Bail-Out - Where Do We Go From Here?
Letter to the Editors
By Gerard Donovan
Candidate US Congress 5th District
Dear Editor:
I wish to calm fears of the 5th
District and approach this crisis with some forethought and
commonsense. Despite what you hear, the United States
economy is not collapsing and we are not doomed as a nation,
nor will we be doomed if we the people refuse to bail out
Wall Street.
We the people do not want to
own nearly a trillion dollars worth of junk bonds.
Thank God for the members of
Congress who heard overwhelming majority of their
constituents and voted down the bailout proposal. Those
members identified themselves as the members who put their
constituents before special interest. Those members
need the support I will take to Washington.
Sadly, Jim Cooper cast the
wrong vote. I’m truly disappointed in the Senate as well.
It's evident that both the House and the Senate held out a
couple of days to include massive amounts of new pork before
passing this taxpayer rip-off.
We need a market solution for
this financial crisis not another government bailout scheme.
Taxpayers throwing billions of dollars to those who created
the problem will only postpone the problem. As a nation we
cannot fix this mess by going deeper into debt.
So what to do?
I support the plan being
discussed to insure the subprime bonds/mortgages with an
underlying FHA-type insurance. Government-insured loans will
have an instant market all over the World, creating
immediate and needed liquidity.
In order for companies to
accept the government backed insurance they must rewrite any
mortgage that is more than three months delinquent to a 6%
fixed-rate mortgage. They must roll all back payments with
no late fees or legal costs into the balance. This brings
homeowners current and allows them a chance to keep their
homes.
In addition, companies must
cancel all prepayment penalties to encourage refinancing or
the sale of the property to pay off the bad loan. In the
event of foreclosure or short sale, the borrower will not be
held liable for any deficit balance. FHA does this now.
This consumer protection will
cost around 50 billion dollars, a far cry from the 700
billion dollars now proposed by Washington.
Secondly, I support removing mark to
market accounting rules for two years on only subprime Tier
III bonds/mortgages. This keeps companies from being forced
to mark down bonds and mortgage back securities to under the
market value of the homes held in collateral.
Finally, I support opening
the flood gates on these securities by removing the capital
gains tax completely. Investors will flood the real estate
and stock market in search of tax-free profits, creating
tremendous, and immediate, liquidity in the markets. As
discussed in the plan, this move will be seen as a lightning
rod politically because many will say it is helping the
rich. The truth is the rich will benefit, but it will
be their money that stimulates the economy. This will enable
all Americans to have more stable jobs and retirement
investments that go up instead of down.
No matter which market driven
plan is adopted, managing this crisis will take leadership
in the years to come; leadership that the people in the 5th
District do not enjoy in Jim Cooper. I am asking the voters
in the 5th District to send me and these
commonsense solutions to Washington.
Gerard Donovan
Candidate TN 5th District US Congress
###
Timeline Of A Crisis:
Most of us
have just watched years of planning and retirement investing
evaporate by half in the last few days.
I don't
know about you, but I'm sick and tired of the same tired
incumbent career politicians who created this mess tell us
that now's not the time to point fingers. They tell us we
must "work together" to solve this "global problem".
Well,
I've had enough of this Washington incompetence and from the
all the calls and emails I'm getting, so have you.
One thing
frustrating me is the media not reporting the mistakes, poor
judgment and outright corruption by career politicians
leading up to the mess we find ourselves.
I want to pass on to you
one of the better summaries we've found in our research.
Hold on to your hat, we are actually
naming names and even the places you can go to see for
yourself. The gloves are off and incumbents have to be held
accountable.
1977:
Pres. Jimmy Carter signs the
Community Reinvestment Act
into Law. The law pressured financial institutions to
extend home loans to those who would otherwise not
qualify. The Premise: Home ownership would improve poor
and crime-ridden communities and neighborhoods in terms of
crime, investment, jobs, etc.
Results: The formerly redlined communities are still
blighted and crime-ridden. Another example of what happens
when government meddles in the market place with bad ideas.
The result - unintended consequences.
How did the
government get so deeply involved in the housing
market? Answer: Bill Clinton wanted it that
way.
1992:
Republican representative Jim Leach (IA) warned of the
danger that Fannie and Freddie were changing from being
agencies of the public at large to money machines for the
principals and the stockholding few.
1993:
Clinton extensively rewrote Fannie Mae and Freddie Mac's
rules turning the quasi-private mortgage-funding firms into
semi-nationalized monopolies dispensing cash and loans to
large Democratic voting blocks and handing favors, jobs and
contributions to political allies. This potent mix led
inevitably to corruption and now the collapse of Freddie and
Fannie.
1994:
Despite warnings, Clinton unveiled his National
Home-Ownership Strategy which broadened the
CRA in
ways congress never intended.
1995:
Congress, about to change from a Democrat majority to
Republican, Clinton orders Robert Rubin's Treasury Dept to
rewrite the rules. Robert. Rubin's Treasury reworked rules,
forcing banks to satisfy quotas for sub-prime and minority
loans to get a satisfactory CRA rating. The rating was key
to expansion or mergers for banks. Loans began to be made
on the basis of race and little else.
1997 -
1999:
Clinton, bypassing Republicans, enlisted Andrew Cuomo, then
Secretary of Housing and Urban Development, allowing Freddie
and Fannie to get into the sub-prime market in a BIG way.
Led by Rep. Barney Frank and Sen. Chris Dodd, congress
doubled down on the risk by easing capital limits and
allowing them to hold just 2.5% of capital to back their
investments vs. 10% for banks. Since they could borrow at
lower rates than banks their enterprises boomed.
With
incentives in place, banks poured billions in loans into
poor communities, often "no doc", "no income", requiring no
money down and no verification of income. Worse still was
the cronyism: Fannie and Freddie became home to out-of
work-politicians, mostly Clinton Democrats. 384 politicians
got big campaign donations from Fannie and Freddie. Over
$200 million had been spent on lobbying and political
activities. During the 1990's Fannie and Freddie enjoyed a
subsidy of as much as
$182 Billion, most of it going to
principals and shareholders, not poor borrowers as claimed.
Did it
work? Minorities made up 49% of the 12.5 million new
homeowners but many of those loans have gone bad and the
minority homeownership rates are shrinking fast.
1999:
New Treasury Secretary, Lawrence Summers, became alarmed at
Fannie and Freddie's excesses. Congress held hearings
the ensuing year but nothing was done because Fannie and
Freddie had donated millions to key congressmen and radical
groups, ensuring no meaningful changes would take place.
"We manage our political risk with the same intensity that
we manage our credit and interest rate risks," Fannie CEO
Franklin Raines, a former Clinton official and current
Barack Obama advisor, bragged to investors in 1999.
2000: Secretary
Summers sent Undersecretary Gary Gensler to Congress seeking
an end to the "special status". Democrats raised a ruckus
as did Fannie and Freddie, all playing the race-card. The
status quo, headed by politically connected CEO's knew how
to reward and punish.
"We think
that the statements", referring to Gensler's congressional
inquiries, "evidence a contempt for the nation's
housing and mortgage markets" Freddie spokesperson Sharon
McHale said. It was the last chance during the Clinton era
for reform.
2001:
Republicans try repeatedly to bring fiscal sanity to Fannie
and Freddie but Democrats blocked any attempt at reform;
especially Rep. Barney Frank and Sen.Chris Dodd who now run
key banking committees and were huge beneficiaries of
campaign contributions from the mortgage giants.
2003:
Bush proposes what the NY Times called "the most significant
regulatory overhaul in the housing finance industry since
the savings and loan crisis a decade ago". Even after
discovering a scheme by Fannie and Freddie to overstate
earnings by $10.6 billion to boost their bonuses, the
Democrats in an attempt to keep the contribution cash-cow
intact, killed any reform.
2005:
Then Fed chairman Alan Greenspan warns Congress: "We are
placing the total financial system at substantial risk".
Sen. McCain, with two others, sponsored a Fannie/Freddie
reform bill and said, "If congress does not act, American
taxpayers will continue to be exposed to the enormous risk
that Fannie Mae and Freddie Mac pose to the housing market,
the overall financial system and the economy as a whole".
Sen. Harry Reid accused the GOP ;of trying to "cripple the
ability of Fannie and Freddie to carry out their mission of
expanding homeownership" The bill went nowhere.
2007:
By now Fannie and Freddie own or guarantee over HALF of the
$12 trillion
US mortgage market. The mortgage giants, whose executive
suites were top-heavy with former Democratic officials, had
been working with Wall St. to repackage the bad loans and
sell them to investors. As the housing market fell in '07,
subprime mortgage portfolios suffered major losses. The
crisis was on, though it was 15 years in the making.
2008:
McCain has repeatedly called for reforming the behemoths,
Bush urged reform 17
times. Still the media have repeated
Democrats' talking points about this being a "Republican"
disaster. A few Republicans are complicit but Fannie and
Freddie were created by Democrats, regulated by Democrats,
largely run by Democrats and protected by Democrats. That's
why taxpayers are now being asked for $700 billion!!
You can
check the facts and see for yourself:
http://www.youtube.com/watch?v=68D9XrqyrWo&feature=related#
http://www.youtube.com/watch?v=pIgqfM5C8lY#
http://www.youtube.com/watch?v=H9juJr8CSY4&feature=related#
Click Here
to see who got what from Fannie and Freddy
Economic Platform
Gerard believes that we must minimize the tax burden on
Tennesseans and American businesses. Gerard sees negligent
incumbents and current
Tax Policies as the root cause to our economic
woes. First off, end completely Washington meddling in the
Free Market. Secondly he believes that complete tax reform
and putting an end to bailouts and deficit spending are essential to
getting America back on track to being the strongest
economic force in the world. He proposes replacing the IRS
with a much simpler consumption tax such as the
"Fair Tax"
plan. Moving Jim Cooper out of Washington will give
Tennesseans another district that supports a fairer way of
taxation. Currently 3 of the 9 TN Congressional
districts support a fair tax. Voting Gerard to
Washington will get Tennesseans closer to becoming a
powerful influence promoting sensible taxation in
Washington; commonsense policies we will never enjoy with Jim Cooper in office.
Jim
Cooper's idea of tax reform was voting in favor to extend the time
limit for raising the amounts paid by working Americans with
the Alternative Minimum Tax. The AMT is a great
example of the misery Tennesseans deal with when trying to
deal with a convoluted, overly complex IRS. Once again, Jim
Cooper contributes to the problem. And again, Cooper
contributes to the dismally low Congressional approval
rating.
Cooper's view on taxes is a recipe for economic disaster.
Cooper's prior votes in Congress tells a story of unfairness
to working class Tennesseans:
-
Going only back to March 13, 2008,
Jim Cooper voted to unfairly RAISE YOUR TAXES! But read
on... We show that Cooper's punitive taxation goes back
for years and contributes to our worsening economy and
his poor approval rating.
-
This vote occurred on the House FY2009 budget, which
seeks to raise taxes on millions of Americans by
allowing all of the 2001 and 2003 tax cuts to expire.
-
By assuming the expiration of
these tax cuts, the House Democrat budget would:
-
increase marginal tax rates;
-
reinstitute the marriage penalty;
- cut
the child tax credit in half;
-
resurrect the death tax;
-
increase taxes on capital gains and dividends;
-
eliminate the 10-percent bracket for
lower-income taxpayers;
-
reduce tax incentives for American small
businesses
-
Voted NO on retaining reduced taxes
on capital gains & dividends.
Reference: Tax
Relief Extension Reconciliation Act; Bill
HR 4297
-
Voted NO on making permanent an
increase in the child tax credit.
-
Reference: Child Credit
Preservation and Expansion Act; Bill
HR 4359
-
Voted NO on permanently eliminating
the marriage penalty.
- Reference:
Marriage Penalty Relief; Bill
HR 4181
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Free Trade:
Gerard
believes that "Free Trade" is not the same as Fair Trade.
Fair Trade means placing
restrictions on imports based on environmental, labor,
or other concerns. Fair trade would not allow otherwise
American companies to move their operation off-shore to
other countries and import their products manufactured
by foreign labor with little or no concern for the
health of and wellbeing of their workers or that of the
planet.
Gerard will fight
any government incentives or corporate welfare programs
designed to provide tax and tariff relief to offshore
business which directly compete with American companies
who must foot the costs of providing employment to
Americans at an American wage with American standards of
safety and environmental impact.
The unintended
consequences of "Free Trade" has led to the use of lead
paint in our children's toys, have poisoned our
medicine, our food and our pet's food, as-well-as,
overwhelmed the inspection abilities of the FDA and
other government regulators that protect the American
public. The once enviable quality of brand name
American products that fill the shelves of our
department stores seldom work as advertised, fall into
shambles and our landfills very quickly are a testimony
of shoddy workmanship, engineering and the price we pay
as Americans for "Free Trade".
In addition, "Free
Trade" contributes to our illegal immigration problem as
normally law abiding American companies are forced to
turn to undocumented workers to reduce their labor costs
in order to compete with offshore companies paying slave
wages to workers in third world countries. The
mere fact that American companies often hire and in some
cases exploit the undocumented provides the magnet that
attracts and makes criminal these workers from abroad.
American taxpayers subsidize the low wages paid to
illegal immigrants in the form of food stamps, free
medical treatment, increased criminal activity and law
enforcement costs.
Gerard will build
coalitions with "Fair Traders" in Congress and will
fight any legislation that puts at risk the people of
the 5th District. Most criminal is the way that these
trade deals are negotiated. Through "Fast Track"
legislation Congress surrenders their Constitutional
obligation to provide adequate oversight of treaty
negotiations to the President. Gerard will fight to
the end to live up to his Constitutional
responsibilities of a United States Congressman and
fight treaties that are negotiated in the best interest
of special interests and market sectors and not in the
interest of the American jobs, labor, product quality,
and the people as a whole.
Dangerous to
Americans: The NAFTA treaty was
established in 1994. The World Trade Organization, an
international organization intended to reduce trade
barriers, was formed by treaty in 1995. Both treaties
were agreed to with little or no Congressional
oversight. While the anti-corporate aspect of "Free
Trade" is primarily a liberal cause, many conservatives
now speak out against this globalization on grounds of
protecting national security and national sovereignty.
At issue is that the WTO and international trade
agreements such as NAFTA override national law, and
hence place the US Congress and the US President
subordinate to an unelected foreign organization.
Republican and Democrats can agree on this one, "Free
Trade" is dangerous.
Jim Cooper has
abandoned his constituents in the 5th District. He
has voted continually for "Free Trade" without a thought
to Fair Trade. As recently as April of this year
and November of last year, Cooper voted no to
House Resolution 1092 which
would postpone considering a new trade agreement with
Columbia, South America and voted for
House Resolution 3688 for a
United States "Free Trade" deal with Peru. Absolutely
two wrong votes for a country saddled in massive debt
and suffering with astronomical trade deficits. In
November you get your chance to vote.
Timeline to a
Crisis
Gerard names
the names, points fingers and
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