Wednesday, October 01, 2008

Betts blames Tiahrt for the Wall Street mess

WICHITA, Kan. – State Senator Donald Betts, Jr., issued a statement today that Rep. Todd Tiahrt (R-KS) failed consumers when he said that he wouldn’t support the bailout plan without “addressing the reasons our markets are in this situation.” Betts said he was disappointed that Tiahrt is pretending he has no idea of how Wall Street ended up in this predicament. “Tiahrt knows what caused these problems, he voted for the 1999 Financial Services Modernization Act that effectively gutted protections and regulations for investment and commercial banking authorized by President Franklin Roosevelt,” said Betts.
“When you look at all the problems we are facing with our economy today with 143 Americans losing their homes in the next hour and consumers suffering from rising grocery and gasoline prices, it is disgusting that our Congress is not claiming responsibility for passing the legislation that precipitated the Wall Street bailout,” said Betts. “The members of Congress that created this monster, including Congressman Tiahrt, should be held accountable.” I want to assure you that I will always fight for the voice of the people and put people over politics,” said Betts. “People deserve to have a voice in our government and it seems that the special interests and big business have had too much control in Washington D.C. and I plan to change all that when elected,” he said.
Following the stock market crash of 1929 and the Great Depression, President Franklin Roosevelt signed the Glass-Steagall act in 1933 to protect our banking system. This legislation addressed the concern of over-speculation by banks and set up regulations for investment and commercial banking. The 1999 Financial Services Modernization Act essentially destroyed the 1933 legislation. With the bailout of Bear Stearns by Congress in March (legislation Tiahrt voted for), the takeover of Fannie Mae and Freddie Mac in September, and the Federal Reserve’s help to AIG, the focus of the entire world is on the U.S. market which continues to teeter erratically. “It is such a shame that our great leaders such as President Roosevelt spent so much time ensuring legislative controls were put into place, only to have them shattered in 1999,” he said.

With the Stock Market falling over 700 points today with news of Congress not approving the bailout, many Americans are concerned about how it will affect their savings, retirement and long-term future. Senator Betts said today, “People in this country need to be reassured that they will not lose their life savings, retirements, and mortgages in lieu of the chaos on Wall Street.” “There is concern and the people need to be sure that Congress is on-the-job,” he added.
Betts is running for the 4th Congressional seat currently held by Todd Tiahrt who has been in office since 1994. Betts has been actively working for Kansans since 2002, when he was elected to the Kansas House of Representatives. He went on to serve in the Senate, bridging party lines to focus on the important issues that affect everyone including support for education through the Workforce Kansas Quick Careers. Among his many accomplishments, Betts took a stand against the practices of genocide with Senate Substitute for HB 2457 which was signed into law divesting Kansas Public Employee Retirement Funds from Darfur. “It has been my pleasure to represent Kansans in Topeka but I believe that now is the time to make their voices heard in Washington, D.C.,” said Betts. “Our nation is in an economic crisis and people are hurting – it’s time to make some choices to make our country strong again and to be fair to everyone, not just the special interests.”

1 comment:

R.mantha said...

If you think this bailout is expensive, just wait until you see the next one. The $700 billion rescue plan approved by the U.S. Senate won't fix the core problem with the nation's ailing financial institutions. And it almost guarantees that you and I will have to pony up for an even costlier bailout someday, maybe soon, if the House of Representatives passes it tomorrow.
Treasury Secretary Hank Paulson has correctly identified the quandary: Lots of shaky banks and insurance companies are showing strangely high values for assets that aren't worth squat in the market. Many need more capital and can't raise it. And he's right in saying the outlook is grim if we don't get this fixed.
What's stunning is how little the taxpayers would get in return for their money under Paulson's package, and how illusory much of the banks' newly minted capital would be.
Under the plan, Treasury would buy some companies' troubled assets at above-market values. To boost their capital, Paulson would have to pay the companies more than what their balance sheets say the assets are worth. Then other companies would use the rigged prices to write up, or avoid writing down, the values of similar holdings on their own books.
So, the taxpayers get hosed on the asset purchases. Other banks use the trumped-up prices to cook their books. And investor confidence supposedly is restored.
That brings us to this question: Why would a smart guy like Hank Paulson -- the former boss of Goldman Sachs -- advance such a dumb, shady plan? Let us count the reasons:
No. 1: It delays our national reckoning until after the presidential election.
Paulson first floated a bailout Sept. 18, at the very hour when shares of Goldman Sachs Group Inc. and Morgan Stanley looked like they might go into a death spiral. It's not so much a bailout, as it is a timeout. He had to follow up with something, anything, to stop the freefall from resuming. It didn't have to make sense.
So it doesn't. The plan is about creating the illusion of stronger financial institutions, not strengthening them.
The banks know this. Otherwise, they would have stopped charging each other near-record rates for three-month loans by now. The reason they haven't is because they're still afraid their customers -- other banks -- might go broke.
No. 2: The reckoning will be worse than you can imagine.
If Paulson were serious about recapitalizing rickety U.S. banks, he would infuse them with hundreds of billions of dollars of fresh government money, in exchange for ownership stakes. And if he wanted to create market liquidity for all those troubled assets on their books, he would be ordering banks to disclose everything there is to know about them, so Mr. Market could figure out their present value.
He can't let that happen. Not now. If everyone could see how much the toxic waste is worth, the write downs would be so huge that many banks would have to be declared insolvent.
Better to let the next administration deal with the clean- up. The trouble is, the longer the government waits to address the banks' lack of capital, the worse it gets, barring a miracle.
No. 3: He's helping his friends.
Is there any doubt? Let's see.
As of yesterday, Morgan Stanley Chief Executive John Mack owned 2.75 million shares of his company's stock, valued at about $67 million. If Mack can get Morgan Stanley to trade reams of sketchy paper for billions of dollars of our Treasury's cash, without diluting any of his stake in the company, who benefits?
Paulson would have us believe it's you.