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If you watched the vote in real time, it was exciting. For the first 8-9 minutes, the measure was passing. Then, for awhile, it flipped back and forth -- up by 1 or 2, then down by 1 or 2. Finally, in the last 5-6 minutes, the "nays" stayed ahead.
All readers are encouraged to continue to hold their congressmen and senators' feet to the fire. Keep your letters and calls flowing to their offices to let them know you do not want this bailout.
After reading the draft text of the Emergency Economic Stabilization Act of 2008, I can say, with great confidence, it will not work. It is a sausage of divergent courses of action. Worse, it does nothing to guarantee that the banks, once bailed out, cannot or will not repeat the practices that brought us to the precipice of financial collapse.
This act would be better entitled the Economic Destabilization Act of 2008. It is little more than a debt consolidation loan for Wall St. It clears the banks books of risky debt, allowing them to restart or continue their lending.
Consumer lenders like myself know that debt consolidation loans are dangerous and rarely solve consumer’s debt problems. The only way they help is if the consumer cuts up their credit cards, stops borrowing, and curtails their spending. Then, and only then, does a debt consolidation loan work.
Unfortunately, what usually happens when consumers take out debt consolidation loans is their best intentions of better managing their spending habits gets lost. In almost every case, these consumers continue using their credit cards or borrowing on their home equity credit lines. They only end up in deeper debt that they find impossible to pay. If they are unable to get more credit, they end up in severe economic distress and often are forced into bankruptcy.
The only way I could support this message before the House today and due to come to the Senate on Wednesday is if it had the regulatory teeth to stop the banks from their risky lending practices. Oh, I am sure the banking lobbyists are promising to mend their ways. The Treasury Secretary, SEC Chairman, and Federal Reserve Chairman are trying to assure legislators that the banks have learned their lessons.
Unless regulatory control is in the legislation, I do not hesitate to tell you to vote “Nay” on it. A group of 400 economists, including three Nobel Laureate prizewinners, have signed a resolution to the Congress that this measure will only make the problem worse in the longer term. The only thing this Act would assure is the inevitable collapse of the entire world’s economy, according to these economists.
Yesterday, I heard one economist on CNN state, we can either allow an 18-month recession by not passing this measure or we can have a “decades-long depression.” I encourage you to vote “No” on this Emergency Economic Stabilization Act of 2008.
For further information on the root causes of this crisis, please go to my blog at http://yankeereb.blogspot.com . There, you will find several essays posted in recent days on this subject.
Sincerely,
(signed)
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