Dear Senator X,
I wrote two nights ago to express my outrage at the bailout bill, and write now to express my surprise and anger that the bill that will come before the Senate tomorrow is no better.
Let me be clear: I understand there is a serious problem, and something must be done. What shocks me is that the bill remains a $700B blank check written and administered by the people (Hank Paulson) who have already proven their incompetence, supplemented by some completely unrelated tax changes.
These changes do nothing to mitigate the failings of the original bill, namely:
(1) They do not include regulatory reform such as capital adequacy requirements for non-depository institutions and some sort of restrictions on derivatives and other instruments that are so complex that no one knows how to assess their risk.
(2) They do nothing to provide genuine oversight. The original bill included only a bipartistan committee empowered to see -- but not change -- the Treasury Secretary's choice of administrators. The modifications I have seen in the bill you will vote on tomorrow does nothing to address this. This is a recipe for crony capitalism -- small wonder the U.S. is being subjected to an IMF audit!
(3) The bill is a straight transfer -- there is no binding mechanism to ensure that this $700B is repaid to U.S. taxpayers.
I encourage you to read this article by Nobel Laureate Joseph Stiglitz: www.thenation.com
In one passage, he writes:
"To be frank, the administration has a credibility and trust gap as big as that of Wall Street. If the crisis was as severe as they claim, why didn't they propose a more credible plan? With lack of oversight and transparency the cause of the current problem, how could they make a proposal so short in both? If a quick consensus is required, why not include provisions to stop the source of bleeding, to aid the millions of Americans that are losing their homes? Why not spend as much on them as on Wall Street? Do they still believe in trickle-down economics, when for the past eight years money has been trickling up to the wizards of Wall Street? Why not enact bankruptcy reform, to help Americans write down the value of the mortgage on their overvalued home? No one benefits from these costly foreclosures.
The administration is once again holding a gun at our head, saying, "My way or the highway." We have been bamboozled before by this tactic. We should not let it happen to us again."
You had the courage to take a stand against the Iraq War when Republicans were reluctant to criticize our president, and you were proven right. Please have the courage to stand up against this bill and insist that Congress do the hard work needed to write a bill that addresses the causes of the crisis and protects ordinary taxpayers.
Thank you for your attention,
