"Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis" (Wall Street Journal – September 30, 2008)
The current financial crisis was brought about by the Liberal Democrats, starting in 1977, when Congress enacted the Community Reinvestment Act (CRA) under Jimmy Carter. Their ‘redistribution of wealth’ philosophy, straight out of the Karl Marx playbook, was further strengthened under Bill Clinton. The revised CRA regulations can be found in the May 4, 1995, Federal Register (60 FR 22156).
All of this culminated in Congressional action, forcing lending institutions to lower, if not eliminate, their credit standards. The penalties for non-compliance ranged from threats of being labeled as racist to punitive fines ranging up to $10,000 for each loan application in which ‘discrimination’ was found.
It’s a damnable lunacy to look for these same Liberal Democrats to provide solutions to the very problems they created. They have made known their intentions to socialize our country, starting with schemes that would destroy the best Health Care delivery system on the planet. Their scheme for the Financial Markets in no less Socialistic and much more dangerous.
We do not need a trillion dollar + bail out. We don’t need any more politics injected into the mix. Let the free market function freely. Where there is fraud, we have laws and courts where wrongdoing can be punished. Unfortunately, we have no such protection against stupidity.
If, indeed, The current problems are a poisonous cocktail of a liquidity crisis, a shortage of available capital and a shrinkage of available credit for Main Street and Wall Street, I propose a four-point plan, each piece of which is simple to implement, and carries no cost to the taxpayer.
1. INSURANCE - As Larry Kudlow was the first to suggest, raise the limit on FDIC insured deposits from $100.000 to $250,000. Benefit – Small Business Security
2. ACCOUNTING - Eliminate “mark-to-market’ requirements and allow holders of mortgage debt to value such debt at a price they can realistically anticipate in the future, not being forced to carry them at today’s depressed prices. Benefit – Lenders and Borrowers
3. TAXES - Declare a temporary moratorium and allow U.S. Companies to bring back deposits from tax havens abroad on a tax-free basis. Benefit – Capital Infusion
4. CAPITAL GAINS - Eliminate Capital Gains tax on any sale of the mortgage-backed securities at the heart of the current problems. Benefit – Increase value of severely depressed paper.
As I am neither economist, financial guru, nor political genius, I am not implying that these are the only options. I’d just like to see our employees in Congress, the Regulatory Agencies and The White House address this problem by examining the full-range of remedies available.
30 September 2008