The Mother of All Bailouts

Dear Politician,

I am writing this letter to articulate my displeasure in recent events regarding the rush to bailout Hank Paulsons old firm. If this isn’t moral hazard there is no such thing.

Two days ago the current CEO called Paulson to get him to do something about the short selling of their stock. When it became clear that Goldman Sachs was in a rush to find a merger before they went the way of Lehman Brothers Paulson stopped the short selling of bank stocks. He also came up with a plan he’s trying to get through Congress to bail out his friends on Wall Street. He also wants to give his friends on Wall Street that manage money market funds the guarantee of taxpayers on these funds. That stupid decision should just about drive the final nail in most small and regional banks coffin.

I want a full investigation of Mr. Paulson’s actions to this crisis and the moral hazard effect there of. Here are my reasons that his actions are a direct conflict of interest to his position.

1. Mr. Paulson in 2005 headed Goldman Sachs at the time the sub prime crisis was at its infancy. Mr. Paulson received a $27million bonus for peddling these financial instruments of self destruction to his clients. Mr. Paulson is reportedly worth some 700 million dollars some or most of this coming from these derivatives.

2. I want to know how much stock in Goldman Sacs Mr. Paulson has, whether it is in a blind trust or not.

3. The rumor being reported that he hired GS to write the bailout plan.

It is apparent to me that the deregulation of our banking system in the late nineties and allowing leverage to go from 12 to 1 to 40 to 1 is what caused this crisis. The sad fact is Money given to politicians buy influence that does not necessarily benefit the public. In 1997 and 1998 the banking, insurance and brokerage industries spent 300 million dollars on the effort of deregulation. Phil Gramm, the bills chief sponsor, collected more than $1.5 million in cash from these same industries during his last 5 years.

The saving and loan bailout by the RTC cost the taxpayers $127 million dollars. If you listened to some politicians and pendants they would have you believe the government made a big profit. This bailout will cost much more and more than likely Wall Street will get these back for next to nothing and make even more money. Fool me once, shame on you, fool me twice…..

Meanwhile, through the stupidity of the born again Bush Administration, involving us in a war of whatever, the inability of congress to reduce spending and the republicans new found taste for pork, we now have to service a national debt of some 9.6 trillion dollars. Who are you kidding, taxes are going up and so is inflation due to there printing money effect.

If this crisis teaches us anything it shows the need for a one term limit for all politicians from the election of President, Senators, and Congressman. It shows that we must make lobbying by corporations and PACs illegal.

I urge you to take your time on this and not let Mr. Paulson’s crisis mode let you do something really stupid. It is my opinion that the crisis is limited to financial institutions that made some bad bets. Banks with capital are loaning money to customers that are credit worthy. Banks are only scared to lend to each other. Most small businesses that make poor decisions don’t get bailed out. Of course we don’t have enough money to influence laws.

Jack D Ashcraft

X Republian

Jack of FL 3:34PM September 20, 2008