Press Release: Congress Must Fight Corporate Welfare
By: BJ Lawson
FOR IMMEDIATE RELEASE
JULY 14, 2008
CONTACT
Linda Williams
919-481-1177
RALEIGH – Today, North Carolina Congressional candidate Dr. William “B.J.” Lawson described the proposal by Henry Paulson and the Treasury department to support Freddie Mac and Fannie Mae as “deceitful and dishonest.”
Lawson said, “The options proposed for supporting these organizations amount to massive corporate welfare payments to bond investors and foreign governments.” He went on to say, “Stock and bondholders of Freddie Mac and Fannie Mae have never had an explicit guarantee of government support, yet these two private companies have relentlessly pushed the limits of financial sanity in an effort to maximize their profits.”
Freddie Mac and Fannie Mae hold over $5 trillion in mortgages and other debt, which is about half of all American mortgages. As a result of the current credit crisis, they were responsible for funding about 80% of all mortgages in the first half of this year. Freddie Mac and Fannie Mae are both languishing in uncertainty, with representatives for both corporations claiming that they are currently solvent based upon historical asset values. But market behavior and the government’s response reveal that both are actually insolvent based upon current marked to market asset values.
Lawson, however, proposes a more balanced solution to the problem: “Instead of a bailout, why don’t we give Freddie Mac and Fannie Mae a long-overdue dose of honesty? Their assets and debt needs to be honestly evaluated and restructured, with the stock and bondholders taking appropriate losses to reflect the fact that their investments were not without risk.”
He went on to say, “Using taxpayer funds to bailout these corporations and their investors is another example of letting corporations profit during boom times, but then expecting the American people to pay for their mismanagement during bad times. Such abuse cannot be sustained by the economy, and Congress must begin serving the people instead of the banks and special interests.”
Dr. William “BJ” Lawson is running for Congress in North Carolina ’s 4th Congressional District.
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July 15th, 2008 at 11:45 am
Right on! Having the government implicitly or explicitly backstop these corporations simply interferes with clear market signals. The result of this interference is distorted decisions and a market that is not adjusting as it should. Thank you for being against the Treasurer’s proposal and speaking the obvious truth.
July 16th, 2008 at 12:32 am
[...] Press Release: Congress Must Fight Corporate Welfare [...]
July 18th, 2008 at 4:56 pm
amen! now, can anyone in Washington see a parallel between the VALUE of letting banks and other financial institutions actually FAIL as a direct result of their actions, and the concept of subsidies to US corporations AND agricultural businesses?
any and all businesses being cyclical and fraught with uncertainties, many have figured out that it’s a good idea to “put something away for the rainy day” but apparently when a business becomes big or involves growing things, the folks running those businesses suddenly discover that they MUST be bailed out by taxing everyone else in the country, rather than saving for their own rainy day situations…. or droughts… or floods…. etc.
make lousy loans…. renegotiate to a longer payback period or suffer.
build your house next to a levee… buy flood insurance or put pontoons under it.
but don’t ask ME to subsidize your lousy decisions.
yep, does any elected official understand those comments?