Expecting Congress to the fix the current financial crisis is like expecting an arsonist to put out the fire he started. Government created this problem. The Federal Reserve flooded the market with easy credit, encouraging excessive borrowing and debt. Government-created Fannie Mae and Freddie Mac lent money without sufficient safeguards. And, Congress, through the Community Reinvestment Act, pushed private banks to do the same.

It’s not as important that Congress does something as it is that we do the right thing. In the Great Depression, the government initially enacted bad policies in response to the initial problem and made things worse. Following the Enron scandal, Congress passed Sarbanes-Oxley, requiring the ‘Mark to Market’ accounting rule, which has exacerbated our current problem. We must guard against a similar, rash action.

The correct plan should suspend the ‘Mark to Market’ rule immediately and provide a guarantee fund for institutions that actually fail, not buy all ‘troubled assets.’ Just today, Warren Buffet announced that he would invest $5 billion in Goldman – proving that private capital is out there and waiting for opportunities to invest. Private capital should have an opportunity to buy the so-called troubled assets that are dragging down the market. It is only if private capital fails to do this that government should step in—and, then, only in a way which protects private citizens, not the institutions or executives who created this mess.

The Federal Reserve should focus solely on stabilizing the currency. It should not have the ‘growth,’ ‘trade,’ and other duties prescribed by current law. The Price Stability Act, of which I am a co-sponsor, would adequately achieve this goal.

I urge House Democrat leadership to allow for open, constructive debate on this critical legislation.

This entry was posted on Wednesday, September 24th, 2008 at 12:45 pm and is filed under Uncategorized .