Federal Bailout is Wrong

It's kind of hard to argue with the logic shown in the video above. It was produced by Freedom Works, and I couldn't agree with them more. Here is an excerpt from an email they sent to me today:

Last Thursday the House of Representatives voted 266-154 to advance a $300 billion program of taxpayer-financed mortgages to home speculators and their lenders.

The bill does not protect taxpayers. The bill gives six-figure taxpayer loans to people who have terrible credit scores and to people who have made fewer than 12 payments on their existing mortgages. The bill even provides these taxpayer handouts to non-citizens. The plan lets banks cherry-pick the worst loans in their portfolios and sticks taxpayers with 100 percent of the risk.

However, our "Angry Renter.com" campaign is making a difference and the opposition is growing to this bailout plan. Renters and responsible homeowners are the "forgotten man" of this debate, as Rep. Tom Feeney of Florida put it in his speech on the House floor.

Can you help spread the news about this legislation so we can stop it?

On Tuesday President Bush came out strongly against the bill, saying "First of all, we are committed to a good housing bill that will help folks stay in their house, as opposed to a housing bill that will reward speculators and lenders. I will veto the bill that's moving through the House today if it makes it to my desk."

Even though the bailout bill passed the House, it was not by margins large enough to override the president's veto.

This week the battle turns to the U.S. Senate.

There, Senator Bunning of Kentucky is leading the charge against a flipper bailout in the Finance Committee. Senate rules make it easier to offer amendments, so we should see greater debate about the risky and unfair aspects of the bill.

FreedomWorks has identified five key senators as targets on the housing bailout bill. Please take a moment to call them and urge them to oppose this flawed piece of legislation.

Sen. Dole: 202-224-6342
Sen. Bennett: 202-224-5444
Sen. McConnell: 202-224-2541
Sen. Bayh: 202-224-5623
Sen. Carper: 202-224-2441

This is a great opportunity to encourage your friends to get involved. These issues affect everyone and a robust opposition has the power to do great things. Ask your friends to sign the Angry Renter petition, and to join you in calling their senator.

Well friends, I'm asking you to sign the Angry Renter petition. Now, I don't rent, but trust me when I tell you, I have been impacted by the collapse of the housing crisis as much as anyone. However, I'm not looking for any federal bailout, and neither should anyone else.

Bailouts Are Wrong

I understand what the Federal Reserve is trying to do, but bailouts are just plain wrong:

The extraordinary measures were made necessary, in the view of the policymakers, by the most dire threat facing world financial markets in years. Bear Stearns, in particular, was confronting a run on the bank as investors were too fearful of the future to make even overnight loans to the nations' fifth-largest investment firm. If it had been allowed to fail, senior officials believed, it would have created a cascading crisis of confidence that could well have brought down several other leading firms and dragged world markets with them.

Policymakers weighed that risk against the risk that their actions would create "moral hazard," or greater willingness of companies to take inappropriate chances. The officials stressed that their efforts were meant not to save shareholders of Bear Stearns or any other company but to keep markets from collapsing.

I don't pretend to be a financial analyst, but the Dow was way below 10,000 just five short years ago, and we can expect it is going to continue to fall from it's current position. We can also expect to see more major banks, mortgage companies, homebuilders and investment firms to collapse. The Federal Reserve Bank is not going to be able to bail the all out, and they should not have bailed out Bear Stearns.

This is not the first time we have had a financial industries correction based on over speculation in land development, and it surely will not be the last - especially if the federal government continues its commitment to bailouts.