ALG Blasts New England Republican Senators for “Failing to Address the True Causes of the Financial Crisis”
July 13th, 2010, Fairfax, VA—New England Republican Senators Olympia Snowe, Susan Collins, and Scott Brown have indicated they will be voting for the Dodd-Frank financial takeover bill, prompting criticism from Americans for Limited Government President Bill Wilson.
“Senators Snowe, Collins, and Brown, through their support of this bill, are enabling government to perpetuate the easy money and loose lending policies that led to the crisis, to continue too-big-to-fail, and to institutionalize the regime that led to limitless bailouts by taxpayers and de facto government control of Fannie Mae and Freddie Mac,” Wilson declared.
Recent polling by Rasmussen Reports indicates opposition to bailouts if “some of the largest banks in the country reach a point where they can no longer meet their obligations,” 56 percent favor the government letting them go out of business. Only 25 percent favor the legislation overall.
“This is precisely the sort of legislation that made America opposed in TARP. Lawmakers have made the same mistake again, and now they have Senators Snowe, Collins, and Brown to thank,” Wilson said.
In a statement, Senator Snowe said, “After thoroughly reviewing the 2,315-page financial regulatory reform conference bill during the July 4 work period, I intend to support passage of the legislation when it’s brought before the Senate for consideration.”
“Since Senator Snowe has thoroughly reviewed the legislation she intends to support, she is familiar with and agrees with the unlimited bank tax on pages 356 through 364, the racial and gender quotas from pages 441 to 450, and the bailout-takeover fund on pages 347 to 356,” Wilson noted.
In Senator Brown’s statement of support he said, “While it isn’t perfect, I expect to support the bill when it comes up for a vote. It includes safeguards to help prevent another financial meltdown, ensures that consumers are protected, and it is paid for without new taxes.”
“Senator Brown is just plain wrong. The bill includes an unlimited bank tax that will be passed on to consumers, and addresses not one of the root, government causes of the financial crisis,” Wilson said.
Wilson cited 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 and “affordable housing goals” reduced lending standards and forced banks to give loans to lower-income Americans that could not be repaid. “None of these root causes are addressed,” Wilson said.
“The Dodd-Frank bill even prohibits the liquidation of Fannie Mae and Freddie Mac under the so-called ‘orderly liquidation authority’,” Wilson noted, pointing to page 171 of the bill.
Wilson pointed out there would be no audit of the Federal Reserve either, “whose easy money policies accommodated the housing bubble.” He cited research by Stanford economic professor John Taylor stating that “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.”
“Senators Snowe, Collins, and Brown have failed the American people, and have failed to address the true causes of the financial crisis that government was responsible for,” Wilson concluded.
“’Down a Rabbit Hole:’ The Threat Posed by the Dodd Bill to the Private Sector,” Updated June 28th, 2010, Americans for Limited Government.
“Big Brother is Watching You: The Threat Posed by the Dodd Bill to Privacy,” Updated June 28th, 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 firstname.lastname@example.org to arrange an interview with ALG President Bill Wilson.