Archives for May 2010

May 27th, 2010

United States House of Representatives and Senate
WASHINGTON, D.C. 20510
To the Members of the U.S. Congress:

While the national debt has surpassed $13 trillion this week, and the nation’s Triple-A bond rating is threatened with the ongoing sovereign debt crisis, we were disappointed to learn that Congressional leadership has decided to once again plough ahead with its deficit-spending, pay-later policies of offering unlimited guarantees to insolvent states like New York and California. This time, Congress is offering $23 billion to the states to pay for public education funding.

This comes atop $53.6 billion that was given to the states in the 2009 “stimulus” bill, and is the second time Congress has attempted to enact a $23 billion state education bailout. The first was in HR 2847, which passed the House 217-212 on December 16th, 2009 as part of a wider $154 billion bill intended to spend paid-back Trouble Asset Relief Program monies to balance state budgets.

However, HR 2847 had most of its provisions stripped out when it was finally passed in the Senate, including the $23 billion bailout. Ever since then, the White House has been desperate to have the fund included somewhere in the appropriations process to forestall unfortunate but necessary cuts in state budgets. The effort to now have it added to HR 5136, a defense appropriations bill, is just the latest attempt to payback public unions for their political loyalty to the Congressional majority.

It’s a kickback. It’s a bailout. And it’s just the sort of thing that has the American people up in arms. While citizens are tightening their belts in these tough economic times, government employees and elected officials are increasing debt, and endangering future generations with economic stagnation, inflation, greater interest rates, and higher taxes.

According to a recent USA Today story, “Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds. At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.” So, while the American people suffer, government is lining its pockets at taxpayer expense.

Americans for Limited Government urges your opposition to this failed approach, which will create an incentive for states to continue to follow the failed, insolvent policies of New York and California. Making matters worse, this bill will disincentivize the prudent path that New Jersey has taken under Governor Chris Christie’s leadership in recent months, which because of the spending freeze undertaken, New Jersey will not have to raise taxes this year to balance the budget.

We urge you to reject the New York and California plan to perpetual bailouts and deficit-spending, and instead, for the sake of taxpayers, to adopt the New Jersey plan of fiscal solvency by making the tough decisions to slash spending.

Sincerely,
William Wilson
President
Americans for Limited Government

May 26th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today urged the Senate Health, Education, Labor and Pensions Committee to reject legislation that would expand pension guarantees to multi-employer pensions that are underfunded by as much as $165 billion.

“Rather than getting their finances in order, the union solution is to get a kickback from the politicians, whose plan it is to subsidize poor investment decisions. This will only incentivize further underfunding of these funds, and open the floodgates for pension bailouts across the board, especially to underfunded public employee pension plans,” Wilson said in a statement.

According to Wilson’s letter to the committee, “[U]nlike private corporations who pay a premium to the Pension Benefits Guaranty Corporation to cover potentially stranded pensioners, these multi-employer pension funds haven’t contributed a dime into this already stressed system threatening its solvency.”

Evaluation of a 2009 report by Moody’s on the solvency of union run multi-employer pension funds revealed that both the MLBPA and NFLPA funds are only 60 percent funded putting them into the government designated “critically underfunded” category, and major unions like the SEIU, LIUNA and the Teamsters have significant underfunding problems, making them all eligible for a bailout under the legislation, which could cost $165 billion.

Wilson wrote that the Casey bill “would require payouts on union pension to every retiree and survivor at 100 percent value until the day they died, all backed by taxpayer dollars.”

“The American people do not support another bailout, this time to labor unions that have grossly mismanaged their own pension plans,” Wilson said in a statement. “This bailout will be paid for by other solvent funds, and when that fails, by taxpayers who are the guarantors of last resort for the Pension Benefits Guaranty Corporation.”

Labor leaders, like the Teamsters James Hoffa, Jr., have made congressional action on legislation to remove their liability for these pension funds a major priority. Wilson said he was not surprised that Teamster union pension plans litter the list of the most insolvent plans in America.

Wilson wrote that the “the big labor unions who run these pension funds have not taken any of the normal steps one would expect them to take to make these funds viable,” citing a lack of “tough decisions like cutting back the benefits paid out, limiting benefit promises to younger employees, requiring their members to pay pension assessments to cover some of the shortfall, or cutting back on spending union member dues on political expenditures.”

The Senate’s Health, Education, Labor and Pensions Committee will hold a hearing on the Senate version of this legislation on May 27th.

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

May 24th, 2010, Fairfax, VA—Americans for Limited Government (ALG) has sent a letter to 9 House Republicans urging that they withdraw their support from legislation providing a taxpayer bail-out of labor union run pension funds. Among the union pension funds in critical danger are those run by the Major League Baseball Players Association (MLBPA), the National Football League Players Association (NFLPA) and more than a hundred other union-run funds.

“We are asking that each Representative remove his or her cosponsorship of this blatant handout to unions, which are now asking the American people to bail them out of their own mismanagement of pensions,” Wilson said, adding that “Compensating poor investment strategies, like those pursued by the multi-employer pension plans, only incentives further underfunding of these plans.”

According to Wilson’s letter to the 9 House Republicans, “While the legislation deals with some challenging issues related to retiree pensions, it is our view that it in fact rewards bad behavior. Those who are asking Congress for this change are largely responsible for the plight of these pension funds, having failed to take the steps to rectify problems that have been looming since well before the stock market drop and recovery over the past two years.”

The letter was sent to Representatives Patrick Tiberi, Ginny Brown-Waite, Jo Ann Emerson, Steven LaTourette, John Linder, Thaddeus McCotter, Tim Murphy, Peter Roskam, and Aaron Schock.

Evaluation of a 2009 report by Moody’s on the solvency of union run multi-employer pension funds revealed that both the MLBPA and NFLPA funds are only 60 percent funded putting them into the government designated “critically underfunded” category, and major unions like the SEIU, LIUNA and the Teamsters have significant underfunding problems, making them all eligible for a bailout under the legislation.

Labor leaders, like the Teamsters James Hoffa, Jr., have made congressional action on legislation to remove their liability for these pension funds a major priority. Wilson said he was not surprised that Teamster union pension plans litter the list of the most insolvent plans in America.

ALG President Bill Wilson said, “The proposed Congressional bailout of union pension funds is outrageous, particularly when you consider that these union run pension funds have failed to take reasonable measures to meet basic solvency requirements.”

“HR 3936 does not require that a union cut benefits, have participants pay part of the pension costs, change retirement ages, limit access to younger employees, or use union dues to supplement the plan. It doesn’t require that unions negotiate for higher pension payments from employers in lieu of other benefits. Instead, it merely throws the unfunded liabilities onto the backs of taxpayers – a potential $165 billion dollar bailout,” Wilson explained.

Citing the hundreds of millions of dollars spent by labor bosses to support Obama, the Democratic majority, and the 9 House Republicans (see attachments below), Wilson decried unions’ “audacity to try to cash in on their political investment by foisting these unfunded liabilities accumulated under their watch onto the backs of taxpayers, who are struggling to fund their own retirements.”

The House version of the bill stands in the House Education and Labor Subcommittee on Health, Employment, Labor, and Pensions, and in the House Ways and Means Committee. The Senate’s Health, Education, Labor and Pensions Committee will hold a hearing on the Senate version of this legislation on May 27th.

Attachments:

Patrick Tiberi PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=7067&order=CONTR&cycle=2009-2010

Ginny Brown-Waite PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=2475&order=CONTR&cycle=2009-2010

Jo Ann Emerson PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=359&order=CONTR&cycle=2009-2010

Steven LaTourette PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=478&order=CONTR&cycle=2009-2010

John Linder PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=200&order=CONTR&cycle=2009-2010

Thaddeus McCotter PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=851&order=CONTR&cycle=2009-2010

Tim Murphy PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=7553&order=CONTR&cycle=2009-2010

Peter Roskam PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=3156&order=CONTR&cycle=2009-2010

Aaron Schock PAC donations 2009-10:
http://www.congress.org/congressorg/bio/fec/?id=142316&order=CONTR&cycle=2009-2010
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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May 21st, 2010, Fairfax, VA—White House Director of the Office of Health Reform, Nancy-Ann DeParle is the latest Obama official with unacceptable ties to individual companies in an industry in which her office determines who survives and who doesn’t.

Americans for Limited Government (ALG) President Bill Wilson contends that, “DeParle is the exact kind of revolving-door political appointee that Obama railed against during his campaign.

She regulated health care companies in the Clinton Administration, made millions serving on the boards of seven of those companies while out of power during the Bush Administration, and now she is overseeing Obamacare giving her tremendous ability to pick winners and losers.”

While she is technically required to recuse herself for two years, the very nature of her job requires that DeParle be intimately involved in developing hundreds of thousands of pages of rules and regulations impacting every aspect of the health care system.

The development of an electronic medical records system is just one area that is both unavoidable and troublesome. DeParle served on the Board of Directors of medical records software producer Cerner Corporation from 2001 to 2009, being paid at least $680,000. When developing regulations, Cerner competitors and taxpayers would be right to question how much her decision making on guidelines could steer business toward Cerner whether they had the best product for the job or not.

Dr. David Himmelstein, an associate professor of medicine at Harvard University, and a co-founder of Physicians for a National Health Plan clearly expresses this concern stating, “The woman owes her fortune to the corporations that she is making decisions about. She cashed in really big on her previous role in government and made millions and millions of dollars. Then she divests and all of a sudden she’s Snow White? It’s ridiculous.”

Beyond picking winners and losers in industry, the record of the companies providing DeParle her largesse is spotty at best. Seven companies, which paid her millions to serve on their Board of Directors, ran afoul of the law with problems like concealing patient deaths from regulators, irregular billing investigations, using unlicensed personnel in violation of state laws, and overbilling the government and filing false claims.

ALG’s Wilson reminds that, “Since 2006, Directors are much more accountable for the legal failings of the companies they are supposed to oversee, yet DeParle has engaged in check cashing without accountability, and now oversees these very companies who have paid massive fines because of their rule breaking under her watch.

“Her conflicts of interest make her unfit to serve, and Obama should immediately request her resignation.”

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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May 20th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today thanked Senate Republicans for blocking the Dodd financial takeover bill yesterday and urged them to “hold the line against a government intervention into the economy that, once enacted, will never end.”

“Senate Republicans deserve the thanks of the American people for standing in the way of legislation that has not addressed the root, government causes of the financial crisis, and instead will institutionalize them for all time,” Wilson said.

Wilson appealed to Senators Susan Collins and Olympia Snowe to join the filibuster. “The American people are not getting a good deal out of this bill from Senators Snowe and Collins. The people are being asked to give the government more power to take over or bail out companies, levy taxes and fees, and monitor every financial transaction in the country, large and small, all without Congressional approval or the possibility for judicial review.”

“In return, the American people are not getting anything. The bill fails to rein in the government causes of the financial crisis that Senators Snowe and Collins have the most direct control over. The American people deserve better,” Wilson said.

“I believe Senators Snowe and Collins can and should deliver more for the American people. They can and should be insisting on the reform of Fannie Mae and Freddie Mac, and end to perpetual bailouts and government takeovers in this legislation that institutionalize ‘too big to fail’ in law.”

“Senators Snowe and Collins both supported Senator John McCain’s amendment that would have ended government control of the mortgage market, and they have the power to demand that this amendment and others ending bailouts and ‘too big to fail’ be adopted. They would be heroes,” Wilson noted.

“Even Senators Dick Durbin and Chris Dodd admit that Fannie Mae and Freddie Mac need to be reformed, and yet they voted against Senator McCain’s very reasonable amendment. To date, they still refuse to do anything to rein in government control of the mortgage market, and Senators Snowe and Collins should tell them that’s not good enough,” Wilson said.

Yesterday on the floor of the Senate, Senator Dick Durbin admitted to Senator Johnny Isakson that government failed in its administration of the housing and mortgage industry: “I will concede that this, what you pointed to as a fundamental flaw, a mistake that was made, there was a presumption made, that owning a home was such a valuable American ideal… but, we went too far, we extended the opportunity for home ownership to people who weren’t ready.”

Durbin continued, “And we believed that if you pushed them to the limit of how much they could pay, that the home would appreciate in value, their incomes would go up and everything would work out. And it turned out that gamble was wrong… on some people. And certainly, Fannie Mae and Freddie Mac as the ultimate guarantors of mortgages were part of that. So, there is a governmental element here, I don’t question that for a moment. So, certainly some blame lies there…”

Senator Dodd too admitted government’s failure to Isakson: “We in Congress collectively did not get job done with Fannie and Freddie… I acknowledge that.”

Neither Durbin nor Dodd thought that the time was right for Congress to do anything about Fannie and Freddie, however. Dodd told Isakson, “I totally agree with your premise [that Fannie and Freddie need to be reformed], the question is that as Chairman of this committee I didn’t know how… we fix this thing at this point… I would also plead that the failure to deal with that in this bill ought not to be justification for walking away…”

“Senators Dodd and Durbin are passing the buck to the American people, to future generations to deal with the government mismanagement of housing finance that caused the crisis. They know government failed, and yet they refuse to do a thing about it,” Wilson declared.

“Senators Snowe and Collins must not be complicit in throwing away the American people’s best chance to rein in the government-caused institution of ‘too big to fail’, the government-controlled mortgage market that created the crisis, and the government-administered bailouts that will never end under the Dodd bill,” Wilson said.

“Only Senators Snowe and Collins can stop the government establishment of unlimited authority to monitor all financial activity in the country, levy taxes, and seize companies, all without Congressional approval of the possibility of judicial appeal. The choice is theirs,” Wilson concluded.

Attachments:

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” May 13th, 2010, Americans for Limited Government.

“Big Brother is Watching You: The Threat Posed by the Dodd Bill to Privacy,” May 5th, 2010.

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

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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May 20th, 2010, Fairfax, VA—Bill Wilson, President of Americans for Limited Government (ALG), will be available to comment on the cloture vote for the Dodd financial takeover bill. Today, the Senate voted to invoke cloture on the legislation 60 to 40.

Audio Actuality 1:
www.getliberty.org/files/Dodd_Pass _ Bill_Statement_1.mp3

“The Senate of the United States today took a giant step to creating a permanent bailout fund for Wall Street. All this does is institutionalize the same bad behavior that got us into the mess we are now.”

Audio Actuality 2:
www.getliberty.org/files/Dodd_Pass _ Bill_Statement_2.mp3

“The American people can be certain of two things as a result of this vote. First, they can be sure that there will be more bailouts and greater dislocation of the markets. Second, they can depend on higher taxes, and greater burden on them and their families, all thanks to the U.S. Senate, Chris Dodd, Barney Frank, Nancy Pelosi, and the rest of the unindicted co-conspirators in the financial meltdown.”

The Dodd Financial Services Bill institutionalizes many of the same issues that the American people rejected during the original financial services bailout. ALG has been a leading voice in opposition to the Dodd Financial Bill, and has become a trusted source for analysis from an independent, limited government perspective.

Interview Availability: To schedule Bill Wilson for a radio or television interview, please contact Rebekah Rast at 703-383-0880, for print interviews please contact Richard Manning at 703-383-0880.

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May 19th, 2010, Fairfax, VA—A Wall Street Journal editorial published today confirms that an unlimited bailout authority is still contained in the Dodd financial takeover bill.

According to the editorial, “Gus Sauter is the Chief Investment Officer at Vanguard Group, the mutual fund giant that manages more than $1 trillion of investor savings. Mr. Sauter told us this week that, even after recent amendments, the Senate bill still allows the Federal Deposit Insurance Corporation to play favorites among the creditors of a failing institution undergoing FDIC resolution.”

The editorial continues, “Specifically, the FDIC could provide a 100% bailout to whichever of these creditors it favors, while imposing severe losses on other investors who bought the exact same bonds.”

Americans for Limited Government President Bill Wilson today said, “The American people have not been told the truth about what’s in the Dodd bill. The bailouts and government takeovers are still included, and it is up to the Senate freeze this legislation before it moves any closer to passage.”

Wilson continued, “This is exactly what Americans for Limited Government has been saying, that despite the Dodd-Shelby amendment, the bill still contains bailouts. We thank the Wall Street Journal for calling it like it is.”

Wilson said he hoped that Senate Republicans would filibuster the legislation “and exhibit the courage of their convictions. They know this bill will be a bad deal for the American people. If they now rise to stand with the people, the people will stand with them.”

ALG has updated its comprehensive backgrounder, “Down a Rabbit Hole,” on the dangers the legislation represents and the shortcomings of various amendments, including the Dodd-Shelby amendment that passed 93 to 5.

According the ALG backgrounder, “Although the Dodd-Shelby amendment provides that the assessments may be charged to the bailed out or seized company to recoup the costs of the bailout or takeover, they may not be imposed if such payments were ‘necessary to initiate and continue operations essential to the implementation of the receivership or any bridge financial company.’”

The backgrounder continues, “Those funds would be drawn from FDIC-levied assessments on the $50 billion or greater companies. This feature necessarily provides for bailouts, and makes the fund unlimited and permanent, because as it is used up, the FDIC can just charge the banks more assessments without any Congressional approval to bail out or seize more companies.”

“Nothing has substantively changed. Despite the efforts of Senate Republicans, the orderly liquidation fund still has not been removed. After all the amendments voted on, the government can still seize any institution it wants, and then keep it, reorganize it, or redistribute it without any Congressional approval,” Wilson had said after ALG conducted an analysis of the amendments.

The Dodd bill, even with the Dodd-Shelby amendment, creates an unlimited “orderly liquidation fund” financed by assessments on approximately 60 bank holding and insurance companies that ALG says will be paid for by any American that uses the financial system through higher costs of transactions, premiums, and bank fees.

The Senate could vote today on cloture for the Dodd bill. Wilson said “time is running out for the American people to rein in the unbridled expansion of federal power to intervene in the economy as never before.”

Attachments:

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” Updated May 13th, 2010, Americans for Limited Government.

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

“Big Brother is Watching You: The Threat Posed by the Dodd Bill to Privacy,” May 5th, 2010.

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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May 18th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today urged Senate Republicans to filibuster the Dodd financial takeover bill, saying, “once enacted, this legislation will be very difficult to undo. The only option left for Senators is to just say no.”

“The Dodd bill will take over the nation’s entire financial sector, institutionalize bailouts for all time, monitor individual finances, and levy unlimited assessments on the American people, all without any votes in Congress nor any recourse to federal courts once company assets are seized,” Wilson declared.

“Only Senate Republicans can stop this legislation before it is too late and it cannot be undone,” Wilson warned, adding, “Harry Reid and Chris Dodd, with this financial takeover, have turned the Senate from the ‘cooling saucer’ into the boiling kettle pot. In just one short month, the so-called ‘most deliberative body’ has considered and will now be voting on the unbridled expansion of federal power to intervene in the economy as never before.”

Yesterday, Senate Majority Leader Harry Reid filed for cloture on the legislation, with a vote expected Wednesday, according to the Washington Post.

Wilson said that his core objections to the bill have not been addressed, including reining in what he called an “unlimited authority to bail out or outright seize companies deemed ‘too risky’.” He also objected to the establishment of an Office of Financial Research (OFR) which he said “would be empowered to gather information on every financial transaction, large and small, in the entire country.”

ALG has published two summaries on the legislation, the first detailing the bailout and government takeover powers in the bill, and the second outlining the threat posed to individual privacy through the OFR.

Wilson said the legislation “started out in exactly the wrong place. The Dodd bill does not address the root, government causes of the financial crisis that blew up the housing bubble in the first place,” Wilson added, pointing to the failure of the legislation to address Fannie Mae, Freddie Mac, the Federal Reserve, the Federal Housing Administration, and the Department of Housing and Urban Development’s Community Reinvestment Act regulations.

“Government policies weakened underwriting standards, lowered down payments on mortgages, and forced banks to give loans to lower-income Americans while simultaneously providing the capital via low-interest loans, which flooded the system and created a housing boom,” Wilson explained.

Wilson said the bill “is as much about deflecting blame away from government for its role in the crisis as it is an egregious power grab. Now, government says it just needs more of our private, financial information to monitor ‘systemic risk’ when it did not act on the clear evidence that was widely available at the time demonstrating its own policies were fueling the housing bubble,” Wilson said.

“The government also argues that it needs a more rapid ‘resolution’ authority when the bailouts to date have only perpetuated the doctrine of ‘too big to fail,’” Wilson added, concluding, “This bill takes all of the worst lessons of the financial crisis and institutionalizes them for all time, and only Senate Republicans can stop it.”

Attachments:

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” April 30th, 2010, Americans for Limited Government.

“Big Brother is Watching You: The Threat Posed by the Dodd Bill to Privacy,” May 5th, 2010.

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

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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May 13th, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today blasted the Dodd-Shelby amendment to the Dodd financial takeover bill that passed last week “which leaves in place the authority for unlimited government takeovers and bailouts paid for by the American people through assessments levied upon financial institutions.”

ALG today updated its comprehensive backgrounder, “Down a Rabbit Hole,” on the dangers the legislation represents.

“Nothing has substantively changed. Despite the efforts of Senate Republicans, the orderly liquidation fund still has not been removed. After all the amendments voted on, the government can still seize any institution it wants, and then keep it, reorganize it, or redistribute it without any Congressional approval,” Wilson declared, urging Senate Republicans to filibuster the measure.

The Dodd bill, even with the Dodd-Shelby amendment, creates an unlimited “orderly liquidation fund” financed by assessments on approximately 60 bank holding and insurance companies that Wilson said “will be paid for by any American that uses the financial system through higher costs of transactions, bank fees, and the like.”

According the ALG backgrounder, “Although the Dodd-Shelby amendment provides that the assessments may be charged to the bailed out or seized company to recoup the costs of the bailout or takeover, they may not be imposed if such payments were ‘necessary to initiate and continue operations essential to the implementation of the receivership or any bridge financial company.’”

The backgrounder continues, “Those funds would be drawn from FDIC-levied assessments on the $50 billion or greater companies. This feature necessarily provides for bailouts, and makes the fund unlimited and permanent, because as it is used up, the FDIC can just charge the banks more assessments without any Congressional approval to bail out or seize more companies.”

“The American people have not been told the truth about amendments being voted upon in the Dodd bill. The bailouts and government takeovers are still included,” said Wilson.

The Dodd-Shelby amendment overwhelmingly passed the Senate last week 93 to 5 under the premise that it would end bailouts.

The backgrounder also describes one of the mechanisms for bailing out a company under a new name in the Dodd bill: “Conceivably, when the FDIC seizes a company, it could use the Fund to fully pay back all outstanding liabilities to the company’s creditors, turn the company into a bridge financial company, fully recapitalize it with financing from the Fund, and then sell the capital stock to those very same creditors that were bailed with the Fund.”

The backgrounder continues, “That’s a bailout, and neither the Dodd-Lincoln substitute amendment, the Dodd-Shelby amendment, nor the Boxer amendment would remove any of these provisions.”

Previously Wilson had criticized so-called “taxpayer protections” that were included in Boxer Amendment: “The Boxer amendment is meaningless, because the allegation is not that the American people will pay for these bailouts and takeovers via income and other taxes. It is that the American people will pay for these government takeovers and bailouts through higher costs on financial transactions and other fees levied by the financial institutions.”

Wilson had said Boxer’s amendment to require that the assets of companies put into receivership are “liquidated” was also “meaningless, because under the orderly liquidation fund, the FDIC has unlimited capacity to either sell seized companies to the Treasury, to reorganize them, or to be redistribute their assets to politically-favored entities.”

On April 29th, Senator Dodd assured his colleagues that the bill did not contain bailouts, but that he would accept an amendment from Boxer affirming his position. Senator Boxer on April 30th, as she submitted her amendment, agreed with Dodd that her amendment was unnecessary, but that she was offering it anyway.

Wilson asked, “If the Dodd bill does not contain bailouts, then why did Boxer submit an additional amendment to affirm that position? Why did Senators Shelby and Dodd submit an amendment that claimed to end bailouts?”

According to the preamble of the Dodd-Shelby amendment, it would “end ‘too big to fail’ [and] protect the American taxpayer by ending bailouts.”

Wilson said, “Provisions in this bill that create an unlimited ‘orderly liquidation fund’ and the creation of ‘bridge financial companies’ give the government unlimited authority and resources to seize companies and either nationalize, bail out, or redistribute their assets to favored political classes, in spite of the many hollow amendments that have been voted on.”

“The amendments to the Dodd bill will not end bailouts and government takeovers. Instead they will be institutionalized for all time. The Senate must defeat this horrendous legislation.” Wilson concluded.

Attachments:

“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” Updated May 13th, 2010, Americans for Limited Government.

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

“Big Brother is Watching You: The Threat Posed by the Dodd Bill to Privacy,” May 5th, 2010.

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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May 11th, 2010, Fairfax, VA—Americans for Limited Government President Bill Wilson today denounced the U.S. Senate for failing to adopt an amendment to the Dodd financial takeover bill that would have authorized a full audit of the Federal Reserve including its dealings with foreign governments.

“On Sunday, the Fed decided to bail out Europe with a credit line after the Fed Chairman Bernanke promised Congress that it would not do so,” Wilson said.

“The Fed and European Central Bank are essentially guaranteeing the bond sales of bankrupt countries. Without the Vitter amendment, the Federal Reserve will continue to operate in secret and with impunity, endangering the financial system, weakening the dollar, and subsidizing risky bets in the markets,” Wilson explained.

“Making matters worse, the Senate is telling the American people that they do not have a right to know about this and other Fed transactions with foreign central banks and governments.”

An amendment offered by Senator David Vitter (R-LA) would have lifted restrictions on the Government Accountability Office that pursuant to 31 USCA §714(b) prohibits it from auditing the Federal Reserve’s transactions with foreign central bank and governments, its deliberations, decisions, or actions on monetary policy matters, its discount window operations, the reserves of member banks, securities credit, interest on deposits, open market operations and transactions.

“The Vitter amendment was an anti-bailout amendment, and the Senate just said no to stopping bailouts or even conducting any oversight of them. Instead, the Senate just issued the Fed a blank check that it does not even want to know about what the central bank is up to. The American people should not be surprised, then, when the Fed bails out more foreign countries that cannot pay their own debts,” Wilson warned.

The Vitter amendment failed by a vote of 62 to 37.

Yesterday, Wilson had denounced Federal Reserve Chairman Bernanke for going back on his word that the Federal Reserve would not be participating in any foreign bailouts after the central bank announced it was extending a credit line to foreign central banks, including the European Central Bank, to bolster lending in near-bankrupt countries like Greece, Portugal, Ireland and others.

At the time, on February 24th, Bernanke told the House of Representatives, “we have no plans whatsoever to be involved in any foreign bailouts or anything of that sort.”

“Ben Bernanke misled Congress about the Fed’s European bailout, and now the U.S. Senate is covering up for him,” Wilson said.

Wilsons has previously noted that the Federal Reserve was a “principal actor” in causing the financial crisis: “By keeping interest rates too low for too long, the Fed accommodated the inflation of the housing bubble throughout the 1990’s and 2000’s by pumping easy money into the system.”

Wilson cited research by Stanford economist John Taylor who in a recent Wall Street Journal column wrote, “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. The deviation from the Taylor rule, which had characterized good monetary policy during the previous two decades, was the largest since the turbulent 1970s.”

“Clearly, the Dodd financial bill is a farce, and will not even be addressing one of the root causes of the financial crisis. Without a full audit of the Federal Reserve, Congress cannot perform its constitutional role of oversight of the central bank. The Senate just voted to keep its blinders on, and to bow at the altar of central planning,” 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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