Residual Forces

Here’s some excerpts from a letter from 31 conservative Republicans to Treasury Secretary Paulson and Fed Chief Ben Bernake on the potential $700 Billion bailout.

Congresswoman Michele Bachmann (R MN6) and Congressman John Kline (R MN2) both are amongst the signatories. 

We write to express our deep concerns over the increasing propensity, size, and frequency of government interventions to prop up failing private sector companies. These bailouts have set a dangerous and unmistakeable precedent for the federal government both to be looked to and indeed relied upon to save private sector companies from the consequences of their poor economic decisions. 

You can find the complete letter here.

But I don’t trust you to go and read the whole thing yet, so here is another great line to entice you.

While there are likely many causes that contributed to this economic turmoil we are now facing, it is clear that at least some part of it has been furthered by the moral hazard created by the potential for government intervention. For decades and more acutely in recent years, we witnessed how the formerly implicit, now explicit, government guarantee behind the GSE’s Fannie Mae and Freddie Mac allowed them to swell to stratospheric and ultimately unsustainable financial heights. Regrettably, the GSE precedent and the March Bear Sterns bailout might have spurred other companies likewise to conclude that they, too, were “too big to fail” and prevented them from acknowledging the true gravity of their financial situations. 

 Hooked yet? 

Experience has shown that the best antidote for market turmoil is regulatory certainty and economic growth. Since any legislative response is unlikely in the waning weeks of the 110th Congress, we urge you in the strongest terms possible to refrain from conducting any additional government-financed bailouts for large financial firms. Regardless of the precautions taken, the risk to taxpayers and to the long term future of our economy remain just too great to justify.  

There are principles limited government Republicans in the US House. Please don’t think that every single member of Congress is in the bag of greed, Wall Street, and K Street. 

I’d encourage the other 6 Republicans vying to join Bachmann and Kline in the US House to pledge their agreement with this letter.