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Press Release

    An Open Letter to the United States Senate: Reject Bailouts, Taxes, and Onerous Regulations in S. 3217

    05/12/2010

    Dear Senator:

    On behalf of the millions of members of the undersigned organizations, we urge you to oppose S. 3217, the so-called “Restoring American Financial Stability Act.” Introduced by Senator Chris Dodd (D-CT), this legislation represents a flawed and incomplete approach to the necessity of reforming America’s financial system. This bill, even in amended form after Senate debate, is an unacceptable exercise in expanding the size and scope of the federal government while ignoring the restoration of fundamental free market principles that must take place if our economy is ever to experience lasting stability and prosperity.

    The legislation is flawed because it contains several damaging provisions that will increase costs and do little to mitigate risks to taxpayers. For example, the bill creates the Bureau of Consumer Financial Protection, which will have the power of regulating an extremely wide variety of financial products offered to consumers. It also creates the Financial Stability Oversight Council to serve as a regulator of systemic risk, and then anoints as council members the heads of the very entities that failed to protect taxpayers from the crisis the first time around. In addition, the legislation essentially codifies into law the notion of an entity being “too big to fail” by allowing regulators to determine which institutions are systemically important.

    The legislation is incomplete because it does virtually nothing to deal with the elephant in the room: housing. The crisis can be traced back to unwise and unscrupulous home loans, and much of that frenzy was fomented by government-sponsored enterprises Fannie Mae and Freddie Mac, which utilized implicit taxpayer backing to tear a path of destruction through the housing market (not to mention the federal government’s finances). Despite the fact that these now-nationalized entities account for the vast majority of current losses associated with the Troubled Asset Relief Program, this legislation is shamefully devoid of an honest attempt at disclosing and divesting taxpayer dollars from Fannie Mae and Freddie Mac’s balance sheets. Furthermore, it does nothing to rein in abuses in municipal bond markets, protect taxpayers from further losses from the bailouts of automotive companies, or address serious ongoing problems with credit rating agencies.

    This wrong-headed approach would raise costs, empower Washington, and do precious little to address systemic problems in the financial system – many of which stem from government manipulation of markets. The time to reform Wall Street is now, but there is never a right time for the wrong solutions. We urge you to oppose this bill and return to the drawing board to draft a comprehensive and measured approach to financial reform.

    Sincerely,
    The Undersigned

    Duane Parde
    President, National Taxpayers Union

    Jim Martin
    Chairman, 60 Plus Association

    David A. Keene
    Chairman, American Conservative Union

    William Wilson
    President, Americans for Limited Government

    Tom Jenney
    Arizona Director, Americans for Prosperity

    Grover Norquist
    President, Americans for Tax Reform

    Ryan Ellis
    Executive Director, American Shareholders Association

    Jeffrey Mazzella
    President, Center for Individual Freedom

    Barbara Anderson
    Executive Director, Citizens for Limited Taxation

    Chris Chocola
    President, Club for Growth

    John Berlau
    Center for Investors and Entrepreneurs, Competitive Enterprise Institute

    Thomas A. Schatz
    President, Council for Citizens Against Government Waste

    Matt Kibbe
    President and CEO, FreedomWorks

    Mario H. Lopez
    President, Hispanic Leadership Fund

    Andrew Langer
    President, Institute for Liberty

    Colin Hanna
    President, Let Freedom Ring

    Dee Hodges
    Chairman, Maryland Taxpayers Association

    Forest Thigpen
    President, Mississippi Center for Public Policy

    Lew Uhler
    President, National Tax Limitation Committee

    Doug Kagan
    Chairman, Nebraska Taxpayers for Freedom

    John W. Whitehead
    President, The Rutherford Institute

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