Letter to my Congressman

Dear Mr. U.S. Representative,

First, thank you if you voted "No" on the bailout bill. I appreciate you fairly representing our district, since the phone calls to your office were nine to one in opposition to the bailout.

I am writing this letter because there is a rewrite occurring and another bill will be presented within the week.

We, the majority of the citizens of your district, do not want to bail out Wall Street, just as we did not want to bail out Freddy Mac & Fannie Mae, AIG or the auto makers, which means that it is time for you elected leaders to look to alternatives, such as bankruptcy, for the failing institutions.*

We, the citizens of the US believe in Capitalism and the freedom to thrive in business, or fall on your face. We also believe in the right to get back up and try again. We do NOT, however, believe in paying anyone for lying on the floor while we beg them to stand up again.

We are tired of throwing our tax dollars at failing corporations when we can barely afford to put gas in our cars, educate our children, heat our homes and pay for our healthcare and prescriptions.

It is against all of our common sense to give huge hunks of money to institutions and corporations who have JUST proven they are not responsible enough to manage them. Would you give a toddler a loaded gun? Of course not. Yet, you give failed institutions such as AIG, Freddy Mac & Fanny Mae zillions of OUR dollars. Why don't you try handing out dollars to someone who can multiply their pennies, such as my mother?

And in case you were thinking that you are just going to have to be super-slick in this instance to vote your party's mantra (both parties are chanting doomsday and catastrophe if we don't pass legislation and throw money at this problem) in deference of public opinion, let me remind you that I am watching and will see through all of your defensive double-talk and spin if you decide to vote along with the doomsday fat-cats.

Meanwhile, the White House, John McCain and Barak Obama are telling us how we MUST do something, that there will be a DISTASTER if we fail to act.

How dare they be so arrogant and pretentious as to act as though they "know better" what's good for the country than their constituents back in the home district? How dare they spout inflammatory cries of a "dire" future when we have never been in this position and they do not know how the financial markets will be affected.

How dare they assume that we would prefer to throw tax dollars at Wall Street than suffer through a recession or, worse, a depression.

My mother lived through a depression. Lots of parents and grandparents did. They'll tell you that it wasn't a lot of fun. However, my mother is glad to do it again before giving our money to every Joe Schmo Cancerous Corporation that falls over choking.

Maybe it's time we got away from exercising our plastic at the mall as a routine sport.

Maybe it's time we went back to hand-me-down clothes and slightly scuffed shoes.

Maybe it's time we styled our own hair and wore our real fingernails.

Maybe it's time we got back to growing our own garden and preserving our own food.

Maybe it's time we cut off the cable TV and read books for a few years.

Maybe it's time we pulled up our bootstraps and drove the same car for the next three years.

Maybe it's time we packed our lunch and avoided the drive-through dinner.

Maybe, if we go through some rough financial times, we'll be thankful for our meager financial blessings instead of demanding more, more, more like a spoiled toddler.

Frankly, Mr. US House of Representative, I believe I need to remind you of one more item: You do not work for the lobbyists, your party, or even the President of the United States. You work for me. You are not to decide how to vote. You are to push the 'Yeah' or 'No' button only after you have determined how I feel about an issue--not after consulting your party chairman or your over-paid political consultant on the election fallout of each vote.

And if and when you forget that little fact, I'll remind you at the next election.

Signed,
Your Watchful Constituent,
Leslie Hayes

*see article from Harvard Economist, Jeffrey A. Miron, pasted below.

Commentary: Bankruptcy, not bailout, is the right answer
By Jeffrey A. MironSpecial to CNN

Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.
Economist Jeffrey Miron says the bailout plan presented to Congress was the wrong solution to the crisis
CAMBRIDGE, Massachusetts (CNN) -- Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown.

This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.
The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.
In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.


Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.
So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.
The opinions expressed in this commentary are solely those of the writer.