Disturbed both by an increased role of government in our economy and the lack of accountability of leading officials, U.S. Rep. Blaine Luetkemeyer (MO-9) today voted against creating a permanent TARP-like bailout authority for the federal government contained in the Democrats’ massive financial regulation bill that also includes the creation of a so-called credit czar.

 

 “This bill is yet another massive expansion of the federal government and enshrines into law the damaging bailouts we have witnessed over the last year. Government has no business using taxpayer dollars to keep companies of their choice open because the free market, and not the government, should determine which companies succeed and fail,” Luetkemeyer said. “I also cannot support putting the availability of credit in the hands of a government bureaucrat who will not be accountable to the American people.”

 

This legislation codifies the bail-out authority used by the U.S. Treasury Department and Federal Reserve to take taxpayer dollars and save failing Wall Street firms. The fundamental question of this legislation is who should pay when a firm fails: the creditors of the firm or the American taxpayers? Luetkemeyer believes the creditors of the firm who willingly took risks should be held accountable when a firm fails, just as they benefit when a firm succeeds, and not the American taxpayers. The majority with this legislation are privatizing gains and imposing costs of a firm’s failure on the taxpayers. The bill also assesses a $150 billion tax on large financial firms to help pay for future bailouts. The majority of firms impacted by this new tax are the same firms whom did not cause the financial crisis and do not pose a threat to the stability of the financial system. This legislation will make permanent the failed policy of taxpayer funded bailouts that has led to record deficits.

 

This bill also creates a new federal bureaucracy called the Consumer Financial Protection Agency, which will restrict financial product choices for consumers, ration credit, and impose fees and other assessments on providers of financial products and services and financial transactions.  The agency will be led by a credit czar who has the authority to dictate which financial products can and cannot be available to American consumers. With this legislation, the majority is vastly expanding the federal government and empowering Washington bureaucrats through the creation of yet another federal agency and czar. 

The Federal Reserve is also given expanded powers through this legislation including being able to decide which firms need to be put through a resolution process and require financial firms deemed systemically significant to sell or transfer assets to unaffiliated firms. These new powers are given to the same organization whose inability to identify and address systemic risk helped cause the financial crisis in the first place.