I am writing to you today as I am sure many of your constituents from the Granite State already have. As a proud native of New Hampshire, and as an American citizen, recent actions in Washington have concerned me and many others to write to our Representatives. Earlier this week, I was proud to view your “No” vote on the Emergency Economic Stabilization Act of 2008 which was defeated in the House. However, as pleased as I was to see you, my State Representative, vote against the amendment placed before the House, I tempered my enthusiasm knowing that another amendment would be placed forth by the Senate by the end of this week. This past Wednesday, my caution was rewarded by the passage of the HR1424EAS by the Senate.
I ask, as your constituent, that you continue the principled stand you demonstrated earlier this week and vote against this amendment when placed before the House today.
I oppose this measure for 2 different, yet equally important reasons.
Firstly, I oppose this measure because of the pure cynicism and disregard for the intelligence of the American people. The usage of this bill to further government spending and the redesign energy policy displays a confounding lack of seriousness by the Senate as to the magnitude of the situation we face today in the global financial sector
The inability of the Senate to put forth a provision which deals solely and directly with the issue at hand demonstrate an indefensible lack of political courage by people voted to represent the will of the people.
Secondly, I oppose this measure because of the economic reality that is facing this nation. The amendment upon which you will vote has been debated on both sides, with each side adamant that they are correct in their assumptions. I, however, do not believe that structuring an initial $700 Billion package will either help continue the continuation of the American economic engine, or be of overall benefit to the American tax payer.
The troubles facing the American economy come from two separate yet intrinsically linked concept of modern finance. Bank used their fractional reserve abilities to leverage deposits into credit. Credit, and perceived credit worthiness were utilized to forecast future economic beliefs that have shown to be untrue. With defaulting mortgages and loans, the basis of capital needed to maintain asset ratios faltered and some banks have found that they have been able to maintain liquidity standards set for them.
Investment banks also used leverage in their dealings. However, the blame for this should not be looked at as a reason for more regulation. Regulations for the Investment banking industry are clear as to the amount of leverage a company can take on to continue with their business. However, as it has been seen, many firms chose to go beyond this (at a rate up to 3 times the SEC mandates) when dealing with derivatives and especially credit derivatives. The onus was upon Mr. Cox and the SEC to do their jobs and their inability to perform their responsibilities has lead us to this point.
Quite simply, we are here today not because of a lack of regulation, but because of leverage within the industries above for mentioned. For the United States economy to reach equilibrium, this leverage must be unwound. By passing this amendment, the Congress will hinder that key factor and prolong this current situation. By artificially maintaining high leveraged prices with in the Housing and Credit Markets, the United States will not be able to reach that equilibrium for a much longer and much more painful period of time.
While political expedience often trumps long term benefit for the American people, I hope that you continue to demonstrate the necessary courage in your vote. Increasing the debt will only put even more pressure on the dollar, increase inflation, and dramatically affect the buying power of many low income Americans. And yet, this proposed amendment does not follow any branch of historical economic theory that would demonstrate that it will work and help the American economy or its taxpayer base.
There are very few votes before the members of Congress which so dramatically affect the lives of the American people. It is often less than once in a decade that a piece of legislation is put before our representatives that has such far reaching effects. I believe that this is one of them.
I ask that you take into consideration not only my views, but those of other constituents from New Hampshire who don’t believe that this is in the benefit of either New Hampshire, or of the United States of America.