Dodd-Frank Bill Perpetuates Taxpayer-Funded Bailouts, Ignores Much Needed Reform of Fannie & Freddie
Yesterday, I joined 19 Democrats and 172 Republicans in opposition to the 2,323 page Chris Dodd-Barney Frank so-called "financial reform bill” which perpetuates AIG-style bailouts, makes no mention of reforming Fannie Mae & Freddie Mac (and will be the most expensive looming bailout of all), and will decrease access to credit lending which our small businesses need to expand and create jobs. While everyone in Washington agrees Congress must act to protect taxpayers from another financial collapse, protect consumers and increase transparency of financial firms, this bill is nothing more than a band-aid approach to the root causes of the 2008 financial collapse.
This bill, if passed in the Senate, creates a permanent bailout authority run by unelected bureaucrats, and is paid for with $15 billion in TARP funds that were supposed to pay down the original debt incurred when TARP was enacted. It gives the federal government tremendous new intervention power to take-over failing financial firms. In other words, it does little to protect taxpayers from the same preferential treatment that resulted in politically-connected banks, firms and others from receiving taxpayer-funded bailouts in 2008.
Most importantly, it is impossible to call this bill comprehensive reform when it completely and totally ignores the reforms needed to fix Fannie Mae and Freddie Mac, which combined own or guarantee nearly 75% of all mortgages in the United States. The long established mismanagement at the two mortgage giants had a major role in the 2008 financial collapse, and to date taxpayers have lost at least $145 billion. Worse, recent news reports and the Congressional Budget Office have found that the cost to fix these two giants, now 80% owned by taxpayers, could range from $400 billion to as much as $1 trillion.
Finally, taxpayers must remain very skeptical of this so-called reform when the head of Goldman Sachs, a financial firm which was a major contributor to the economic downturn, has given it a thumbs-up.
