From Gov. Mike Huckabee:
Dear Huck PAC family,
I ask 2 things of you right now:
First, read this email completely. I’m including my thoughts on the “bailout bill,†and I believe you will find them of interest. Second, if you agree with what I have to say, support my efforts at Huck PAC so we’ll continue to have a strong voice and we’ll have the capacity to support conservative candidates all across the nation who will stand and fight for our conservative principles … especially in times of crisis like we are facing as a nation today.
Frankly, I’m disappointed and disgusted with my own Republican party as I watch them attempt to strong-arm a bailout of some of America’s biggest corporations by asking the taxpayers to suck up the staggering results of the hubris, greed, and arrogance of those who sought to make a quick buck by throwing the dice. They lost, but want the rest of us to cover their bets so they won’t be effected in their lavish lifestyles as they figure out how to spend their tens of millions and in some cases, hundreds of millions in bonuses and compensation which was their reward for not only sinking their companies, but basically doing the same to the entire American economy.
It’s especially disconcerting to see the very people who pilloried me during the Presidential campaign for being a “populist†and not “understanding Wall Street†to now line up like thirsty dogs at the Washington, D. C. water dish, otherwise known as Congress, and plead for help. I thought these guys were the smartest people in America! I thought that taxpayers like you and I were similar to the people at the U. N. who have no translator speaking into their headset – that we just needed to trust those that I called the power bunch in the “Wall Street to Washington axis of power.â€
The idea of a government bailout in which we’d entrust $700 billion to one man without Congressional oversight or accountability is absurd. My party or not, that is insanity and I believe unconstitutional.
Will there be far-reaching consequences without some intervention? Probably, but we honestly don’t know since we’ve really never seen this level of greed and stupidity all rolled into one massive move. But may I suggest that letting “Uncle Sugar†step in and bail out the billionaires who made the mess will be far worse and will start a long line of companies and individuals who will demand the same of the government—which last time I checked means that they will be demanding it out of YOU and ME. This is not money that Congress is risking from THEIR pockets or future, but ours. Many if not most of us have already experienced lost value on our homes, retirement accounts, and pensions. Now they’d like for us to assume some further risks so they won’t have to.
What happened to the “free market†idea? Is that only our view when we WIN and when we LOSE, we ask the government to come in and take away the pain?
If you are a small business owner, is this the way it works at your place? When you have a bad month, a bad year, or face having to close, can you go up to Congress and get them to write YOU a fat check to take away your risk?
Some of what contributed to this disaster is too much government in the form of Sarbanes/Oxley. Some is due to the tax structure that created the hunger for companies to “game†the system. Some is the common sense that was ignored like loaning money to people who can’t pay it back.
Wall Street has become Las Vegas east, but at least in Vegas, people KNOW they are gambling and they don’t expect the government to cover their losses at the tables. In Wall Street, they do. And the American taxpayer burdens the responsibility.
If Congress wants to do something, here are some suggestions:
1. Eliminate ALL capital gains taxes and taxes on savings and dividends right now. Free up the capital and encourage investment. This is the kind of economic stimulus the Fair Tax would bring and if Congress is going to lose money, let them lose it with lower taxes, not with public dollar bailouts of private market mistakes.
2. Repeal Sarbanes/Oxley. It has failed. It was supposed to prevent this. It didn’t. Kill it.
3. Demand that the executives who steered their ships into the ground be forced to pay back the losses of their companies. Of course, they can’t, so let them work and give back to the government and they can live like the people they put on the streets or kept there. It makes no sense to put them in jail—that’s just more they will cost you and me. I’d rather them go out and earn money—just not get to keep so much of it this time. I’m not talking about limiting CEO salaries—just those of the people who now are up in Washington begging for help because they ruined their companies.
Attempts by Democrats and Republicans to blame each other is nonsense. They are both guilty and ought to own up and admit it. They all lived off big campaign contributions and the swill of the lobbyists who strong armed them into permission to steal. Enough of blame. Fix it!
This would be a start. If we don’t hold these guys responsible, we are all finished.
Your support today will send a strong message to our Party Leadership in Washington that we are fed up with “business as usual!†And it will give us the resources to support strong conservative candidates who are campaigning hard for election this November. Those folk who share our beliefs and who will fight …not bail … on our principles. Please make an immediate contribution of $25, $50, $75, $100 or more to help make certain that the “business as usual†of Washington politics stops in January.
Thank you for your continued support and God Bless
Mike Huckabee
Have to say I agree with him.
Just an observation today, Mr. Huckabee. I live in Arizona. Today Ditech.com was advertising mortgage loans for 5.5% (fixed rate). They were looking for the people with ARM problems to refinance their loans.
MOR furniture just advertised their furniture with NO CASH DOWN and no interest until 2013.
It sounds to me as if most of the country is operating just fine. It is the financial sector, the buddies of the Secretary and Chairman Bernanke who want the special bailout.
This country will be RUINED if we adopt the view that we (as a country) have to bail out special interests, even when that special interest is the financial sector.
If these bad loan packages are offered at a low enough price, there will be private money happy to buy it. The banks want more than the fair market price, so they want the U.S. taxpayer to take care of them. That is imprudent and the opposite of our entire philosophy of government and economics.
The first duty of our elected officials is to the taxpayers of this nation, NOT the financial special interest whoever they are. If things freeze up for a while, so be it. It will work out in time. There’s a lot of money in this world looking for a home. Some will buy bad assets at large discounts, willing to wait for the future profit. Some will help recapitalize firms when it can be shown they are worth recapitalizing.
Respectfully submitted,
Bernie Koerselman
Just an observation today, Mr. Huckabee. I live in Arizona. Today Ditech.com was advertising mortgage loans for 5.5% (fixed rate). They were looking for the people with ARM problems to refinance their loans.
MOR furniture just advertised their furniture with NO CASH DOWN and no interest until 2013.
It sounds to me as if most of the country is operating just fine. It is the financial sector, the buddies of the Secretary and Chairman Bernanke who want the special bailout.
This country will be RUINED if we adopt the view that we (as a country) have to bail out special interests, even when that special interest is the financial sector.
If these bad loan packages are offered at a low enough price, there will be private money happy to buy it. The banks want more than the fair market price, so they want the U.S. taxpayer to take care of them. That is imprudent and the opposite of our entire philosophy of government and economics.
The first duty of our elected officials is to the taxpayers of this nation, NOT the financial special interest whoever they are. If things freeze up for a while, so be it. It will work out in time. There’s a lot of money in this world looking for a home. Some will buy bad assets at large discounts, willing to wait for the future profit. Some will help recapitalize firms when it can be shown they are worth recapitalizing.
Respectfully submitted,
Bernie Koerselman
Mike, the following is a proposal by a very experienced money analyst. I sent this both to the president and John McCain. You may wish this info, as the huge problem is more than simply sub-prime loans.
You may wish to take this into consideration in your thinking.
Blessings,
Bernie Koerselman
The “Money Morning Plan” to End the Credit Crisis
by Shah Gilani, Contributing Editor, Money Morning
Editor’s Note: Earlier today, our colleagues at Money Morning released a solution to the credit crisis… that won’t cost U.S. taxpayers a dime. Their 15-point plan below, in an open letter to Treasury Secretary Paulson, shows you how.
Dear Hank: Here’s How to End the Credit Crisis at No Cost to Taxpayers
While it’s clear from the current credit crisis that our financial system is at a critical juncture, it’s just as clear that there’s no agreement over how we should fix the problems we face. The reality is that neither the plan put forth by U.S. Treasury Secretary Henry M. “Hank” Paulson Jr. – nor any of the addendums offered up by Congress or the lobbyists – will resolve this crisis.
The key culprits are the structured financial products that reside on the balance sheets of banks, dead investment banks, insurance companies, hedge funds and all manner of other duped and unsuspecting investor entities worldwide, as well as the proliferation of the unregulated $62 trillion credit default swaps (CDS) market.
Because all these securities, and in the case of credit default swaps, bilateral contracts, are impossible to value and impossible to guarantee, no one trusts them. As a result, everyone is afraid of these securities and contracts.
Banks are currently not lending to one another because they are afraid that the next round of write-downs and losses may imperil some of their trading partner banks to which they formerly lent billions and billions of dollars to every night. If the answer were really as simple as adding liquidity, the Federal Reserve would have lowered the Fed Funds target. But that won’t work. It’s a vicious cycle that’s eroding banks’ faith in one another, and worse, our faith in our banks.
Unfortunately, I don’t see the Treasury Department’s much-needed rescue plan being effective without actually addressing the pricing of – indeed, the very existence of – credit default swaps and collateralized debt obligations. As well intentioned as it is, the Treasury plan will create more problems than it solves and will eventually saddle taxpayers with so much debt that it will tank the dollar. It could even put the U.S. government’s AAA investment rating at risk. That would be calamitous.
I have a modest proposal that I’m calling the Money Morning Plan, because it potentially heralds a new dawn in the credit crisis, addressing the problems from the bottom up, and not from the top down. The bottom line is that my plan will end the credit crisis quickly with potentially little or no cost to taxpayers. And those are the two most important benefits of all. I present my plan as an open letter for public debate.
An open letter to U.S. Treasury Secretary Henry M. Paulson, Federal Reserve Chairman Ben S. Bernanke, Distinguished Members of Congress, and the American Taxpayers:
Dear Ladies and Gentlemen,
How we respond to the upheavals in our financial markets will define the American character at home and in the eyes of the world. With our cherished history of free markets and entrepreneurial spirit, we should guide ourselves as we always have, trusting our collective financial interests to our Constitution, which created a government by the people, for the people. Trying times are not a mandate to foreswear our personal, financial nor collective economic interests to any lobby or government other than one that protects all our rights, especially the right to not be taxed unfairly or unjustly.
The proposed Treasury Department rescue plan before Congress has not been presented without due consideration. There are, however, other proposals that merit our collective contemplation. As a taxpayer and investor, I am proposing an alternative plan for open discussion. We need to act quickly, but we need to act responsibly.
Respectfully,
Shah Gilani
Contributing Editor
Money Morning
The Money Morning Plan
1. Establish an empowered, not overpowering, regulatory apparatus to rein-in structured products and establish protocols for the creation and tradability of financial products based on real-world economics and hedging considerations. Products must be transparent, easily valued and rated on a universal ratings model.
2. Establish regulated standards to support the universal ratings model and allow free-market competition for providing rating services based on a “pooled-income revenue model,” whereby all issuers that either want to be rated, or that are required to be rated, pool funds on a per-volume, pro-rata basis and ratings providers are paid blindly for rating services.
3. Immediately stop the issuance of credit default swaps without mandatory reserve requirements and safeguards typical of what insurance regulations already require of legitimate insurers. Net out all existing credit default swaps to tighten counterparty risk and unwind positions that cannot be secured by issuers meeting adequate reserve requirements. Eliminate virtual insurers.
4. Only allow issuance of credit default swaps up to the actual outstanding dollar value of corporate debts and loans outstanding. This will ensure legitimate hedging and eliminate undue pressure on outstanding debt issuers.
5. Create a class of “eligible (mortgage-related only) securities” that constitutes problem securities. Leave all eligible securities on the books of existing holders.
6. Have eligible security holders identify to the U.S. Federal Reserve every eligible security by CUSIP and face amount. Only the Fed will have knowledge of institutional and investor positions. This will allow the Fed to correctly assess the risks at hedge funds and others with “significant operations” without exposing their positions to competitors.
7. Create a new accounting domain in-between “held-to-maturity” and “available-to-trade” where only eligible securities, as of a predetermined valuation date, can be accounted for at their value on the predetermined valuation date and not further subject to fair-value (marked-to-market) accounting, while held.
8. Mandate all holders of eligible securities mark-to-market inventories on a predetermined valuation date, preferably as soon as the Fed expects all eligible securities to be registered with it. Those who have recently marked their securities have already taken their write-downs; those who haven’t will have to. If the totality of the resolution represents a bona-fide solution, investors and speculators will bid up eligible securities to own them before the predetermined valuation date, because of newly ascribed accounting advantages of holding eligible securities.
9. Reduce the haircut on the reserve requirements for all eligible securities covered by this plan. Since valuations have already fallen precipitously, reducing reserve requirements on eligible securities would additionally enhance their value as balance-sheet assets with upside potential.
10. Have both the Fed and Treasury determine a liquidation or receivership outcome for holders suffering from insolvency as a result of accurately marking-to-market their holdings on the predetermined valuation date in the event bankruptcy would result in further systemic problems. This scenario would be cheaper and quicker to manage than what’s in store for us under the present Treasury draft, and it allows the two to assess the potential fallout of insolvent entities prior to their exposing the financial system to resulting disruptions. Hedge funds would not be saved.
11. The Fed must establish and manage a conservative, transparent pricing model for eligible securities based on actual underlying cash-flow measures, projections and model specific criteria. Absolutely no trading would be allowed over-the-counter or otherwise on any of the eligible-securities specific pricing models or indexes.
12. The Fed, with a firm handle on all eligible securities and a transparent-pricing methodology, would have to take in any and all eligible securities as collateral against Fed borrowings from the discount window or through its dealer facility.
13. “Servicers” managing underlying mortgages on behalf of trust entities, under which securitized pools are created, must be empowered to alter and modify terms and conditions of underlying mortgages in conjunction with originating banks or lending institutions.
14. To incentivize banks and lending institutions to modify existing mortgages and to incentivize homeowners to stay in homes with upside-down mortgage-to-appraised values, eliminate all capital gains on appreciation of newly appraised homes when they are sold by either homeowners, banks or lending institutions.
15. Create tax-advantaged scenarios for banks and homeowners partnering in the reduction of delinquent obligations whenever loans can be brought to a performing status.
Editor’s Note: Contributing Editor R. Shah Gilani has toiled in the trading pits in Chicago, run trading desks in New York, operated as a broker/dealer and managed everything from hedge funds to currency accounts. In his just-completed three-part investigation of the U.S. credit crisis, Gilani was able to provide insider insights that no other financial writer or commentator could hope to match. His experience and network of contacts developed through the years provides Money Morning readers with the “real story” of the credit crisis. It’s a perspective on the near-financial meltdown that you’ll find nowhere else.
You can find each part of Gilani’s investigative series here: Part I, Part II and Part III. To get a free copy of “Crash Proof” courtesy of Money Morning, and learn how to grow five times richer over the next five months regardless of short-term market hiccups, go here.
________________________________________
Bernie & Dar Koerselman
Email: b.koerselman@bereanpublishers.com
Dar’s Email: dar@bereanpublishers.com
Website: http://www.bereanpublishers.com
I concur. Man, I wish he would have gotten the nomination.
I concur. Man, I wish he would have gotten the nomination.