out firms on Wall Street.
The Democrats would also keep "too big to fail" alive by authorizing the Federal Reserve to regulate firms that are considered "systemically important." This special regulatory structure will send a clear signal to the markets, indicating that those firms have the implicit guarantee of the U.S. government. This will permanently distort the financial markets, providing advantages for those select firms to the detriment of small ones.
While Democrats perpetuate a scheme to make taxpayer-funded bailouts permanent, Republicans are offering better solutions. Last year, House Republicans introduced the Consumer Protection and Financial Regulatory Enhancement Act. The Republican bill would end bailouts once and for all, restore market discipline and keep taxpayers off the hook for Wall Street's bad decisions.
Republicans would also provide for the orderly but necessary liquidation of failing non-bank financial firms by creating a new chapter in the bankruptcy code. And, the Republican plan would establish a board of outside experts and financial regulators to analyze the financial system and ensure that government is smarter and more efficient in its regulatory work.
We believe that there are already enough federal agencies. What we need is consistent enforcement and accountability through a system that is modernized to end redundancy.
Finally, a chief cause of the financial crisis was the failed policies of Fannie Mae and Freddie Mac. While Democrats do nothing about Fannie and Freddie, Republicans have a much-needed exit strategy to privatize them within four years. It would end the current model, which gives profits to Fannie and Freddie's executives while leaving taxpayers with the losses.
Regulating the financial services industry is a complex issue that requires more than empty slogans. Republicans have free-market solutions that will create jobs and protect taxpayers without putting hardworking American taxpayers on the hook for one more Wall Street bailout.
• Pence represents Indiana's 6th Congressional District and is chairman of the House Republican Conference.
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Posted By: breakthebank(440) on 4/23/2010 | 1:17 AM ET
STOP! The point of the legislation isn't to protect the little guy, and its not about reigning in the money men. Its about power and control in a progressive(socialistic) state. The more the progressives control the less decisions you get to make. The same for Health care, cap&tax, EPA & OSHA regs. The less decisions you make (good or bad) the more power over your life and future they have. Face it your to damn stupid to make those kinds of decision leave to the Manchurian candidate.
Posted By: antisocialist(295) on 4/22/2010 | 11:42 PM ET
TyCoon, what kind of business are you in?
Posted By: Ty Coon(90) on 4/22/2010 | 11:35 PM ET
I've got an idea. Let's not tax any business. Why? Because they will pass it on. But in so doing, we are transferring our nations coffers over to these banks and financial institutions who continue to raise our rates and fee us to death. I am still amazed that a bank can borrow money at zero percent and not make money. It's absurd. As is the whole idea of competition among banks. The only thing it's created is an industry that sees a fee someone else is charging and then charges it.
Posted By: Serfdumb(1515) on 4/22/2010 | 10:37 PM ET
The Gov't now owns or control half the economy, they apparently want to control or own all of it-through debt induced 'crisis'. "There are two ways to conquer and enslave a nation. One is by sword. The other is by debt." -"“ John Adams "Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money." -"“ Daniel Webster Audit the Fed.
Posted By: Serfdumb(1515) on 4/22/2010 | 10:29 PM ET
The ship is sinking and the guy that steared us into the reef (Dodd) is telling us to rev the engines 'full steam ahead'. The cowards decided to prop up the economy and placate the citizens by printing money out of thin air and pretend that everything will turn out fine. $13,000,000,000,000 dollars of debt is enough already, it's suicidal and will result in our enslavement to the Fed/Treasury and the progressives (aka socialists) or is that the plan?
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