Senator McCaskill Responds on Bailout

Here is the text of the e-mail I received from Senator McCaskill in response to my letter about the bailout:

Dear Mr. Diederich:

Thank you for contacting me regarding the turmoil in the financial markets and federal government’s response to it. I appreciate hearing from you, and I welcome the chance to respond.

The situation in the credit markets is dire, and that has left us with some tough choices. We have seen a series of financial institutions fail and that brought us to a crisis point where lending all but stopped. Problems spread beyond investment banks and Wall Street trading firms. Retirement funds and even some money market accounts, which are supposed to be safe places for savings, have been threatened. Meanwhile, interest rates for the short term financing that businesses rely on to make payroll rose to levels that they could barely afford. Many have found that they could not get financing at all, and some small businesses in Missouri have shut their doors as a result.

Missourians are right to be angry about this situation. Financial firms packaged risky subprime loans into securities which they said were as safe as government bonds, and investors made reckless bets on these new products. The new products were so complex that, when they started to go bad, no one knew which securities were affected and to what extent. What’s more, some firms had borrowed huge amounts of money to buy these products, which put their creditors on the hook as well. Confidence dropped to zero throughout the whole market. The federal government was asleep at the wheel during all of this. Regulation was inadequate and oversight was nonexistent.

I do not like how we got here, and I do not like what we have to do to get out. It stinks that the American people are now being asked to post $700 billion to clean up this mess. It all stinks to high heaven. But doing nothing would be much worse. While many Missourians have not felt it yet, the credit crisis has already caused some farmers and small businesses to lose the lines of credit they rely on to function day to day. Many city and state governments have been unable to find financing for important projects, such as sewer projects and hospital improvements. With no action, even Missourians with good credit might not be able to get a home loan, a student loan, an auto loan or a loan to expand their small business.

Still, I took no pleasure in voting for the Emergency Economic Stabilization Act, but I did so because the credit crisis poses a very real threat to the economic security of all Americans. This bill will attempt to address the credit crisis in a systemic way and get credit flowing again. The bill will allow the Treasury to purchase up to $700 billion in distressed assets, such as mortgage backed securities. The Treasury hopes that this will restore confidence and free up lending by removing some of these distressed assets from the banks’ balance sheets and replacing them with capital. The Treasury also hopes to recover the $700 billion through the sale of these assets and possibly return a profit to the American people.

Like many Americans, I have my doubts about this plan. However, I was pleased that Congress inserted many provisions designed to protect the taxpayer and ensure oversight of the program. The bill places strict reporting and disclosure requirements on the Treasury. It requires the companies that participate in the program to give the government equity shares, allowing the taxpayer to benefit if the company recovers and its stock price goes up. It puts limits on compensation paid to CEO’s at participating companies and there are provisions to work with homeowners to restructure loans and keep them in their homes to the greatest extent possible. While it is far from perfect, it is much better than the blank check the Secretary of the Treasury initially proposed.

I know this plan will not be a silver bullet. We will need to do a lot more to get our economy back on track, including investing in education, job training, and renewable energy. We also need to get to work to establish strong, common sense rules and regulations to undo the damage of the last decade of deregulation that turned our financial markets into the world’s largest casino. As your Senator, I will be pushing hard to address all of these issues.

Thank you again for contacting me. I hope you will continue to reach out in the future with your thoughts and advice.

All best,
Senator Claire McCaskill

Notice that she completely ignores my question about the Community Reinvestment Act, insisting that the problem was NOT ENOUGH regulation of the market.

Published by Little-Known Blogger

I spent the first years of my life in a trailer park outside of a tiny town in rural Missouri. I grew up to be a long-haired, gun-hating, military-hating, Presbyterian super-liberal. Well, perhaps the “growing up” happened later. While in high school, I was on the cross-country and wrestling teams, and actually won my weight-class in a State powerlifting competition. I went on to attend college on a Bright Flight scholarship, where I promptly became an atheist. I trained for a few years in Shotokan karate and Cheng-system taijiquan before training in my first real martial art, Hwarang-Do, under the late Franklin Fowlkes (later the Founder and Grandmaster of the Five Elements Martial Arts System). I married an older Taiwanese woman my junior year, got divorced in short order, and dropped out of college. After completing my AA in Psychology, I decided I needed a complete change of scenery and joined the U.S. Marine Corps (having early been assured that there was no way that a skinny liberal like me would ever survive Boot Camp). Contrary to what the Hipster Zombies will tell you, this did not “brainwash me into being a Conservative”. Instead, it made me a very unhappy, short-haired liberal, surrounded by guns and the military. However, I spent my whole contract (after schools) on the island of Okinawa, where I was exposed to points of view not dominated by the American liberal media. During this time, I taught ESL classes as a side-job, trained under some of the highest-ranking masters of karate on Okinawa, and discovered the practice of Buddhism. I also spent some time in Korea, where I got to train in hapkido. It was during this period that I came gradually to realize how stupid and evil American liberalism actually is. This was partly due to my Military Police command sending me to Small Arms Instructor school, which gave me more exposure to guns than I could ever have imagined—thus negating my idiotic liberal distaste for them. After the active-duty portion of my Marine Corps contract was over, I worked several jobs, from security contracts to operating a forklift in a warehouse. In 2002, however, when the invasion of Iraq was getting under way, I signed up with the Missouri Army National Guard, and have remained with them since, continuing as a Military Policeman. I am also full-time corrections officer, a member of the Anglican Church, and at one time was an Instructor Candidate in Dekiti-Tirsia Serradas Kali (until my instructor moved away). My hobbies (beyond blogging) include strength training, shooting sports, martial arts, creating digital art, and being a huge science and science-fiction geek.

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