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FreedomWorks, the national grassroots advocacy organization, today announced it opposes the unprecedented $700 billion intervention to bail out Wall Street banks under hasty consideration on Capitol Hill.
FreedomWorks opposes the bailout for several reasons:
First, history has demonstrated that bailouts simply don’t work. From Japan in the early 1990’s to the New Deal in the 1930’s, bailouts prop up failing enterprises, punish prudent businesses and taxpayers, and do not fix the underlying problems in the economy.
Our current economic crisis has its roots in nearly a decade of inflationary Federal Reserve policy, market distortions from the ‘implied’ government guarantee to Freddie Mac and Fannie Mae, and a wildly inaccurate signals from obsolete, government-chartered ratings agencies. These policies underpinned the housing market bubble, yet the bailout does not address any of these broken public policies.
Second, the $700 billion proposal is virtually a blank check from the Treasury to industry insiders. The plan lacks transparency, is designed so that taxpayers will overpay, and entrusts the very people who created the problems with managing the bailout.
Third, this is a massive overreach of executive power. The Treasury plan would be open to interpretation as the political climate changes, and sets the precedent of the Federal government guarantee of private enterprise.
FreedomWorks President Matt Kibbe commented,
“The best way to protect taxpayers is not to commit them to bailing out nearly a trillion dollars in bad decisions by Wall Street. Accountability is key to a functioning market economy, and the $700 billion bailout punishes the taxpayer, rather than the firms that made poor decisions.”