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.”
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 firstname.lastname@example.org to arrange an interview with ALG President Bill Wilson.