MICHELE BACHMANN ON BARNEY FRANK'S FINANCIAL REGULATION: "GIVING MORE POWER WHERE POWER IS NOT DUE"

From Congresswoman Michele Bachmann:

Last week the U.S. House of Representatives passed Barney Frank’s financial regulatory reform bill, or as Democratic Congressman Brad Sherman called it, “TARP on Steroids.” Instead of examining and addressing the root cause of the financial collapse so that we may ensure it never happens again, this bill codifies the bailout mindset. In addition to expanding the Fed’s power, it restricts consumer’s investment options, imposes fees on already struggling firms, and it even provides a $200 billion bailout fund. Essentially, it sets up a permanent bailout system with taxpayer dollars.

Below is a piece from me concerning this legislation printed last Friday in the Minneapolis Star Tribune. While the 1,300 page bill is quite complex, it can be boiled down pretty easily: No More Bailouts!:

GIVING MORE POWER WHERE POWER IS NOT DUE

Wall Street and bureaucracy would benefit from pending reform.

The majority of Americans last fall were united against the $700 billion Wall Street bailout known as TARP. Proponents of the bill urged immediate action, claiming that a failure to act quickly would send the financial industry over the brink. They promised to examine the root cause of the crisis once financial markets were secure. One year later, the House is considering legislation that will result in the most far-reaching reforms of the financial services industry in our nation's history.

But instead of addressing the real causes of the financial collapse and fixing bad government policies that led to the crisis, congressional Democrats want to codify the fiscally irresponsible bailout mania. Their bill would make taxpayer bailouts the permanent solution for dealing with reckless financial institutions in the future.

The 1,300-plus-page bill the House is scheduled to vote on today creates a "systemic risk regulator" tasked with determining which firms meet an undefined "too big to fail" test. It allows the government to tap a multibillion-dollar bailout fund to save troubled firms whenever it wants. This fund will be initially financed by a massive new tax on financial institutions and is expected to take $55 billion out of the hands of small businesses and job creators, leading to a loss of as many as 450,000 jobs. Should that fund run dry, taxpayers are on the hook to replenish it. And unlike TARP, this bill authorizes the Treasury Department and the Federal Reserve to completely bypass congressional approval and directly provide such lifelines to flailing firms.

The moral hazard this bill creates will ripple through the entire financial marketplace. Providing banks with a bailout guarantee will perpetuate a cycle of irresponsibility, shielding creditors from taking the fall for making risky decisions and forcing taxpayers to ante up again and again.

Rather than increasing transparency within the Federal Reserve and directing it to focus on the nation's monetary policy, this bill drastically expands the powers of the Fed to intervene in the private marketplace. But the Federal Reserve has already proven its inability to preemptively catch systemic risks as demonstrated by the financial crisis that occurred under its watch. Giving more power to government bureaucracies that have failed in the past will do nothing to stabilize our markets.

I support an alternative plan that addresses both the core problems in our financial system and promises American taxpayers that they will not be on the hook for Wall Street's mistakes ever again.

Three key principles guide this proposal:

1) It ends government bailouts of financial institutions;

2) It stops allowing the government to pick winners and losers in the financial industry; and

3) It reinstates market discipline by removing moral hazards that exist today.

Minnesotans know when Washington is trying to pull a fast one. While the government takeover of health care and total lack of job growth is at the forefront of everyone's minds, we cannot let this permanent bailout legislation slip through Congress without a fight.

By Congresswoman Michele Bachmann

From The Declaration of Independence:

"He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance."

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