Can't Trust 'Em

I watched the Senate Banking committee hearings Monday.  My first thought was why hasn't Chris Dodd resigned as chairman of the Senate Banking committee after he has failed so miserably to regulate the financial markets?

My second thought was how odd it was to hear Hank Paulson, former head of Goldman Sachs, the lone remaining independent investment bank on Wall Street, tell the Senators that the financial instruments he's thinking of buying, from Wall Street, are so complex that he'll need lots of flexibility about exactly how he spends $700 billion (or more) of our money.  In other words...trust but no verify.  What??? 

I'm not falling for it.  I have a better plan. This is a credit crunch right?  Let's address our credit needs and leave the rest up to the people:

1. Eliminate cap gains tax – brings in tons of fresh capital which is badly needed and overtime, increase government revenue
2. Eliminate corporate tax rate – reduces inflationary pressures, improves corporate cash flows and jump starts the economy in a real/honest way, not a fake stimulus-checks-for-everyone way.
3. Drill Here, Drill Now, Pay Less – allow unlimited drilling to structurally lower energy costs & overall inflation, increase government revenue, increase employment and reduce the trade deficit that's killing our dollar.  A Win-Win-Win-Win.

Paulson and the current Congress cannot be trusted to do anything else. 

Everything else, including the Paulson plan and a buyback of the substandard loans the government forced banks to make for the last 15 years, should be debated during the current campaigns for President and Congress.   Let McCain and Obama debate their plans and let the winner go to Washington with a mandate.

In the meantime, the big picture is the direction of the country.  If capitalism/free markets/de-regulation is made the bad guy, McCain will lose and Obama will usher in a new era of American Socialism.  Right now, capitalism is on trial and it's losing badly.  Defenders of capitalism need to take the witness stand and say strongly and clearly:

This is not a failure of free markets.

It is a failure of Clinton and the Democrats's "Community Reinvestment" and what Ayn Rand's “mixed economy”.

One option I would like to hear debated is a government buyback of the substandard loans the Congress forced banks to make for the last 15 years.  Paulson's plan is to buy lots of strange financial instruments  - it's unclear to me if his plan will also buy substandard loans directly. 

Taxpayers should not buy Wall Street's strange creations - just the bad loans the government forced banks to make.

Buying back the substandard loans Clinton and the Democrats pushed on banks would improve the balance sheets of thousands of banks from Wall Street to Main Street by putting the risk for those loans exactly where it belongs – on the jerks in Congress. Like everyone else, Democrats in Congress should take responsibility for it's mistakes. 

Put responsibility for these loans where it belongs - Congress - not capitalism or free markets.

Once the government takes these loans out of the financial markets, the market can begin to heal.  The markets will know how to price it because the mortgages that remain will be ones that were done freely - not under threat from the government. 

I know, ultimately, we the people will have to pay for it – not Congress – but it seems to me it’s the right thing.  It is a baby step toward rebuilding trust in government. I wish we could attach the wages and put a lien on the assets of Barney Frank, Chris Dodd, Bill Clinton and the rest of the architects of the Community Reinvestment Act – but we can’t.

The only thing we can do let the candidates debate and throw the bums out that advocate more government and less freedom.