Bailout Watch

Center-Right Coalition Letter Opposes Toxic Provisions in Dodd Bill

by John Berlau on April 23, 2010

in Bailout Watch, Culture, Deregulate to Stimulate, Insurance, Labor, Mobility, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Zeitgeist

Below is a letter sent today to the Senate that was signed by several prominent groups in the Center-Right Coalition expressing “grave concerns about the ‘Restoring American Financial Stability Act’ and its negative impact on Main Street.” The letter has been signed by a broad spectrum of the Center-Right coalition, including this author on behalf of the Competitive Enterprise Institute; economic conservative stalwarts Grover Norquist and Tim Phillips on behalf of, respectively, Americans for Tax Reform and Americans for Prosperity; and veteran conservative activists Phyllis Schlafly on behalf of Eagle Forum. Also signing on are two energetic new grassroots groups that speak on behalf of much of the Tea Party movement: Tea Party Express and American Grassroots Coalition.

The letter, printed below, highlights what it calls “a by-no-means exclusive list” of major concerns with the bill. These include the bill’s broad definition of “nonbank financial company” that would mean that many “Main Street non-financial businesses would be hit with taxation, regulation, and possible nationalization by the Federal Reserve” (Read more about this here), the proxy access mandates that would usurp state incorporation law and “empower union pension funds and other progressives by forcing companies to fund their Saul Alinsky-style campaigns for a company’s board of directors” (Read more about this here), and the lack of any reforms in the bill of Fannie Mae and Freddie Mac – the two government-created mortgage giants that were “primary causes of the crisis.”

The letter concludes: “While we believe the government should act swiftly to punish financial fraud, it should not diminish Americans’ choices and opportunities in the name of ‘stability.’ We believe that fundamentally, as with health care, although there are a lot of complexities involved, this is about the future of our country. Do we continue living in an America where entrepreneurs and investors can launch new businesses and new ideas — or do we live under a system in which almost every transaction has to be approved by a government agency or czar?!”

April 23, 2010

Dear Senators Reid and McConnell,

As leaders of groups representing millions of Americans that comprise a Center-Right Coalition, we have grave concerns about the “Restoring American Financial Stability Act” and its negative impact on Main Street. While we believe the government should act swiftly to punish financial fraud, it should not diminish Americans’ choices and opportunities in the name of “stability.”

We believe that fundamentally, as with health care, although there are a lot of complexities involved, this is about the future of our country. Do we continue living in an America where entrepreneurs and investors can launch new businesses and new ideas — or do we live under a system in which almost every transaction has to be approved by a government agency or czar?!

Below is a by-no-means exclusive list of our concerns about provisions that hurt Main Street.

1. Main Street non-financial businesses would be hit with taxation, regulation, and possible nationalization by the Federal Reserve: Defenders the $50 billion upfront resolution (bailout) fund argue that the money would come not from general taxpayer funds but fees on “financial institutions.” But putting aside the fact that even taxes on big banks would be passed on to depositors and borrowers, the bill’s definition of “financial institution” subject to the fee and regulation by the Federal Reserve goes far beyond a bank or stockbroker.

Life, home and auto insurers would be subject to this bailout fund fee even though they already pay into state funds for insolvent insurance companies, and the fee would then be passed on to their policy holders. The Federal Reserve would also have the power to define a “nonbank financial company” to encompass any business it deems as “substantially engaged” in financial activity, and experts fear this definition could include energy companies and manufacturers tangentially involved in finance and credit. These firms would be subject not just to the bailout fees, but to the Fed’s new powers of breakup and nationalization for firms it deems “systemic.”

2. “Proxy access” and corporate governance provisions would take power from states and empower progressive interest groups — from unions to animal rights: Even though they have little justification in preventing the next financial crisis, the bill contains “proxy access” provisions that would empower union pension funds and other progressives by forcing companies to fund their Saul Alinsky-style campaigns for a company’s board of directors. Combined with other items federalizing incorporation law — like a mandated majority instead of plurality standard for director votes– this could enable special interest activists to harm the interests of ordinary shareholders and encourage corporate directors to cut deals with them on things like card check, cap-and-trade, and kicking conservative media personalities off the air.

3. What’s not in the bill — any reform of Fannie and Freddie: The bill ignores the two of the primary causes of the crisis: Fannie Mae and Freddie Mac. They’re bigger than ever, and the Obama administration quietly lifted the $400 billion cap on government backing on Christmas Eve — the “Christmas bailout” — so now taxpayers have unlimited liability for them. A bill aiming to prevent the next crisis is woefully insufficient without reform of Fannie and Freddie, and could have the unintended effect of allowing them to carry the risks that other businesses would be barred from taking.

We are happy to meet with you or members of your staff to discuss further these vital concerns.

Sincerely,

Jennifer Hulsey, Co-Founder, American Grassroots Coalition

Dick Patten, President, American Family Business Institute

Tim Phillips, President, Americans for Prosperity

Grover Norquist, President, Americans for Tax Reform

Chuck Muth, President, Citizen Outreach

John Berlau, Director, Center for Investors and Entrepreneurs, Competitive Enterprise Institute

Phyllis Schlafly, President and Founder, Eagle Forum

Colin Hanna, President, Let Freedom Ring

William Greene, President, RightMarch.com

Jim Martin, Chairman, 60 Plus Association

Amy Kremer, Director, Grassroots and Coalitions, Tea Party Express

Cc:

The Honorable Christopher Dodd               The Honorable Richard Shelby

Chairman                                                      Ranking Member

Committee on Banking, Housing,               Committee on Banking, Housing,

and Urban Affairs                                        and Urban Affairs

United States Senate                                    United States Senate

Washington, DC 20510                               Washington, DC 20510

The Honorable Robert Corker

United States Senate

Washington, DC 20510

Obama Uses Phony Rhetoric About Financial ‘Reform’ to Push Bill That Enriches Special Interests and Perpetuates Bailouts

by Hans Bader on April 23, 2010

in Bailout Watch, Economy, Legal, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

President Obama has collected millions from Wall Street special interests, his administration is chock full of Wall Street lobbyists, and he supported the unnecessary $700 billion bank bailout.  But now, he’s pushing a deceptive financial regulation bill with phony rhetoric about “reform,” claiming it is “not legitimate” to point out that the bill could lead to yet more bailouts and government takeovers (as economists and banking experts like Peter Wallison have demonstrated).

Obama’s legislation would do nothing to curb the abuses of the worst offenders behind the mortgage crisis, the government-subsidized mortgage giants Fannie Mae and Freddie Mac, even as it would enrich the politically connected liberal Wall Street firm Goldman Sachs (recently accused of fraud), enrich left-wing lobbying groups and community organizers, and give the government the permanent ability to bail out and take over Wall Street firms.

Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, tax cheat Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.” Worse, the Obama administration lifted the $400 billion limit on bailouts for Fannie and Freddie, so that they could continue to buy up junky mortgages at taxpayer expense, and showered their executives with $42 million in compensation.  The Obama administration is now expanding the bailouts of these mortgage giants so that they can lavish pay on their CEOs and reduce the payments of deadbeat mortgage borrowers.  (At the direction of the Obama administration, Freddie Mac is now running up $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes.  Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.)

Fannie and Freddie helped spawn the mortgage crisis by acting as loan toilets, buying up risky mortgages and thus creating an artificial market for junk.  “From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.”

Why did they buy these risky loans?  They put up with Clinton-era affordable-housing regulations that required them to buy up lots of risky loans, in order to curry favor on Capitol Hill and thus retain their annual $10 billion in tax and other special privileges (which they possessed owing to their status as “Government-Sponsored Enterprises” or GSEs). They paid their CEOs millions in the process, and engaged in massive accounting fraud — $6.3 billion at Fannie Mae alone — to increase the size of their managers’ bonuses.  As GSEs, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

Banking expert Peter J. Wallison, who prophetically warned against the risky practices of Fannie Mae and Freddie Mac for years, says that Obama’s proposals will lead to “bailouts forever” and give big, politically connected banks that are “too big to fail” the ability to drive smaller rivals out of business at the expense of consumers and taxpayers.  His colleague Alex Pollock notes that Obama has not lived up his administration’s claims that it would back reform of Fannie Mae and Freddie Mac.

Obama claims that it will not lead to more bailouts, but even congressional Democrats admit that it will.  As Congressman Brad Sherman (D-Calif.) admitted, the “bill has unlimited executive bailout authority. . .The bill contains permanent, unlimited bailout authority.”

Government pressure on banks to make loans in economically-depressed neighborhoods was another key reason for the mortgage meltdown and the financial crisis.  If Obama has his way, that pressure will increase.  The House earlier approved Obama’s proposal to create a politically-correct entity called the Consumer Financial Protection Agency. “The agency would be in charge of enforcing the Community Reinvestment Act, a law that prods banks to make loans in low-income communities.”  It would do so without regard for banks’ financial safety and soundness, even though the Community Reinvestment Act was a key contributor to the financial crisis.

Obama’s proposed financial regulations would also harm retail banking operations used by middle-class people and small businesses.

Dodd bill punishes Main Street entrepreneurs, rewards Fannie and other high rollers

by John Berlau on March 15, 2010

in Bailout Watch, Deregulate to Stimulate, Economy, Legal, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Zeitgeist

With the focus this week on health care’s “home stretch” and concerns about government limiting the ability of ordinary Americans to make choices about medical treatment, another threat to freedom is accelerating this week that could harm Americans’ abilities to start a business, invest for retirement, and get affordable home and auto insurance policies. Today, after abruptly shutting down earnest negotiations between Senate Republicans, Senate Banking Committee Chairman Chris Dodd announced a partisan so-called financial regulatory reform bill that he will try to ram through his committee within a week.

Dodd’s bill would do nothing to put restrictions on two entities that were proximate causes of the housing bubble, the government-sponsored Fannie Mae and Freddie Mac, and instead would hit Main Street businesses and entrepreneurial firms that had nothing to do with the crisis. The bill’s specific provisions would penalize the corporate structure of public companies from Google to Warren Buffett’s Berkshire Hathaway, tax prudent banks and stable home and auto insurers and their policy holders to pay for the bailout of the next Lehman or AIG,depress revenues from incorporation fees in Sen. Harry Reid’s Nevada and Vice President Biden’s Delaware by federalizing corporate governance laws, and put thousands of retailers who issue gift cards or even offer layaway plans under a new Federal Reserve bureaucracy to regulate credit.

The one virtue the Dodd bill has is making the President of the Federal Reserve Bank of New York subject to Presidential nomination and Senate confirmation. But that will not fix the bill’s many other provisions giving the Federal Reserve direct regulatory power over thousands of America’s big and small businesses without more transparency and accountability for the entity itself.

Here are the highlights of some of the main provisions for the economy.

1.  The Shareholder Rights jujitsu with “proxy access” and other corporate governance mandates.

According to Politico, so-called “proxy access” language was one of the main issues “not resolved.” There is good reason for it was not resolved is because proxy access has nothing to do with complex financial products and everything to do with empowering shareholder groups on the Left, such as union pension funds, to pressure public companies to bow to their various agendas.

For more than 150 years, state law has governed the director nomination and election process for corporations and their shareholders. In states such as Delaware and Nevada, where many companies are incorporated, any shareholder can nominate a candidate for the board, but that candidate has to pay for the campaign out of his or her own pocket. Under Dodd’s bill, the federal government would force the companies and other shareholders to subsidize the campaigns of dissident shareholders and include them in a company’s proxy materials.

But as I have written in BigGovernment.com, subsidizing shareholders to let them run director candidates on the cheap opens the floodgates to special interest agendas that hurt the bottom line for ordinary shareholders. “Groups from unions to animal rights groups could run their own candidate for corporate directors and promote their special interest agendas at the company’s (and ultimately other shareholders) expense.”

The bill also takes the unwise step of forcing companies to justify having the same person serve as chairman and CEO. Some corporate governance activists have flagged this as a bad practice, but there is no evidence it harms shareholder returns. In fact, shareholders of Google and Berkshire Hathaway seem quite pleased with their CEOs – Eric Schimidt and Warren Buffett, respectively (both of whom supported Obama) — also serving as chairmen, and would be quite angry if the government were to penalize this practice that had been so effective for these companies’ growth.

Finally, the one-size fits all corporate governance procedures would greatly reduce the competitiveness of Delaware and Nevada in attracting firms from all over the world incorporating their because of the variety of corporate structures the states allow that work both entrepreneurs and investors.

More to come.

Obama Administration Rewards Corrupt Mortgage Giants, Punishes Productive Private Banks, Fleeces Taxpayers and Responsible Credit Cardholders

by Hans Bader on March 10, 2010 · 3 comments

in Bailout Watch, Deregulate to Stimulate, Economy, Energy, Environment, Labor, Mobility, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The Obama administration wants to increase taxes on productive banks that are self-supporting, while exempting the mortgage giants and other companies that got massive taxpayer bailouts.  For more details, click on this graph, “Bank-robbing tax lets ‘bad guys’ go free,” courtesy of a Washington think-tank, the Heritage Foundation.  It shows that the mortgage giants Fannie Mae and Freddie Mac are exempt and will never have to pay a dime, despite being bailed out by taxpayers at a cost of more than $200 billion, while Bank of America and Wells Fargo, which are solvent and returned all their TARP money, would be forced to pay billions under the administration’s proposed tax.

General Motors and Chrysler won’t have to pay a dime, either, even though the government claimed they were “financial institutions” just like banks in order to use bank bailout money to bail them out at a cost of at least $70 billion (a bailout that would not even have been needed to save the companies if they had simply been reformed to make them competitive, and received relief from burdensome red tape, like poorly-drafted CAFE and global-warming regulations that may backfire.  Instead, the Obama administration effectively gave the companies, at taxpayer expense, to the UAW, a powerful union opposed to much-needed reforms).

In other news, economists and real estate experts say that a mortgage bailout program the Obama administration spent $75 billion on has backfired and harmed the real estate market.

Obama recently expanded the bailout of mortgage giants Fannie Mae and Freddie Mac and lavished money ($42 million) on their CEOs.

Under the Bush administration, federal regulators took over Fannie and Freddie in the name of stopping their risky practices. But the Obama administration has increased their purchases of risky mortgages in a vain attempt to inflate the economy. Worse, it forced them to run up to tens of billions in losses to bail out deadbeat and at-risk mortgage borrowers, and then tried to conceal those losses, in conduct reminiscent of Enron.  But their management hasn’t objected, because the costly requirements are accompanied by massive taxpayer bailouts and lavish pay for the mortgage giants’ CEOs.

Fannie and Freddie helped spawn the mortgage crisis by acting as loan toilets, buying up risky mortgages and thus creating an artificial market for junk.  “From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.”

Why did they buy these risky loans?  They put up with Clinton-era affordable-housing regulations that required them to buy up lots of risky loans, in order to curry favor on Capitol Hill and thus retain their annual $10 billion in tax and other special privileges (which they possessed owing to their status as “Government-Sponsored Enterprises” or GSEs). They paid their CEOs millions in the process, and engaged in massive accounting fraud — $6.3 billion at Fannie Mae alone — to increase the size of their managers’ bonuses.  As GSEs, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

At the direction of the Obama administration, Freddie Mac is now running up $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes.  Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.

Under Obama’s proposed financial “reforms,” banks will be pressured to make even more risky, low-income loans. Obama has sent to Congress his proposal to create a politically correct entity called the Consumer Financial Protection Agency, tasked with enforcing the Community Reinvestment Act. Government pressure on banks to make low-income loans was a key reason for the mortgage meltdown and the financial crisis. Yet Obama’s proposals would empower the new agency to enforce the Community Reinvestment Act, which was a key contributor to the financial crisis, without regard for banks’ financial safety and soundness.

Moreover, Obama’s proposed financial rules do absolutely nothing to reform Fannie Mae and Freddie Mac, admits Treasury Secretary Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

Meanwhile, a new law backed by the Obama administration, the CARD Act of 2009, has effectively forced responsible credit-cardholders to subsidize irresponsible people, leading to the return of annual fees on many credit cards, and the elimination of many cash-back and rewards programs.  My wife, who has an excellent credit rating, was recently informed that one of her cards will now have an annual fee — of $60!  (She promptly canceled the card.)

LibertyWeek 74: TSA Under Fire

by Richard Morrison on December 29, 2009

in CEI Projects, Podcast

Richard Morrison, William Yeatman and Ryan Young join forces to bring you Episode 74 of the LibertyWeek podcast. We investigate the Department of Homeland Security’s antiterrorism efforts, China’s climate change conundrum and California’s chance at closing her budget gap. We finish with some dangerous snowballing in the streets and the last echoes in the Ballad of Kwame Kilpatrick.

Government Expands Fannie and Freddie Bailout and Lavishes Money on their CEOs

by Hans Bader on December 28, 2009 · 1 comment

in Bailout Watch, Economy, Features, Legal, Politics as Usual, Stimulus to Nowhere, Zeitgeist

On Christmas Eve, when it hoped no one would notice, the Obama administration lifted the $400-billion limit on bailouts for government-sponsored mortgage giants Fannie Mae and Freddie Mac, and showered their executives with $42 million at taxpayer expense. (Earlier, Freddie Mac’s CFO received $5.5 million).

Under the Bush administration, federal regulators took over Fannie and Freddie in the name of stopping their risky practices. But the Obama administration has increased their purchases of risky mortgages in a vain attempt to inflate the economy. Worse, it forced them to run up to tens of billions in losses to bail out deadbeat and at-risk mortgage borrowers, and then tried to conceal those losses, in conduct reminiscent of Enron.

Fannie and Freddie helped spawn the mortgage crisis by acting as loan toilets, buying up risky mortgages that were issued by banks and mortgage companies, and thus creating an artificial market for junk. They put up with Clinton-era affordable housing regulations that required them to buy up lots of risky loans, in order to curry favor on Capitol Hill and thus retain their annual $10 billion in tax and other special privileges (which they possessed owing to their status as “Government-Sponsored Enterprises” or GSEs). They paid their CEOs millions in the process, and engaged in massive accounting fraud — $6.3 billion at Fannie Mae alone –  to increase the size of their managers’ bonuses.  As GSEs, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.

The federal government has a double standard when it comes to huge executive pay.   It has no problem paying exorbitant sums of money to people who head failed government agencies like Freddie Mac and Fannie Mae.   (At the direction of the Obama administration, Freddie Mac is now running up $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes.  Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public).

The federal government does, however, have a problem with big compensation packages at private banks like Bank of America and Citibank, even for talented new executives.  Obama’s pay czar, Ken Feinberg, a major donor to liberal politicians like Senator Chris Dodd (who recommended Feinberg for the job after he gave Dodd more than $9000), is now chopping compensation more at basically self-supporting institutions like Bank of America than at completely-bailed out entities like Chrysler.  (Many expect Chrysler to go under despite a $70-billion bailout.   Chrysler is owned mostly by the United Auto Workers union, which received majority ownership from the Obama administration at taxpayer expense, through a politicized bankruptcy process).

Feinberg’s actions have already left taxpayers worse off by forcing Citigroup to get rid of a profitable subsidiary. As finance professor Roy C. Smith noted in The Washington Post:

Feinberg’s actions . . . are not going to improve either the government’s chances of getting its money back or the prospects of repairing these damaged companies. Because of his recommendations, Citigroup agreed to sell its profitable Phibro unit at an extremely low price of only one or two times earnings in order to avoid having to pay a talented trader a $100 million contractual share of the profits he had earned. The most successful of the remaining employees of Citigroup, AIG and Bank of America have been given an incentive to leave their posts, and the firms will be constrained in hiring replacements.

Many competent executives whose pay is threatened by the pay czar are now leaving for other firms.  (The pay czar’s political patron, Senator Dodd, received sweetheart loans from the reckless, bankrupt subprime lender Countrywide, and a massive gift from Edward Downe, in the form of a luxurious “cottage” in Ireland he received in a “cut rate real estate deal” for hundreds of thousands of dollars less than fair market value.)

Banks will now be pressured to make even more risky, low-income loans. Obama has sent to Congress his proposal to create a politically correct entity called the Consumer Financial Protection Agency, tasked with enforcing the Community Reinvestment Act. Government pressure on banks to make low-income loans was a key reason for the mortgage meltdown and the financial crisis. Yet Obama’s proposals would empower the new agency to enforce the Community Reinvestment Act, which was a key contributor to the financial crisis, without regard for banks’ financial safety and soundness.

The mortgage crisis was also caused by the reckless government-sponsored mortgage giants (”GSEs”) Fannie Mae and Freddie Mac, and by federal affordable-housing mandates. But Obama’s proposed financial rules overhaul does absolutely nothing about Fannie Mae and Freddie Mac, admits Obama’s Treasury Secretary, Timothy Geithner, even though he admits that “Fannie and Freddie were a core part of what went wrong in our system.”

Worse, Obama’s plan is “largely the product of extensive conversations” with two lawmakers responsible for the corrupt status quo, Chris Dodd and Barney Frank, and it expands the reach of regulations that have been used by left-wing groups to extort payoffs from banks.

Fixing TARP: Is Transparency Enough?

by Ryan Young on November 16, 2009

in Bailout Watch, Economy, Features, Regulation, Zeitgeist

The House is voting today on a bill to improve transparency in the TARP bailout program. TARP is, shall we say, rather opaque. 25 different agencies administer TARP funds. Each one uses different accounting standards. Keeping track of everything is almost impossible.

I wrote an article not too long ago saying that transparency is welcome symptomatic relief. But TARP itself is a disease. The only way to cure the disease of bailout programs is to abolish them. Russ Roberts said much the same thing:

[C]apitalism is a profit and loss system. The profits encourage risk-taking. The losses encourage prudence. If the taxpayer almost always eats the losses for the losers, you don’t have capitalism. You have crony capitalism.

Transparency is a good start. But the goal should be to not have government bailing out politically favored companies in the first place.

New CEI Release: One Nation, Ungovernable?

by Elizabeth Jacobson on October 26, 2009

in Bailout Watch, Deregulate to Stimulate, Regulation, Stimulus to Nowhere

Question: What do you get when you combine a $700 billion “stimulus” package, $1.1 trillion in wealth-destroying regulatory compliance costs, a mountainous non-discretionary entitlement obligation, bailouts for large manufacturers, an small army of unelected czars, and a $1.4 federal budget deficit?

Answer: Way too much government!

In a new CEI paper, One Nation, Ungovernable?, Clyde Wayne Crews lays out an agenda for setting America on the path to economic recovery. From lifting burdensome regulations and restrictions on executive compensation to fostering competition and restraining federal spending, Crews calls for an end to the “bailout culture” that’s spread throughout the capitol, and a return to more responsible policies that promote growth and liberty.

As Crews notes, “If government intervention were stimulative, the nation should be overflowing with wealth and job creation already.” Obviously, the folks on Capitol Hill got it wrong. Wealth comes from policies that unleash the creativity and industriousness of private citizens and companies, not from massive regulation or wasteful government  “investment.”  Deregulation and markets encourage competition and growth and create jobs.

Calling all legislators: please take a few moments and read One Nation, Ungovernable? Fret not, at only six pages, it’s far shorter than most of the tax-and-spend bills you’ll see this year.

Markets vs. Special Interests

by Ryan Young on October 12, 2009

in Bailout Watch, Deregulate to Stimulate, Economy, Environment, Global Warming, Healthcare, Insurance, Politics as Usual, Regulation, Stimulus to Nowhere

Detractors of capitalism decry that it caters to special interests. The opposite is actually true. Just look at what’s happened in the last year.

Most of Wall Street came to government asking for a bailout when the government-created housing bubble popped.

The Big Three automakers also went to Washington for largesse when their customers came to prefer Toyotas and Hondas.

Health insurance companies stand to make a killing if Obamacare passes.

T. Boone Pickens and Al Gore would make millions from environmental legislation.

Ludwig von Mises explained the reason for all of this corrupt behavior with a single sentence back in 1949: “It is precisely the fact that the market does not respect vested interests that makes the people concerned ask for government interference.”
-Human Action, 4th Edition, p. 337.

LibertyWeek 54: Read My Lips

by Richard Morrison on August 3, 2009

in CEI Projects, Podcast

Your host Richard Morrison welcomes back returning guest co-hosts Michelle Minton and Jeremy Lott for Episode 54 of the LibertyWeek podcast. We start with ominous hints of new taxes, California state employees making strike threats and the possible antitrust implications of the Microhoo partnership. We continue with a double-dipping pay scandal, the suppression of dissent in Venezuela and some fully transparent Olympic News.

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