An Open Letter To Our Maine Federal Representatives
Posted by: Archimedes on Sep 25, 2008 - 09:54 AM
Politics
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I doubt very much that anyone is paying attention other than the handful of Maine readers that come to my site...but if they are, then please, by all means, put this to our federal representatives. This time of neglecting the constituents of the country must come to an end. It's time that the people of this nation made an effort to make our representatives aware that they are just that - our representatives. And we cannot be ignored. Not just ignored, but dismissed as we obviously have been with relation to this proposed bailout of Wall Street. So in case Mrs. Collins, Mrs. Snowe, Mr. Allen and Mr. Michaud are not listening, and I doubt very much that they are, then by all means disseminate this open letter as widely as possible and let at least OUR representatives know that we are against this, we cannot afford it and it is NOT representative of our feelings in this and NOT in our best interest.
Mrs. Collins, Mrs. Snowe, Mr. Michaud and Mr. Allen
I'm writing with relation to the recent proposal from Mr. Paulson with relation to the propose $700B taxpayer infusion into the trouble markets and the impact it may have here on Main Street. I cannot stress enough that it is as a result of the poor business practices of these same institutions to whom Mr. Paulson is now saying we should give a "gift" of such an astounding amount of money that we are where we are today. I don't discount the personal responsibility of those that accepted mortgages far beyond their means and that these individuals have some measure of blame for this current crisis. However, it is the lack of discretion on the part of the lenders that and the packaging of such "mortgage backed securities" that has brought this country to its knees. And now, under this plan, those of us who have acted responsibly are expected to "share the pain".
I can't speak for anyone else, but I've been fiscally responsible. I bought a house that was within my means and was intelligent enough to ensure that the requirements that would be placed on me would be within my ability to meet. But now I'm expected to pay for the giant mistakes of these multimillion dollar corporations who have gone out of their way to pat themselves on the back for a job well done, compensate themselves according to their self-proclaimed success and, as their companies failed, provide severance packages the likes of which we on Main Street can’t begin to even dream about. Yet now their failing falls on our shoulders.
This infusion of monies is supposed to “erase” the “toxic” assets from their balance sheets, thereby making them liquid again. I put to both of you that these assets are referred to as “toxic” for a reason. These are the equivalent of junk bonds. They have no intrinsic value now nor will they in the future. And in providing such an exorbitant amount of money to these same companies that made such giant mistakes in judgment based solely on greed only frees them of their responsibility and encourages them to continue to proceed as they have for the last decade in the practices that now bring us to this point. In short, this allows them to “continue to extend credit”. Speaking as John Q. Public, ladies and gentlemen, providing greater credit is of no more concern to those of us on Main Street. Most of us have reached the limits of our credit. Providing more is not going to help us. It will not solve the current mortgage crisis. It will not keep people in their homes. It will simply allow these companies that played the largest part in bringing us to this place to continue to do “business as usual”.
If you truly wish to solve this problem, then throwing $700B at these failing financial institutions will not solve the problem. I have no MBA from an Ivy League school. But frankly, I’m quite tired of being told by the CEOs of these giant organizations, and others, that I don’t understand the complexities of the market or these kinds of securities. It appears to me that, for all of their bluster, neither do they as, if they did, then they wouldn’t have made such grievous errors in judgment as they have that have brought us here.
For all of the gobbledygook spoken by Mr. Paulson about “how angry” he is and “how embarrassed” he is and how his only thoughts are “for the taxpayers”, and for all of the “thank you for your service” that I’ve witnessed the members of congress laud upon him, I put to you that this is the same man that was the CEO of Goldman Sachs since 1995 before taking the post as Secretary of the Treasury. He has been directly responsible for the decision making process by these companies that have brought the financial institutions to ruin. And to trust in his judgment now is madness. This man should be embarrassed. But he has no room to be angry. This is in part his doing and under that premise, it falls on him that this is a monster of his own making.
Speaking as a taxpayer, I can only say that I’ve been prudent in my choices regarding my own finances. And given the impact that his decisions have already had on Wall Street, even those decisions I’ve made have proven that I am now in a position in which I’m *already* in a position in which I must cut back as I watch the cost of home heating oil, gasoline, food and other commodities rise and have a further detrimental impact on my budget that I carefully planned for. And yet, Mr. Paulson blithely comes forward now and says that in the process of their poor decision making, it has now fallen on me, the American tax payer to “share the pain”.
We here on Main Street are already in pain, ladies and gentlemen. And frankly, as a sole income provider for me and my wife, I cannot afford an additional $3600.00 or more per person in my household of debt. If you were to come to me right now and tell me I owed $7200 of debt on top of that which I owe now on my mortgage and car payment, both of which were prudently decided on, I would have no choice but to declare bankruptcy. Further credit here on Main Street will *not* solve the problem. Even if we could get credit, I have extreme doubts that anyone would want it at this point as it would only compound our misery.
If this congress is bent on spending $700B of *our* tax dollars, I would put it to you that it would be better spent on creating some kind of fund under which those who are in a distressed position as a result of the subprime lending practices of the giants, those that are in a mortgage that they can no longer afford, might avail themselves on such a fund to have their mortgage bought out by the U.S. Government and then offered a reasonable, fixed rate mortgage of up to 50 years that is within their budget to afford. This would keep the individuals in their homes, provide the much needed capital injection back into the banking industry as this would stem the tide of future collapsing mortgages, thus stabilizing the lending institutions indirectly, and would provided much needed breathing room for those of us here on Main Street. Admittedly, such a plan would not be anything I personally could avail myself on as, in my previous statements, I indicated I was prudent in my decision making process and secured a loan both within my means and was of a fixed rate. But in so stabilizing the economy by indirectly injecting this capital into the markets by taking over these ARMs and balloon mortgages, providing the injection of capital as the principle of these loans are paid in full for the most distressed mortgages out there, in doing such a thing, then the lending institutions would stabilize and the markets might return to some semblance of normalcy.
Further, the government and the tax payers would have a direct, physical asset that they can then say they are invested in, not some “security” which amounts to little more than junk bonds. If the person then defaults on their loan after being provided with a loan that is reasonable, then the foreclosure would entitle the government to seize the property and the government would still have something more tangible then a piece of paper saying “I’m owed X number of dollars”.
Frankly, perhaps I do oversimplify things. Only in today’s economy can “debt” be considered a tradable commodity. It matters not how much someone owes you. That is irrelevant. It’s how much you are paid back. And at the rate that this is going, these securities will never be paid back. Those in mortgages they cannot afford will still be in mortgages they cannot afford. They will still default. The securities will still be worthless. The banks will still foreclose on these people and hold the property and the ONLY ones that will have a physical asset in hand will be the very lending agencies that were in large part directly responsible for the crisis to begin with. And the government, or more appropriately the taxpayers, will be left with “assets” of no worth. There is no assurance in this that it is going to curve the predatory practices of investment bankers. There is no assurance in this that those that are in jeopardy of losing their homes are going to be provided a chance to stay in their homes. This simply maintains the situation as “status quo” and allow these predatory agencies to continue their practices and continue to put more and more people in jeopardy.
I’ve listened to the rhetoric presented by Mr. Bernanke and Mr. Paulson that “if we don’t do something now, the consequences will be far worse”, yet they cannot elaborate aside from eluding to the fact that retirement accounts, money market accounts and other such investments will be placed in jeopardy. And while I do agree with Mr. McCain’s assessment that the backbone of the American financial system, the consumer (or in this case workers and taxpayers) in this country are strong, we are also strong of will, but we are stretched to our limits even as we speak. We cannot afford to continue in this fashion. And this “solution” presents a continuation of the existing conditions on Wall Street.
One cannot have a capitalist society with government intervention directly in the markets. If one espouses that they are in keeping with the true sentiments of capitalism, then these organizations that have made poor business decisions are subject to the Darwin’s Law and should fail. In their so failing, more companies will come up in their absence to take their place and they will take their cue from the giants that fell before them and provider sounder decision making practices, better service and a stronger foundation for our economy to grow on. But only through the process of natural selection can this painful process be allowed to take place. You cannot have both government intervention AND a free market. The two are mutually exclusive. And most certainly, such a debt cannot be pressed on the people of America and expect that the people of this country will accept it without question, especially those of us who haven’t made such fundamentally poor decisions as these people who have purported to have a greater understanding of such financial complexities as they continue to pride themselves in being so knowledgeable about. Inasmuch as I am concerned, while I can only understand it on a very simple level, it occurs to me that the decision making process in these regards is fundamentally simple…you don’t take risks you cannot cover. If you haven’t the capital backing to take such a risk as providing loans in the fashion that they have without some kind of sound oversight from within your own organization and you continue to take such risks, then you are doomed for failure. And their failure should *not* be translated as pain to be shared by those of us who had no part in these kinds of foul decision making processes.
Frankly, Mrs. Collins, Mrs. Snowe, Mr. Michaud and Mr. Allen, I understand that the consequences for not doing something to stabilize these markets are dire. However…I place a great deal more faith in the people of this country than I do in the financial institutions that have made such grievous errors in judgment and would be more inclined to spend trillions of dollars on that front than invest this amount of money into the institutions that are directly responsible for bringing us here. Yes, there is a real chance that our retirements and our investments could be in jeopardy. But I can promise you that the fallout of such investments going away will amount to this – we the people of this country will pick ourselves up, dust ourselves off, call the government officials that allowed this to go unchecked and the heads of these financial institutions who have made such profoundly poor decisions all kinds of names. We will be angry. We will march in the streets, to be sure. But in the end, we will pick ourselves up, dust ourselves off, and we will persevere. That is the inevitable truth. But our single biggest investment is our home. If you take that away from us, then we are lost. And no amount of money on Wall Street is going to correct that.
This package needs to be directed at the people who are going to pay for it – directly at the people who are going to pay for it. It cannot be an indirect package because if it is, then you will have earned the ire of this country as you can already see growing around you. We cannot afford to pay for the mistakes of others. At this juncture, we can barely afford our own mistakes. But we cannot be held responsible for the indiscretion of others, especially those who tout themselves as being above us as a result of the fact that they believe (and I think even to this moment they honestly still believe) that they know more about these kinds of securities than we do. It’s more than apparent to me that they don’t. And frankly, I cannot and do not prescribe to the notion that I should be held accountable for their poor judgment.
Thank you all for your time and consideration.
Sincerely,
Clifford Warren
Concerned Taxpayer
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