Archives for April 2010

April 29th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today urged Senate Republicans to “take the opportunity to amend the Dodd financial takeover bill to directly address the root, government causes of the financial crisis once and for all.”

“At the end of the day, the American people know that government caused this crisis by deliberately weakening credit standards, pumping easy money into the system, and advancing home ‘ownership’ as a social policy. It’s their fault. Government did this to the American people, and if the Senate legislation fails to address these root causes, it must be rejected,” Wilson said.

“The result of the government policies was to create a tremendous economic bubble that, when it popped, and the trillions of dollars of bailouts began, now threatens the entire world with a sovereign debt crisis,” Wilson explained, noting that excessive deficit-spending by European nations like Greece and Portugal has resulted in their credit ratings being downgraded, and interest rates rising on their government borrowing costs.

“Greece and Portugal are a coming attraction of what’s in store for the U.S. should Congress fail to remove the unlimited, implicit backing of taxpayers to Wall Street,” Wilson added. “The implied backing of taxpayers created the crisis with Fannie Mae and Freddie Mac, who sold the mortgage-backed securities all over the world on the basis that they were as good as U.S. treasuries. This was the genesis of the ‘too big to fail’ system of bailouts and takeovers.”

Yesterday, Wilson blasted provisions that he said would protect firms with assets greater than $50 billion, saying, “This bill would create about sixty new Fannie Mae’s all with the implied backing of taxpayers. Taxpayers cannot even afford to back Fannie and Freddie, and Senate Democrats want to multiply that by a factor of thirty. This is madness.”

According to the Congressional Budget Office, there are about 60 bank holding and insurance companies with $50 billion or more in assets that would contribute to an unlimited fund with the power to bail out those firms. The legislation would also allow the FDIC put into receivership companies whether they are financial or not.

Wilson said the bailouts were the direct cause of the sovereign debt crisis spreading throughout the world. “This government-created crisis is now engulfing Europe, a direct result of losses associated with the government-financed housing, securities, and derivatives bubbles all popping at once, and the added weight of deficit-spending brought on by the bailouts.”

“The bailouts and government takeovers are unaffordable to taxpayers, are misallocating resources from productive sectors of the economy, and as a result are bankrupting the nations that participated in them. Now, Senate Democrats want to institutionalize and codify that system,” Wilson said.

Wilson yesterday noted that the nation’s largest financial institutions want a permanent bailout fund for themselves. “The facts are clear. The head of Goldman Sachs has said he embraces the legislation and that the biggest beneficiary of the bill is Wall Street. This is evidence that the Dodd-Goldman bill continues the system of ‘too big to fail,’ and does not reject it,” Wilson said.

Senate Republicans yesterday reportedly won concessions for the bailout fund to be removed, but Wilson said that would “not be enough to win the support of the American people if ‘too big to fail’ stays in there by perpetuating the current bailouts of Fannie, Freddie, and the entire mortgage market.”

Wilson concluded, “Senate Republicans must not support a bill that fails to rein in Fannie, Freddie, the FHA, the Federal Reserve, and HUD that caused the crisis by weakening credit and inflating the housing bubble to begin with. The American people are counting on them, and they must not let their constituents down, who want an end to the bailouts, an end to ‘too big to fail’ and an end to the centralization of credit and finance in government that is bankrupting this nation.”

Attachments:

Letter to the U.S. Senate, ALG President Bill Wilson, April 26th, 2010.

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” April 22nd, 2010, Americans for Limited Government.

Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.

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April 28th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today praised Senate Republicans for blocking what he called the “Dodd-Goldman financial takeover bill” and “protecting taxpayers from never-ending government takeovers and bailouts.”

“We know now this is nothing more than the Goldman Sachs bailout bill. The Senate must vote no on the Goldman Sachs bailout bill,” Wilson said.

“The facts are clear. The head of Goldman Sachs has said he embraces the legislation and that its biggest beneficiary is Wall Street. This is evidence that the Dodd-Goldman bill continues the system of ‘too big to fail,’ and does not reject it,” Wilson said.

The final vote failing to invoke cloture on the legislation was 56-42. Senate Majority Leader Harry Reid promptly filed a motion to reconsider.

“Harry Reid and Chris Dodd are desperate to make good on their promises for an unlimited bailout fund to Wall Street,” Wilson declared.

Wilson noted that Goldman Sachs has been a major Democrat donor, funneling over $20 million in donations to Democrat candidates since 1989, according to OpenSecrets.org.

Wilson blasted provisions that he said would protect firms with assets greater than $50 billion, saying, “This bill would create about sixty new Fannie Mae’s all with the implied backing of taxpayers. Taxpayers cannot even afford to back Fannie and Freddie, and Senate Democrats want to multiply that by a factor of thirty. This is madness.”

According to the Congressional Budget Office, there are about 60 bank holding and insurance companies with $50 billion or more in assets that would contribute to an unlimited fund with the power to bail out those firms. The Dodd-Goldman bill would also allow the FDIC put into receivership companies whether they are financial or not.

Wilson urged Senate Republicans to produce an alternative bill that “addresses the root, government causes of the financial crisis: Fannie, Freddie, the Federal Reserve, the FHA, and HUD.”

ALG has previously condemned Fannie Mae and Freddie Mac weakened mortgage underwriting standards and mislabeled high-risk mortgage-backed securities, defrauding investors; the Federal Reserve whose easy money, low interest rate policies fueled the housing bubble; the Federal Housing Administration (FHA) lowered down payments on mortgages; and the Department of Housing and Urban Development’s (HUD) Community Reinvestment Act regulations reduced lending standards and forced banks to give loans to lower-income Americans that could not be repaid.

“Any compromise legislation that includes a takeover of the financial services industry, and endangers taxpayers with perpetual bailouts, and the private sector with limitless government takeovers, is unacceptable to the American people and must be rejected,” Wilson concluded.

Attachments:

Letter to the U.S. Senate, ALG President Bill Wilson, April 26th, 2010.

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” April 22nd, 2010, Americans for Limited Government.

Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.

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April 27th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today praised Senate Republicans for blocking the Dodd financial takeover bill yesterday, and said “now is the time for Republicans to establish firm preconditions for real financial reform by reining in the government-run agencies that contributed to the crisis in the first place.”

Wilson said he recognized that while agencies will be resistant to reform, that “it is the role of legislators and their sworn duty to rein in the excesses of government when failures of this magnitude occur. The Dodd bill is just a whitewash.”

“Legislation that does not address the government causes of the crisis is a sham,” Wilson declared.

Wilson said that “What’s in the bill is bad enough. It will give the government unlimited authority to seize companies, tax the citizenry and spend money without any vote in Congress. And shareholders whose assets are liquidated will be barred from challenging the theft in a court of law. All of that needs to go.”

Wilson continued, “But what’s not in the Dodd bill demonstrates that there is little to no will on the part of Senate Democrats to even deal honestly with how the government caused the financial crisis to occur. Republicans can wield the upper hand in this debate by holding the majority to account for covering up for the real villain of the crisis: government.”

In an ALG editorial published today, the group calls on the Senate to address and reform five government agencies in any legislation debated: Fannie Mae, Freddie Mac, the Federal Reserve, the Federal Housing Administration, and the Department of Health and Human Services.

The editorial cites research by former chief credit officer of Fannie Mae, Ed Pinto, demonstrating that Fannie Mae and Freddie Mac weakened mortgage underwriting standards and mislabeled high-risk mortgage-backed securities, defrauding investors; that the Federal Housing Administration (FHA) lowered down payments on mortgages; and that the Department of Housing and Urban Development’s (HUD) Community Reinvestment Act regulations reduced lending standards and forced banks to give loans to lower-income Americans that could not be repaid.

That research was summarized in part in a letter Wilson sent yesterday to the U.S. Senate urging members not to proceed to debate, and to instead “to demand a completely new bill that actually addresses the root, government causes of the crisis” that Pinto outlined.

The ALG editorial also calls upon Senate Republicans to bring transparency via the Government Accountability Office to “the Federal Reserve whose ultra-easy money policies and lower-than-justified interest rates that allowed the credit bubble to inflate to catastrophic proportions in the first place.”

According to research by Stanford economics professor John Taylor, “the Fed’s target for the federal-funds interest rate was well below what the Taylor rule would call for in 2002-2005. By this measure the interest rate was too low for too long, reducing borrowing costs and accelerating the housing boom.”

Wilson concluded that “Senate Republicans have an opportunity to give the American people a detailed account of the government policies that caused the crisis that must be repealed, and the responsible agencies that must be reformed. If they truly want to bring an end to ‘too big to fail’ they will insist that any legislation must rein in the excessive risk-taking that was mandated by government policy.”

Attachments:

Letter to the U.S. Senate, ALG President Bill Wilson, April 26th, 2010.

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” April 22nd, 2010, Americans for Limited Government.

Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.

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April 26th, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today urged the U.S. Senate to block debate on the Dodd financial takeover bill, and to start over with new legislation to address what it called “the root, government causes of the crisis.”

In Wilson’s letter to Senators, he wrote, “The American people will be more than livid with Senators that adopt an approach that expands government powers when the essential cause of the financial crisis was a government that was (and remains) unaccountable to the risks it was (and is) taking.”

Wilson laid blame for the financial crisis at the feet of government-run Fannie Mae, Freddie Mac, the Department of Housing and Urban Development, the Federal Housing Administration, and the Federal Reserve, which according to the letter weakened lending standards, underwrote risky mortgages, and created an unprecedented expansion in lending through artificially low interest rates.

Instead, Wilson wrote, the Dodd bill “in addition to creating a $50 billion revolving ‘orderly liquidation fund,’ will codify an unlimited bailout-takeover authority. This federal authority will endanger companies across the nation with unlimited government takeovers of their assets, operations, and ownership. No investment would be safe, and once seized, a company’s shareholders would have no recourse in federal courts, even if the takeover was unwarranted.”

According to an Americans for Limited Government summary of the legislation, there would be no limit on how much money could flow through the ‘orderly liquidation fund’ in total, nor would it require any Congressional authorization for firms to be seized, the funds to be spent, or new assessments to be levied by the FDIC to replenish the fund.

Wrote Wilson in his letter, “This will create moral hazard of the first order, and institutionalize ‘too big to fail’ for all time.”

The bill would also shield from judicial review any government seizure of a company: “no court shall have jurisdiction over… any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any covered financial company for which the Corporation has been appointed receiver.”

Wilson wrote that this particular provision raised “serious Fifth Amendment due process property rights concerns” saying that any company could be seized under the broad provisions of the bill and would have no recourse in federal court.

Wilson wrote that the only solution was for Senators to “vote against proceeding to the current bill, and to demand a completely new bill that actually addresses the root, government causes of the crisis. In this instance, there is much to be said for starting over and getting it done right.”

Attachments:

Letter to the U.S. Senate, ALG President Bill Wilson, April 26th, 2010.

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” April 22nd, 2010, Americans for Limited Government.

Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.

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Says Expanded Takeover Provisions Threaten Free Enterprise System

April 22nd, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today condemned what he called the “unlimited bailout fund” and “greatly expanded federal takeover provisions contained in the Dodd bill that threatens every business in America with a government takeover of its assets, operations, and ownership.”

ALG today published a comprehensive backgrounder, “Down a Rabbit Hole,” on the imminent danger this legislation represents. “Under the Dodd bill, the government could seize any institution it wants,” Wilson declared, urging Senate Republicans to filibuster the measure.

“This legislation has got to be one of the most egregious violations of property rights in American history. It will give to government the means to consolidate the economy, pick winners and losers, centralize credit, and eliminate entrepreneurship — all by faceless bureaucrats who nobody will ever see,” said Wilson.

Wilson pointed to provisions in the bill creating a $50 billion revolving “orderly liquidation fund,” which he said is “actually an unlimited bailout-takeover fund that will most certainly be abused by a government hell-bent on taking over every aspect of the economy and redistributing wealth to favored political classes.”

“The fund would be used to save politically-favored institutions deemed ‘too big to fail’, or to seize financial institutions and other entities deemed by the Federal Reserve to be ‘substantially engaged in activities’ that are financial in nature,” Wilson explained.

“That is very muddy language, and it will be up to the relevant agencies to determine what ‘substantially engaged’ means,” Wilson added. “It’s a rabbit hole.”

“If a new government power can be abused, it will be abused,” Wilson predicted, pointing to the government seizure of GM and Chrysler under the Troubled Asset Relief Program. “Even though those were auto companies that posed no systemic risk to the financial system, and even though there were private sector alternatives to the government takeover, they were considered to be economically important enough to apply to TARP.”

Wilson continued, “The same thing will happen under the Dodd bill to other companies, except the fund will be unlimited. And like TARP, the actions taken under the fund will not be subject to Congressional approval.”

Under the Dodd bill, a firm can be put into receivership by a recommendation of two-thirds of the Federal Reserve Board of Governors and the FDIC Board of Directors, and determination by the Treasury Secretary. “This transfers the determination of what constitutes risk from markets to a Politburo that operates with impunity on its own and without any accountability with the power to seize whatever it deems to be ‘too risky,’” Wilson explained.

Wilson said the seized firms “will most likely be sold to the very financial institutions that are taxing the people to finance the fund in the first place,” meaning the fund “could be used by government to knock out competitors to politically-favored institutions.”

As the fund is drained, FDIC can charge more assessments to keep the fund at its $50 billion limit. “That’s what makes the fund actually unlimited and permanent, because as it’s used up, the FDIC can just charge the banks more assessments without any Congressional approval.”

“Call it corporatism, call it socialism. Whatever we call it, the Dodd bill is not a free market system. Instead, it adopts a system that over history has consigned tens of millions of people to lives of poverty throughout the world. By its passage, we’re abandoning the only system that has ever guaranteed prosperity and the opportunity for individuals to make themselves wealthy through the protection of private property,” Wilson concluded.

Attachments:

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” April 22nd, 2010, Americans for Limited Government.

Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.

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April 20th, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today demanded that the Senate “scrap the Dodd financial takeover bill and start over with real reform of the government institutions that caused the crisis to begin with.”

“In short, the Dodd bill does nothing at all to prevent another crisis from occurring, and Senators should be wary about following Dodd off the cliff,” Wilson said, adding, “Dodd is asking many of his colleagues to stand for election defending his legislation following the same recipe that caused his own career to go down in flames.”

“Meanwhile, Dodd himself is not willing to run on this nonsense. The voters of Connecticut have rejected Dodd’s corruption. He’s not representing them. To this day, he is representing Fannie Mae and Freddie Mac. He is representing the ill-conceived social policy of pushing loans on those who cannot afford them despite unacceptable rates of default.”

Wilson continued, “In sum, he is representing government control of the entire financial system under the false premise that tighter control will better manage the unintended consequences of foolish government policies.”

Wilson said Dodd bears a “great deal of responsibility” for causing the financial crisis. “Dodd has no business leading the Senate’s effort to ‘reform’ the financial system. He is the most corrupt Senator in U.S. history who protected Fannie Mae and Freddie Mac from being reined in while the housing bubble was inflated, and who personally benefited for being a shill for banks with VIP treatment in his loan from Countrywide.”

In a recent oped, Wilson wrote that “Putting Chris Dodd in charge of writing the financial ‘reform’ bill is like calling in Don Corleone to write an anti-crime bill. To expect anything but a whitewash that protects the real criminals is naïve at best.”

Wilson said the legislation itself proves it: “The Dodd bill does not even mention Fannie or Freddie, government entities that misrepresented the quality of mortgage-backed securities to investors.”

“Instead, it leaves the government in charge of the GSE’s, expands the powers of the Federal Reserve which printed the money that fueled the housing bubble, does nothing to rein in the Federal Housing Administration that degraded credit quality by lowering down payments, and leaves in place the Community Investment Act regulations that strong-armed banks to give out loans to lower income Americans who could not pay them back in the first place,” Wilson explained.

“The only right thing to do in this instance is to scrap Dodd’s plan and to start over with a plan to sell of Fannie and Freddie piece by piece, to bring transparency to the Federal Reserve and to restrict their easy money policy, restore prudent lending standards, and repeal the Community Reinvestment act once and for all,” Wilson concluded.

Interview Availability: Please contact Rebekah Rast at (703) 383-0880 or at rrast@getliberty.org to arrange an interview with ALG President Bill Wilson.

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April 16th, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today condemned Barack Obama’s nominee for Judge to the Ninth Circuit Court of Appeals, Goodwin Liu, for his views on the Commerce Clause of the Constitution, saying “Liu leaves the door open for regulation of just about every aspect of life.”

In questioning from Senator Dianne Feinstein, who said the Supreme Court had taken a “constraining view” of the Commerce Clause and asked what Liu thought was the extent and scope of Congress’ power to regulate commerce.

Liu outlined what he viewed as the current doctrine adopted by the Supreme Court, saying, “the Court articulated the doctrine that the activity being regulated has to be economic in nature but it stopped short of saying that that is an absolute requirement” before the Court could determine if the activity or “class of activities” had a “substantial effect” on interstate commerce.

Liu promised to uphold that doctrine, saying, “that is the doctrine as I understand it, and I would faithfully apply that doctrine to any case that came before me as a judge.”

“In other words,” said Wilson, “Goodwin Liu is saying that an activity need not be economic in order for it to have a ‘substantial effect’ on interstate commerce, leaving the door open for just about every human activity to be regulated by Congress, even if it in reality has no bearing on interstate commerce.”

ALG Counsel Nathan Mehrens described Liu’s view of the Commerce Clause is “expansive,” adding that Liu had “a total lack of a philosophy that applies either the original intent or meaning of the Constitution.”

Mehrens said that the Supreme Court’s expansive view of Commerce Clause over the past century “has given rise to regulation in areas that have no relation at all to commerce, in everything from education to environmental policy.”

Wilson also criticized Liu for his previous controversial writings, which he said “were confirmed by today’s testimony. Liu acknowledged that if a ‘welfare right’ is created by Congress, ‘eligibility requirements’ of that ‘right’ could be heard by the courts.”

“In short, if something is subsidized by Congress, an individual could sue that they have a right to that ‘entitlement,’” said Wilson.

In a 2008 Stanford Law Review article, “Rethinking Constitutional Welfare Rights,” Liu discussed at length the concept of judicially-imposed welfare rights. In this context welfare rights mean a societal consensus that persons possess a right to certain goods and services, a consensus of “how a society understands its obligations of mutual provision.”

According to the article, Liu wrote that, “judicial recognition of welfare rights is best conceived as an act of interpreting the shared understandings of particular welfare goods as they are manifested in our institutions, laws, and evolving social practices.”

Liu explained what this would look like in context of his actual decision-making as a judge, “Some day yet, the Court may be presented with an opportunity to recognize a fundamental right to education or housing or medical care. But the recognition, if it comes, will not come as a moral or philosophical epiphany but as an interpretation and consolidation of the values we have gradually internalized as a society.”

Wilson said that “by saying that ‘eligibility requirements’ of an expansive ‘welfare right’ such as the recently enacted health care legislation can indeed be heard by the courts, Liu is opening the door for the national health care takeover to become a single-payer system by judicial fiat.”

Senator Jeff Sessions criticized Liu’s consistency, and questioned whether he had contradicted himself in his testimony, comparing his statements to his previous promotion of his book in promoting his book, Keeping Faith with the Constitution for the American Constitution Society.

Then, Liu suggested in a podcast that “What we mean by fidelity is that the Constitution should be interpreted in ways that adapt its principles and its text to the challenges and conditions of our society in every succeeding generation,” as reported by National Review Online.

However, during testimony, Liu said his writings and books “would have no bearing on my role as a judge” and that “in any generation, the interpretation of the Constitution has to be guided by not what makes people happy, rather it has to be guided by the faithful application of the text, the underlying principles and the precedents that have accrued.”

Sessions said, “I’m going to try to fairly evaluate that answer, but I don’t think your writings reflect that… Is what you’re saying today consistent with what you said then?”

Wilson said “They are not at all consistent. What is the point of writings that urge judges to act in a certain way if now he claims those writings would have no bearing on his conduct as a judge?”

Wilson concluded, “Goodwin Liu is being dishonest with the Judiciary Committee, and he should be rejected for once again attempting to conceal his most controversial views from the scrutiny of the Senate by claiming that they now have no relation to how he as a judge will rule when the writings are about how a judge ought to rule.”

Attachments:

Goodwin Liu, Americans for Limited Government Nominee Alert, March 2010.

“Wonderland: The World According to Goodwin Liu,” Bill Wilson, March 24th, 2010.

“Why Goodwin Liu is Important,” ALG News Editorial, April 12th, 2010.

“Liu Guilty by Omission,” Robert Romano, April 8th, 2010.

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April 14^th, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today praised the American people’s participation in tea party rallies nationwide, calling them “true patriots standing up for constitutional limited government, liberty, and fiscal responsibility.”

“The American people are not waiting for leaders in Washington to save them from an expansive, centralized government. They are once again taking matters into their own hands,” Wilson said.

Local tea parties have events scheduled across the nation in towns and cities. There will also be a national rally in Washington, DC today.

Wilson said the tea party movement was a “very important development in American politics that has already reshaped the political landscape.”

“Without the tea parties and, more broadly, without the American people standing up and speaking out against the unsustainable growth of government, the government takeovers of health care, housing, the financial system, the pension system, and the energy sector, most of the Obama agenda would already be implemented,” Wilson explained.

“The American people are now all that stands in the way between what remains of our once-great constitutional system and a tyranny of government dependents,” Wilson added, encouraging Americans to take to the streets to protest what he termed was an “unaccountable, command-and-control government takeover of almost every aspect of the people’s lives.”

The tea party movement was originally inspired by CNBC commentator Rick Santelli’s commentary on the floor of the Chicago Mercantile Exchange on February 19^th, 2009. Then, Santelli spoke out against the government foreclosure bailouts, where homeowners who paid their bills on time and in full were being asked to also assume the costs of their neighbors who were delinquent in their payments and not credit-worthy to begin with.

Wilson concluded, “There’s only so much the American people will put up with. In the past two years, government has expanded in ways never thought possible under our constitutional system. It started with the bailouts, but where it ends is anyone’s guess. What is clear, and is evidenced by the tea parties today, is that the American people are standing against tyranny.”