RLC: "NO Bailout for Failure, NO Rescue from Risk"
- Date: 09/28/2008
Contact: Westmiller (805) 493-4332
"NO Bailout for Failure, NO Rescue from Risk," says Republican Group
Thousand Oaks, CA - A national caucus of Republican activists has urged GOP
legislators to stand firm against the "Paulson Bailout" of a corrupt
financial regulatory system. "This proposal is a government takeover of the entire
U.S. economy," says Republican Liberty Caucus Chairman William Westmiller,
"whose only purpose is to rescue those who made risky bets on bad mortgages."
The Caucus [www.RLC.org] opposes any taxpayer payoff to rescue those who
made bad investments in any sector of the economy. "The problem is not a lack of
government control," says Westmiller, "but rather the decades of market
distortions imposed by Congress through subsidies, mandates, guarantees, and
constraints on free-enterprise mortgage offerings."
The Paulson proposal grants the Secretary of the Treasury total control over
all mortgage-related financial instruments, nearly a trillion-dollars in
discretionary funds, and the power to nationalize or deputize every financial
institution in the nation. "This isn't a rescue plan," says Westmiller, "it is
an economic police state."
Over the past five years, Congress has refused - on multiple occasions - to
impose standard accounting practices on "Government Sponsored Enterprises",
maintained an implicit taxpayer guarantee against all of their losses, and
expanded the discretion of federal agencies to allocate new national debt to
failed investments and insurance brokers. "This is not free enterprise, nor
anything even remotely associated with the American Dream," says Westmiller, "it
is pure and simply corporatism, designed by oligarchs, suitable for a Weimar
Republic or Soviet Union, not the United States of America."
The RLC favors clear legislation protecting individuals against fraud,
misrepresentation, and theft. It opposes any law that benefits one class of
Americans at the expense of another, including any form of financial guarantee or
subsidy that rewards failure or encourages foolish investments.
"The worst aspect of all the proposals now pending in Congress," says
Westmiller, "is the destructive craving to save a system of patronage, political
favors, and class benefits that has brought us the current crisis. More of the
same is no solution."
"The 'Pelosi Compromise' is a fruitless exercise of battling against the
most extreme Democratic proposals," says Westmiller, "adding new layers of
bureaucracy, prolonged studies of alernative interventions, and phased-in
destruction of the dollar is not progress, it is more, much more, of the same failed
The RLC applauds the stamina and fortitude of multiple Republican Senators
and Congressmen who have opposed any corporate bailout, expansions of
government fiscal power, new burdens on taxpayers, or any further assaults on the
value of the dollar through inflation.
The RLC is a political membership organization working within the Republican
Party in support of individual rights, limited government, and free
enterprise. The Caucus has members in all 50 states and 20 chartered state chapters.
The RLC has urged all of its members to communicate to their representatives
in Congress their total opposition to any bailout.
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RLC Statement of Principles and Positions:
"We oppose all restrictions on the voluntary and honest exchange of value in
a free market ...
We oppose all legislation that concedes Congressional power to any
regulatory agency, executive department, or international body.
We support the phase out of any government subsidies and incentives that
support or favor any business or special interest ...
We favor the privatization of all government assets and a transition to free
market management and services for all programs that exceed the enumerated
powers of the Constitution.
RLC Advisor Mike Pence (R-IN):
“House Republicans believe that we should not pass along the cost of a $700
billion bailout from Main Street to Wall Street ... I simply find it anathema
that the federal government would borrow $700 billion from future
generations of Americans to nationalize every bad mortgage in America”.
"Economic freedom means the freedom to succeed and the freedom to fail. The
decision to give the federal government the ability to nationalize almost
every bad mortgage in America interrupts this basic truth of our free market
RLC Advisor John Shadegg (R-AZ):
"The problem here is that the government created this. ... Now we
see the two chairs on each side, adding all kinds of things to the bill. I
think the last thing you do when government policies get you in trouble is
write a blank check to the government."
RLC Advisor Ron Paul (R-TX):
"Unfortunately, the government's preferred solution to the crisis is the
very thing that got us into this mess in the first place: government
"By doing more of the same, we will only continue and intensify the
distortions in our economy - all the capital misallocation, all the malinvestment -
and prevent the market’s attempt to re-establish rational pricing of houses
and other assets."
RLC Advisor Vernon McKinley on "Corporate Welfare King and Queen" 
"The GSE structure is a classic case of a special legislative benefit that
its recipients will fight to the death to maintain. Congress should
immediately revoke all the benefits of government sponsorship ..."
Republican Liberty Caucus
44 Summerfield Street
Thousand Oaks, CA 91360
(866) RLC-Liberty [752-5423]
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If this is a bailout, then who's getting bailed out? Seems to me this is more of a liquidation. Liquidators (competent liquidators, anyway) make money on the deal.
For example, my next door neighbor bought her house for $400K two years ago. Today she is trying to sell it for $237K -- roughly 60 cents on the dollar. I think that's a fair price. I bought my slightly bigger house next door to hers in 2003 for $220K, before the big run up in prices. If I could get a loan for $200K today, I would plunk down 20% and buy the house myself. The rent on that house would barely pay for the mortgage/taxes/insurance. Her house is in great shape (better than mine).
But I can't get a loan. Banks are reluctant to lend to anybody. If the gov't wants to buy distressed MBS's for 25 or 50 cents on the dollar, they'd be getting a better deal than even I would be willing to pay for my neighbor's house. I don't see the problem.
That said, all you wrote about the scandalous protection of incompetence at the GSE's is accurate, but irrelevant. It would be great if we could get the truth out about the boobs who allowed this crisis to develop, who actively obstructed reform. As Barney Frank, in my mind the chief perpetrator has said, "Good luck with that".